Wednesday, June 27, 2012

District OK’d change orders worth $3.9M

Additional McKinstry work not related to green energy projects

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By TERRY SMITH
Express Staff Writer

The Blaine County School District approved 28 change orders, worth a total of $3.9 million, in its contract with McKinstry Essention.

None of them related directly to the green energy projects that McKinstry was originally hired to do. Instead, all 28 change orders are for various facility improvements, including new lighting and fire suppression systems, and are not involved with geothermal resource development and heating, ventilating and air conditioning retrofits at eight district facilities.

Information on the change orders was provided by the School District in response to a formal Idaho Public Records Law request filed with the district earlier this month by the Idaho Mountain Express.

The change orders were originally worth $3,929,838. However, according to the information provided by the district, $424,306 worth of work was later withdrawn from McKinstry to be given to other contractors, leaving a net change order amount to McKinstry of $3,505,532.

Added to the $15,160,239 value of the original green energy contract with McKinstry, the change orders brought the McKinstry contract value to $18,665,771.

Seattle-based McKinstry is claiming that it performed work, at the direction of district officials, worth $25.8 million and that the district still owes the company almost $7 million. Neither party has been willing to explain the $7 million discrepancy.

Both parties filed lawsuits against each other in May, with McKinstry claiming it is owed nearly $7 million in unpaid balance and the district alleging damages at least equal to the $18.6 million contracted to McKinstry.

The School District is alleging fraud, misrepresentation, breach of contract and even criminal "racketeering" on the part of McKinstry, which has adamantly denied the district allegations, characterizing them as "outrageous" and "sensational."

Though the district has alleged racketeering by McKinstry, the case remains a civil action. Earlier this month, the two cases were consolidated in Blaine County 5th District Court, with McKinstry now listed as the plaintiff the School District listed as the defendant.

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Change orders

The School District and McKinstry entered into an energy savings performance contract in April 2010. The contract awarded the company $15.1 million for geothermal energy development and system retrofits at eight district facilities, including Hailey and Bellevue elementary schools, Wood River High School, the Community Campus, the District Support Services Facility and the Carey School elementary, high school and gymnasium buildings.

The change orders were not approved until after May 2010, when a "judicial confirmation" process was finished in Blaine County 5th District Court. Judicial confirmation, approved by Judge Robert J. Elgee, allowed the district to fund the McKinstry work and other district facility projects by borrowing on future revenues from a 10-year $59.8 million plant facilities levy approved by Blaine County voters in 2009.

Included in the change orders are improvements at all eight of the facilities involved in the McKinstry contract. District officials explained earlier that it would be cost-effective to give the work to McKinstry while the green energy work was going on because interior walls and ceilings would be exposed while McKinstry was performing the geothermal energy and system retrofit operations.

The change order work varies from facility to facility, but includes installation of new fire suppression systems and alarms, new lighting and occupancy sensors, drop ceilings and catwalks and kitchen additions or upgrades.

The change orders vary in dollar value from a high of $545,600 for fire suppression sprinkler systems, drop ceilings, lighting and occupancy sensors and catwalks at Bellevue Elementary School to a low of $1,428 for what is listed as a "kitchen installation" at the Carey School campus.

McKinstry's main role in all of the work it was contracted to perform was in providing construction management and engineering and design services. The bulk of the actual construction was performed by local subcontractors.

According to the School District, 56 local companies benefited financially from the McKinstry contract.

Terry Smith: tsmith@mtexpress.com

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