Audit: City failed to effectively monitor Sunport renovation

Copyright © 2022 Albuquerque Journal

A photo opportunity staged to make a major airport construction project look further along than it actually was cost the city of Albuquerque’s Aviation Department $3,625 in “questionable and unnecessary” expenses, according to a recently released audit.

But that’s just a fraction of the money auditors say the city could have saved – or recouped – on the Albuquerque International Sunport’s terminal improvement project, or TIP.

The Aviation Department paid primary contractor Flintco $189,779 more than it was obligated to pay, the city’s Office of Internal Audit determined. The department also never pursued from Flintco $753,000 in liquidated damages for project delays it could have sought, according to a report that arrived as the city plans its next major Sunport overhaul.

The Aviation Department “over-relied” on its architect consultant, SMPC Architects, and consequently never required Flintco to submit for approval a construction schedule or formal breakdown of material and labor costs, the audit found, nor did the department – as it could have – require Flintco to seek multiple competitive bids for work it subcontracted.

“The audit found that Aviation did not have the appropriate framework in place to effectively monitor and control project costs and progression, resulting in an additional $3 million in change orders and over two years of project delays after the original contract completion date,” the report states.

The TIP overhauled the ticketing area, baggage claim and outdoor arrivals sidewalk. It wrapped up in 2020 after 26 contract change orders and cost $32.9 million – $3.1 million more than the contracted price. It took about 3½ years instead of the originally planned 15 months.

Auditors made several recommendations in their report, and an Aviation spokesman said the department will heed them. That includes updating policy with better project control provisions, and assessing whether it can seek $942,779 from Flintco.

“The Aviation Department is currently consulting with the City’s Legal Department regarding the recovery of funds,” spokesman Jonathan Small said in an emailed response to Journal questions.

Flintco, however, said the city has no grounds to seek money from the company, saying it fulfilled its obligations and the Aviation Department accepted its work at project’s completion.

“Additionally, all amounts paid to Flintco for its work and the work of its trade contractors were agreed to and approved by (Aviation) and the Project architect in advance of payment. There is no basis for (Aviation) to seek recovery of any amount it paid to Flintco for its work on the Project,” Flintco president Steve Eikanger said in a statement to the Journal.

The audit says the city could have required Flintco to pay $1,500 per day in damages for delays resulting from Flintco’s replacement of its electrical subcontractor. Documents cited “performance failure of (Flintco’s) electrical subcontractor” for 502 extra days on the project, and that could have been worth $753,000 in payments back to the city, the audit found.

The project also cost the city $193,404 in “unnecessary” expenses, according to the audit, which blamed a “lack of adequate review of change orders.” That included $189,779 for Flintco expenses that the city was not obligated to pay because it was not part of previously agreed-upon change orders, plus another $3,625 to cover the addition, then removal, of certain ceiling tiles for the sake of a photo opportunity. That tile work was “questionable and unnecessary,” according to the report.

“The prior Administration (under Mayor Richard Berry) requested ‘to make the carousel look as complete as possible for a photo opportunity for City Administration,’” the audit said, citing a city administration-requested change order. “As a result, the primary contractor instructed a subcontractor to install ceiling tiles prior to completion of overhead. Once the photo opportunity was complete, the primary contractor instructed the same subcontractor to remove the tiles to complete the overhead work.”

The city soon will embark on another major Sunport renovation – this one to transform the security checkpoint and create a new food court – and Small said it will use a different type of contract than it did for the terminal update. It’s called CMAR, or construction manager at risk, and Small said in a statement it is used “to enable effective management of project costs, improved communication, and project management.”

Jaynes Corp. is the construction manager for the upcoming project, which will cost an estimated $90 million.