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Rockwood schools have cozy ties with construction firm
Rockwood

Rockwood schools have cozy ties with construction firm

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A deepening relationship

Glenn Construction Co. has had a long, profitable - and unusual - relationship with the Rockwood School District.

For the last two decades, Rockwood - one of Missouri's largest school districts - has contracted with the small construction management company for more than $15.6 million in work.

Each time voters in Rockwood have approved bonds for new buildings or renovations, Glenn Construction has taken a cut of those funds. In exchange, the Eureka-based company helps plan and oversees the district's construction-related projects.

For the last 14 years, Rockwood has used only Glenn in that management role.

"We're kind of a unique story in the longevity, and I'm very proud of that," said company owner Jim Glenn. He says Rockwood provides 98 percent of his company's work.

That relationship is so close that Rockwood, has, for years, not only provided the company with school district office space for its work in the district, but Glenn cites the address of the district-owned, rent-free property as its corporate headquarters and principal place of business when seeking work from other school districts.

And it's so close, that Glenn's project coordinator - a liaison between the company and the district for bond issue projects - is none other than Steve Smith, president of the Rockwood School Board.

Rockwood resident Eileen Tyrrell said that she attended two candidate forums in the spring, when Smith was running for his board seat, and that the issue of his employment never came up. Nor does Smith cite his position with Glenn on the district's website, instead referencing his 23 years as a law school associate dean at St. Louis University.

"It's just too big of a conflict ... way too big," said Tyrrell, one of the founders of Rockwood Stakeholders for Real Solutions, a recently formed residents group.

In recent months, district residents have expressed displeasure with the board and Superintendent Bruce Borchers after the hiring of two of his former colleagues from Minnesota as consultants at a rate of $1,800 a day each. Borchers' colleagues were later named two of the district's top administrators.

Smith was board president when Rockwood first hired Glenn, in 1991. Glenn hired Smith in 2004. Smith stresses that he has not simultaneously been on the board and employed by Glenn when the board has signed contracts with the firm. He says that his leadership of the board has no role in the district's decision to continue contracting with Glenn and that he has abstained from voting on Glenn-related matters.

"I understand the concern," Smith said. "But the law anticipates that conflicts will happen, it provides a way for dealing with them, and I believe I have followed that pretty religiously."

The rest of the School Board, meanwhile, has approved contracts that have been increasingly lucrative for Glenn.

While the district's projects have varied in size and Glenn's responsibilities have expanded over the years, Glenn's fees have climbed from about $221,000 following a 1991 bond issue to a high of $3.7 million from a 2008 bond issue.

Over the years, Glenn has adjusted how its fees are determined. In the last decade, those fees have been based on an escalating percentage of total construction program-related costs. In 2001, Glenn charged 4.6 percent; in 2008, the fees jumped to 7 percent, where they now stand.

Even after the board signs contracts with Glenn, the company's meter has continued to rack up fees due to additional projects. Since 2004, the district has paid Glenn $1.1 million in additional fees for managing board-approved projects added after contracts were signed, according to district records.

The district says most of that money came from Rockwood's building fund and bond issue savings.

All the while, Glenn Construction hasn't had to worry much about competition.

LITTLE COMPETITION

Rockwood has sought proposals from other project management companies only three times since 1995, despite securing voter approval for eight bond issues worth millions of dollars in that span.

District spokeswoman Kim Cranston said the board has chosen in recent years to negotiate agreements with Glenn rather than seek other proposals.

"Over the years, Rockwood school boards and district administrators have reviewed the fees charged by Glenn Construction Company and determined them to be fair, reasonable and competitive," Cranston said in an email.

The School Board and district selection committees had the opportunity to compare Glenn's fees with those of others in 2000 and 2009, when the district accepted proposals from other firms - but didn't.

The Post-Dispatch requested copies of documents submitted by Glenn's competitors in those two years but was told that Assistant Superintendent Dennis Griffith, who served on both selection committees, destroyed the records detailing proposed fees.

The documents were destroyed "because these companies don't want their fees being shared, as the fees are specific to the specific project(s)," Cranston explained in an email.

But according to documents obtained elsewhere by the Post-Dispatch, at least one of the two companies that bid in 2000 proposed lower fees than Glenn.

Construction Contract Service Group, of Chesterfield, offered to oversee a $38.5 million bond issue the next year for $965,000.

Glenn's fees, meanwhile, ultimately brought the firm more than $1.3 million.

