Denver City Council Meeting - Audit of Denver International Airport Great Hall Project - July 30, 2024
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Denver City Council Meeting - Audit of Denver International Airport Great Hall Project - July 30, 2024\n\nThe Mayor and Denver City Council received a briefing from the City Auditor on the findings of an audit of Denver International Airport's Great Hall Project. The audit highlighted significant issues with project oversight, procurement transparency, and subcontractor management, estimating the project will cost $2.1 billion and finish in 2028.\n\n### Discussion Items\n\n- Auditor's Presentation on Great Hall Project Audit: The City Auditor presented the results of an audit conducted on the Great Hall renovations at Denver International Airport. The audit noted that the project began in July 2018, the original contract was terminated in late 2019, and a new contractor, Hensel Phelps Construction Company, was hired through an expedited process. The auditor reported two key takeaways: first, a lack of formalized oversight has led to inefficiencies and inflated costs; second, airport officials intentionally prevented public transparency by not keeping standard documentation during the expedited procurement. Additionally, the audit found the airport failed to properly monitor subcontracting, allowing awards without competitive bids and to companies that were not the lowest qualified bidders, and did not oversee the contractor when it hired itself for subcontracted work. The auditor warned that without proper management, the airport risks overpaying and damaging its reputation.\n\n- Presentation Context: The auditor noted previous audits at the airport, including Pena Boulevard improvements, and emphasized that subcontractor costs typically account for 80-90% of project costs, making oversight critical.\n\n### Key Outcomes\n\n- The Council and Mayor were briefed on the audit findings. No votes or formal actions were taken during this session. The auditor encouraged the public to submit questions for future episodes of "Ask the Auditor."
Meeting Transcript
Plans include a new security checkpoint, new check-in areas, and construction of the Center of Excellence and Equity and Aviation. I have conducted several audits at the airport, noting the lack of oversight and issues with selection of contractors and project delivery methods. In my recent audit of the Great Hall Project, my team found the airport needs better management and oversight to ensure the best value for the city. Renovations of the main terminal at Denver's airport began July 2018, but the airport terminated the original construction contract in late 2019 after a falling out with the initial contractor. Airport officials expedited the procurement process to hire Hensel Phelps Construction Company as the new contractor of a reenvisioned three-phase construction project. The airport now expects the work on the Great Hall to finish in 2028 at an expected cost of 2.1 billion dollars. From initial contracting to ongoing execution. Two key takeaways from the report related to the restart of the project in 2019 are first. We see this in our previous construction audits, including the Pena Boulevard improvements and their own after action report following the termination of the Great Hall Partners contract. A formalized approach could help prevent inefficient and ineffective project oversight, including inflated construction costs and avoidable project delays. Second, the airport deviated from its standard procurement process when it hurried to select a new contractor for the Great Hall project. We found airport officials intentionally prevented public transparency of their decision making by not keeping any standard documentation to support key steps in the expedited procurement process. Airport officials said they had to hurry up the process because they only had a three-month window to choose a new contractor and protect the active construction site from exposure to weather. In addition to the quick contracting project to restart the Great Hall construction after the costly end of the public-private partnership in 2019, my audit also shows the airport has not been properly monitoring the subcontracting process. As a result, the airport has paid more than it should. Specifically, airport staff did not approve the subcontractors, allowed subcontracts to be awarded without competitive bids, and they allowed subcontracts to go to companies that were not the lowest responsive and qualified bidder. Plus, the airport did not properly oversee the contractor as it hired itself for subcontracted work, increasing the risk of suppressing competitive bids and overpaying for work. Subcontractor costs are by far the largest chunk of construction project costs, typically approaching 80 to 90% of the cost of a project. Without proper project management and oversight of construction projects, beginning with choosing the appropriate project delivery method and lasting through construction, Denver International Airport risks overpaying for the Great Hall renovations. Additionally, if the procurement of contractors and subcontractors is not done openly, fairly and competitively, it damages the airport's reputation and impedes the airport's ability to ensure the city receives the best value for contracted work. Well, that's it for this episode of Ask the Auditor. If you have a question, submit it to Auditor at DenverGov.org, and maybe your question will be the next question we answer on the next episode of Ask the Auditor. Welcome to this meeting of the mayor and Denver City Council. At this weekly session, city agencies brief the mayor and council members on various proposals and projects across the city.
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