Bidding scandal expands

Trammell Crow fires employee; DA’s office reviews allegations

A major development company fired an employee Wednesday as the Denver district attorney’s office reviewed city allegations of collusion in the planned expansion of the Colorado Convention Center.

The city on Tuesday revealed potential misconduct in the bidding process for the $233 million project. Wednesday, the government released documents to The Denver Post with new details of the scandal.

City officials believe Trammell Crow, a company that was managing the convention center project, “attempted to eliminate a bidder,” “improperly released City documents” and “altered plans without the City’s knowledge,” according to a letter signed by Eulois Cleckley, director of the Department of Public Works.

Trammell Crow announced Wednesday that it had fired an unnamed employee. Bill Mosher, the company’s senior managing director in Denver, apologized in a statement “for the disruption to the convention center expansion project that has occurred because of the actions of our former employee.”

Documents released by the city also say Mortenson Construction, a general contractor bidding on the project, “has been implicated in violations of the City’s requirements with regard to the integrity

of its bidding process.”

In another letter sent Tuesday, Mayor Michael Hancock asked that District Attorney Beth McCann investigate “potential illegal acts by private parties.” He said the city has “discovered potentially improper collusion between the City’s project management consultant and one of the proposers.”

The letters imply that “they have discovered some kind of evidence that somebody was cheating, basically, to get the contract on their terms, or whatever they wanted to get,” said Jason Schall, a former federal prosecutor who isn’t involved in the matter. “We don’t know what that is yet, but typically there’s a quid pro quo — ‘You scratch my back, I’ll scratch yours.’ ”

Trammell Crow and Mortenson, which have been involved with major Denver projects, each launched an internal investigation and promised to cooperate with the city, according to statements from the companies.

What happened?

Denver voters approved partial funding for the convention center in 2015. The plan is to add a ballroom and outdoor terrace atop the center, plus technology upgrades and lobby renovations for the existing building. The initial public price estimate was $104 million, but that number grew to $233 million as plans were finalized. The budget gap will be funded in part by a new tax on hotel visits.

The project was in the bidding phase, meaning that companies had submitted proposals in a competition to win the right to work on the project. City officials were preparing to interview a shortlist of three companies — Mortenson, Hensel Phelps Construction and PCL Construction Services.

But things went off course in October, according to City Attorney Kristin Bronson.

“A public works employee noticed what I would call an anomaly that appeared to be inconsistent with the city process and made some inquires,” she said. The responses to those questions were “problematic,” so the city attorney’s office got involved and hired outside attorneys.

The investigation “included obtaining documents, reviewing emails, interviewing witnesses,” she said, “and we got to a point where it became very clear that we had a tainted process, that there had been collusion and that we’d gotten as far in our investigation as we could and that we needed to hand this over to the district attorney’s office.”

City officials met with members of the DA’s staff Monday night and formally requested a DA investigation Tuesday.

The city also sent letters that day to all three of the shortlist bidders, announcing that the bidding process was canceled. The city has not made any allegations against PCL or Hensel Phelps.

Construction was to begin late in 2019. The city hasn’t announced a new timeline.

“With the reopening of the bid process, the city will work to minimize any delays and pursue all available legal remedies to recover damages,” public works spokeswoman Nancy Kuhn wrote in an email.

The companies

Trammell Crow, based in Dallas, has worked in Denver for 50 years, claiming $2 billion in metro-area projects and purchases over the last decade. Mortenson, headquartered in Minneapolis, emphasizes its expertise in “virtual design and construction,” a specialty that it used on the sharp angles of the Denver Art Museum.

Mortenson and Trammell Crow have partnered previously on major projects in Colorado:

• The Ralph L. Carr Colorado Judicial Center was developed by Trammell Crow, with Mortenson as the builder.

• Trammell Crow is the developer, and Mortenson the general contractor for the $196 million redevelopment of the Denver Water campus.

The Denver Water project is still underway.

“We do not know what, if any, impact they will have on our project,” wrote Denver Water spokesman Travis Thompson in an email. “We are gathering facts and determining our next steps.”

The fallout

The scandal has delivered significant consequences, and they’re likely to keep coming. Trammell Crow’s now-canceled contract was worth about $9 million, and it’s not clear how much of that sum the company will collect.

The city also is re-examining Mortenson’s prequalification status for bidding on city contracts. The company recently completed three other contracts with Denver Public Works, and it still holds an on-call contract with that department.

Hancock’s administration also will work with City Council to strength the city’s debarment law, which allows it to ban companies from future work, Bronson said.

The DA’s white-collar-crime division is handling the case.

“For it to start in the civil city attorney’s office … suggests a violation of a nondisclosure agreement, something like that,” according to Schall, the former prosecutor.

“But clearly that entity, the city attorney’s office, had something that bothered them, potentially something that would be criminal, that they would send across the street to the DA’s office. The DA’s office has more resources to investigate — principally the grand jury.”

The reactions

Two of Hancock’s political challengers said the debacle is an example of a broader pattern.

“It’s clearly a sign that things have gone too far, and it’s clearly a sign that the mayor’s not managing the city and he’s not paying attention,” said Penfield Tate, a mayoral candidate. As an example, he pointed to accusations that a former airport official rigged bidding for a restaurant contract.

Tate called for an FBI investigation, saying that the case could involve political corruption. Bronson said she spoke with the state’s U.S. attorney’s office, and she said DA McCann could bring in federal agencies if appropriate.

Mayoral candidate Lisa Calderón said the case mirrors her own experience. Her organization recently lost its contract to provide services to people leaving Denver’s jails. It was awarded to another group after a bidding process. In an ongoing lawsuit, she alleges retaliation.

“I think it’s very serious. What I would like to see, actually, is a full audit of the major contracts, because I just don’t buy that it’s a one-off, something that is unusual. I think this is this administration’s way of doing business, and somehow it got out, so they’re making a big deal of doing an investigation,” Calderón said.

Jamie Giellis, another candidate for mayor, said it is too early in the investigation to cast blame.

The city is reviewing its existing contracts but has paused its investigation at the DA’s request, according to Bronson. The situation, she said, is “unprecedented in recent memory.”