Some competitors of Glenn's say Rockwood's infrequent requests for proposals are empty gestures intended to make it look as though the district would consider someone else. And that appears to keep bidders at bay.

For example, neither of the companies that bid in 2000 did so again in 2009, when just three companies submitted proposals.

"We just made a business decision that it wasn't worth our while," said Construction Contract Service Group President Craig Lindquist. "We had no expectation that they were going to change program managers, so we chose not to expend the time, effort and money in proposing."

A LONG HISTORY

Rockwood officials say their loyalty to Glenn Construction is merited.

"I have worked with other construction management companies, and (Glenn is) the first one that delivers on time, understands what a deadline means ... and understands we're educating kids and that when school starts, you gotta be done," said School Board Vice President Janet Strate. "It's almost personal to Mr. Glenn."

Glenn touts his firm's successes in working for Rockwood. "We've delivered in every single case," he said. "Our competitors have a pretty tough road to beat us."

For the last two decades, the Rockwood board has put a bond issue before voters about every other year. Since 1991, voters have approved nine of 11 bond issues totaling $408.4 million. The result has been a steady stream of construction and millions of dollars in work for Glenn.

The company was tapped to monitor construction expenditures stemming from a $65 million bond issue in 1991 that involved constructing four school buildings and renovating 23 others. The agreement resulted in payments totaling about $221,000 over three years for Glenn.

At the time, Steve Smith was the Rockwood board president and in his first of three stints on the board.

"We've been handed a serious bit of trust by the voters in this district," Smith said, according to a Post-Dispatch article at the time. "I want to know that $65 million is being well-spent."

About five years later, Glenn and another company were hired to manage the district's construction projects. The move followed the district's 1995 request for qualifications - an invitation for project management firms to compete to oversee the district's 1996 bond issue projects.

Not until 2000 would the district issue another request for proposals. By then, Glenn's relationship with Rockwood had become exclusive. Glenn signed on as the district's sole program manager in 1998 and has maintained that role, uninterrupted.

Jim Glenn says that his rates are negotiated and that they have risen as Rockwood's bond issue work has become more complex and widespread.

"It depends on the number of different projects there are and the number of different contracts that are developed out of the projects," Glenn said.

Prior bond issues have involved multiple work sites and projects as the district has responded to significant growth. But Glenn says more recent projects include additions and renovations that are more labor intensive from a program manager's perspective.

"We have enjoyed a very long tenure and a wonderful tenure with Rockwood, and I have to tell you I consider that a real source of pride, both personally and corporate-wide," Glenn said. "We truly know the Rockwood School District."

The feeling appears to be mutual.

As Rockwood has signed contracts with Glenn over the last decade, it has included carry-over provisions that describe "additional and related projects," bridging a role for Glenn in future bond-related undertakings.

Each of Glenn's five contracts with the district since 2001 read: "Such projects may be considered a second phase of the projects being pursued under this agreement, and thus the program management services which may be required for such later phase are ongoing in nature."

OTHER APPROACHES

Other school districts in the St. Louis region also have hired project management firms for two or more projects, but they aren't nearly as loyal to those firms as Rockwood is to Glenn.

Several districts said they seek competitive proposals before choosing a project manager. State law requires that kind of scrutiny, some school district officials say.

Amid that open competition, Glenn Construction has lost out to rival firms.

For example, in late 2008, the Francis Howell School District decided to seek proposals from firms to provide construction management services related to a $78.5 million bond issue.

Glenn Construction submitted the highest bid - $2.5 million - among the six bidders. That was about 3½ times higher than the winning bid of $714,152, from Ben Hur Construction.

Francis Howell's chief financial officer, Kevin Supple, said he was initially nervous about Ben Hur's low bid, "but their service has been tremendous."

Similarly, when the Clayton School District asked for proposals for construction management regarding its $51 million bond issue in 2009, Glenn produced the highest bid of four companies that submitted them. Glenn proposed $2.7 million. The winner, SM Wilson, bid $2.2 million.

School districts handle the administration and oversight of bond-related construction differently.

Some districts - such as Parkway - rely mostly, if not exclusively, on district employees to oversee such work. Other districts turn to outside firms or consultants with hourly rates.

Districts often pay a percentage of construction-related costs for such services.

Comparing fees among school districts can be difficult because districts have different approaches and particular needs.

But in some area districts, fees paid to construction management firms are as low as 2 percent, compared with the 7 percent Glenn charges Rockwood.

