Prop P panel examines contracts, change orders


Members of a committee reviewing the Mehlville School District’s Proposition P districtwide building improvement program last week focused on contracts for construction management and architectural services.

Proposition P Review Committee members also discussed the process for change orders that were approved during the course of the project. Furthermore, committee members noted during the Oct. 2 meeting that questions about the Proposition P districtwide building improvement program will be accepted until Wednesday, Oct. 18.

Questions can be submitted by e-mail to or by mail to interim Chief Financial Officer Brent Bell, who is serving as the district’s liaison to the review panel. Those questions can be mailed to: Mehlville School District, Attention Brent Bell CFO, 3120 Lemay Ferry Road, St. Louis, Mo. 63125.

Voters in November 2000 approved Proposition P, a nearly $68.4 million bond issue funded by a 49-cent tax-rate increase. However, a final budget revision approved last December raised the Proposition P budget to $89,137,440 — a roughly 30.3-percent increase — more than $20.7 million over the nearly $68.4 million building improvement program envisioned in 2000.

At the committee’s first meeting Sept. 15, members reviewed an audit of Proposition P that was conducted last year by RubinBrown and requested a variety of information, including a copy of the district’s contract with McCarthy Building Cos. Inc., which served as construction manager for Proposition P, and the district’s contract with Dickinson Hussman Architects, which provided architectural services for Proposition P.

Reviewing the RubinBrown audit Sept. 15, committee member Al Kirchhofer noted the cost of construction management fees — $2.835 million in the original budget approved by the school board in October 2001 and actual expenditures of more than $7.415 million. More than $3.5 million of that difference was a result of the cost of reimbursable expenses.

Kirchhofer said last week that he had reviewed the McCarthy contract. Under the contract, McCarthy was reimbursed for many “ancillary” services, including providing temporary hoisting, temporary toilets, temporary enclosures, temporary barricades, temporary signage and cleanup and trash removal, among other services.

But Kirchhofer said he did not find a not-to-exceed figure in the McCarthy contract.

That was the same conclusion reached by committee member Greg Hayden.

“That’s correct,” Kirchhofer said to Hayden. “That’s all I’ve seen in the contract was just hourly rates, and the hourly rates were actually really reasonable.”

Hayden said, “But there were no caps anywhere.”

Kirchhofer agreed, saying, “… There were no caps in the entire contract that I noticed … Usually, when you work on a contract as anybody knows here that’s done contracts, you’ve got two variables — hours and dollars. So if you don’t set both of those, you can always back into what you’re looking for. So, yeah, you may have a great hourly rate, but if you don’t have a cap on hours, that maximum dollar is just a blank check. And that’s what I’m seeing with this contract here. It’s pretty much a blank check.”

Committee member Debra Selinger said, “Well, that’s why I was wondering if there was an attachment we were missing on it …”

Committee member Ed Ryals also said he would expect the contract to have an attachment, but Bell told the committee he was unaware of any attachment. However, he said he would check again to see if one existed.

Regarding the contract with Dickinson Hussman Architects, Kirchhofer said, “… The architect’s contract has got percentages in there and you know what you’re going to pay. But on this one here (the McCarthy contract), it was pretty open-ended …”

For the future, he suggested, “… The areas that could be improved are contracts with maximum out of pocket, so that you know what your exposure is, and then the project manager or construction manager, whoever’s overseeing that job, provide that service and no other services to have the district’s best interests.”

Kirchhofer later asked if the school district’s legal counsel had reviewed the contract, and Kurt Witzel, committee co-chairman, responded by citing one of the recommendations from the RubinBrown audit.

“District management should consider having a legal professional review all contracts before they are executed,” the audit recommended. “During our audit, we noted that certain additional expenses relating to the construction management contract were not considered during the planning and budgeting process. These expenses would include reimbursable and general condition expenses. Having a legal professional review the contracts prior to execution would allow the district to accurately estimate project costs and could allow district management to take advantage of cost-saving opportunities.”

Witzel said, “… The district’s response is they agree with the recommendation and will consider — not have — but will consider having legal counsel review consulting and construction contracts in the future.”

At one point, Witzel asked, “Does it bother anybody that this contract’s not dated?”

He also noted the McCarthy contract was signed by then-Superintendent John Cary.

“If you go through every one of these, it’s sort of every contract that was signed, it’s all signed by either John Cary, (former Superintendent) Tim Ricker or (former Chief Financial Officer) Randy Charles, and the board policy says that the board president will sign all the contracts …,” Witzel said.

Selinger interjected, “Is that the policy in place at the time?”

Witzel responded that the policy had been adopted in 1998, and later said, “Well, I guess I’m just wondering if the board ever saw these contracts. I mean if they’re not signed by anybody on the board …”

Selinger interjected, “Well, I think there’s something in the minutes, the board minutes …”

Witzel asked, “That said what? That said that they did see all these things?”

Selinger replied, “That I think these contracts were put before the board and I can’t remember. I don’t remember where I saw it.”

But the Call reported Oct. 9, 2003, that neither the McCarthy contract nor the Dick-inson Hussman contract were approved by the Board of Education. At that time, those contracts totaled more than $10.8 million.

The two contracts later were renegotiated — then totaling nearly $12 million — and approved by the school board.

Committee member Lisa O’Donnell later asked about the process for approval of change orders and Witzel cited a process included by Charles in a construction up-date presented to the school board in May 2005.

Under that process:

• A need and reason for the change is identified.

• The architect and/or construction manager direct contract to develop a price for the change proposal request.

• The construction manager enters the potential change order in a log with an estimated cost.

• The contractor submits the change proposal request to the construction manager. If rejected, the construction manager sends it back to the contractor for repricing. If approved, the architect signs and forwards it to the school district chief financial officer, or CFO.

• The school district CFO reviews the change proposal request. If rejected, the CFO sends it back to architect. If approved, the CFO signs all copies, keeps one and returns others to the architect.

• The approved change order actual cost is entered into the log by the construction manger.

• The Board of Education receives a copy of the log in monthly report.

“… This basically says that the board didn’t approve, didn’t put their stamp on the change order. This says that the CFO reviewed the change order, approved it, signed all copies, keeps one and then returns it to the architect … The board gets it a month after it’s done. They get a log of what all the change orders were …,” Witzel said, noting in the “bevy of documents” the committee had been given, “… There’s a thing about John Cary saying, I don’t really want to change any — I don’t want to be responsible for making any change orders unless they’re very small … At some point in time, this whole thing changed to say Randy Charles gets to make all the change orders and tell the board afterwards.”

Witzel later read from the minutes of the Oct. 3, 2001, Oversight Committee meeting at which Cary discussed change orders. The minutes noted that the superintendent had been granted the authority to approve change orders, but he would be reluctant to approve change orders unless they were very small without some type of higher authority.

“… Basically it says that the board gave up any kind of power or authority over change orders,” Witzel said.

Committee members requested a variety of documentation for its next meeting, which will take place at 7 p.m. Monday, Oct. 23, at the Administration Building, 3120 Lemay Ferry Road.