Jim Glenn says he offers Rockwood a broader range of services than what many other companies provide. And he said by the time other districts are billed, the lower percentages quoted by other firms end up being much higher. That's because the lower percentages often don't include fees for trailers, trucks, some wages and other fees.

Glenn says upward of 60 different Rockwood board members over time have evidently been so pleased with his firm that none has voted against a contract with Glenn Construction.

"They've all thought they were getting good value," he said. "The reason we've been around a long time is because what we've done is what the community likes and what the board likes."

LEGAL INTERPRETATIONS

Glenn describes his "core business" as construction management in documents submitted to other school districts: "Construction management is our first choice of doing business with our clients," a 2010 Glenn proposal reads. Despite that, Glenn says his company's role in Rockwood is more expansive.

Contracts with Rockwood refer to Glenn as the district's program manager - a term that Glenn says encompasses managing all things bond issue-related from inception to completion, from deciding what projects to pursue, to suggesting which architects to hire, to handing over a new building's keys.

"We understand that project, we understand it from when it was a concept," he said. "From the very beginning."

The distinction Rockwood and Glenn make between program and construction management is key to their arrangement.

State law requires that governmental bodies advertise and solicit proposals before contracting for construction management services and that the number of proposals not be restricted.

Officials at other area school districts say they seek proposals and compare fees when looking to hire construction managers, per state law. Several school districts have provided the Post-Dispatch with documents detailing that process, including summaries of the fees competitors propose in pursuing construction management contracts.

But because Glenn and Rockwood both label Glenn's services program management, the district considers Glenn's role a "professional service, similar to the service a law firm provides to a school district," according to Cranston. "School districts typically don't put out (requests for proposals) every year for legal services."

Matt Menghini, a lawyer who was involved in consulting on the 1993 statute that defines construction management and the rules public entities must follow in obtaining such services, agrees that program management is a professional service. But so is construction management and a range of other related labels, and all are still covered by the statute, he says.

Menghini says the statute was written broadly so that it would define a group of people involved in construction projects who aren't general contractors. Those services include - but are not limited to - advising architects and engineers, making budget estimates, preparing schedules and coordinating the work of all contractors.

"There are people in the industry who like to call themselves program managers or scheduling managers or whatever," Menghini said. "You can call it anything you want, but if it falls within that definition (of construction management), that is what it is."

Susan Goldammer, a lawyer with the Missouri School Boards' Association, said she tells school boards to review the statute's definition of construction management to determine whether services they're seeking fall under the statute.

"One of the biggest penalties that school districts face is lack of public trust and also the trust of district vendors," Goldammer said. "Construction is very competitive and frequently a local kind of service, and the school districts that don't follow the laws to a T frequently find themselves in a bad PR situation and sometimes subject to a lawsuit if they select a construction manager and don't follow the rules."

Menghini said that the statute is less clear regarding just when districts should seek proposals, but that if a public entity hires someone after reviewing proposals and then continues working with that firm when new projects arise without soliciting proposals, that's likely violating the intent of the law.

Borchers, Rockwood's superintendent, said in an email Friday that the board's process in securing program management services would be "open and transparent" in the future.

"As the superintendent, it is my responsibility to work with the Board on ways we can improve this procedure and process," he said. "I have already begun reviewing this with them."

A SATISFIED BOARD

Rockwood's allegiance to Glenn was evident in 2009, the last time district officials took a look at possible competitors.

The district advertised for proposals on a website and received responses from three firms.

A selection committee including Assistant Superintendent Griffith and the district's chief financial officer examined the qualifications of each and chose Glenn as their recommendation to the School Board. They did so without examining whether Glenn's competitors offered lower fees. Such information was in envelopes, unopened and later destroyed.

When Griffith presented the recommendation to the board, he extolled the merits of Glenn Construction, saying the firm had great knowledge of the district and a strong relationship with district officials .

The bidding process, he said, presented alternatives, but not ones the board should consider just yet.

"If Glenn Construction retires, we have some people in the wings, I think, who could be a very good fit for us," Griffith said.

The board approved the recommendation unanimously with little discussion of costs. One board member asked how Glenn's fees compared with their past fees.

"Exactly the same," Griffith responded.

No one asked whether the other companies were cheaper.

The completed contract, like many before it, set the stage for a continuing relationship with Glenn - this time for a possible 2012 bond issue.

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