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Firm Under Fire for Terminal Estimate Says It Was Correct

December 02, 1988|JEFFREY A. PERLMAN and MICHAEL FLAGG | Times Staff Writers

Breaking a monthlong silence, the consulting firm under fire for allegedly underestimating the cost of the new John Wayne Airport passenger terminal by $18 million insisted Thursday that its estimate had been correct, that construction bids had been inflated and that the county is being overcharged.

Concord-based Lee Saylor Inc. estimated the cost of the new terminal at $40.8 million, but five contractors delivered bids that ranged from $59.8 million to $66 million.

"It's not a $59-million building," said Lee Saylor, president of the firm. "We think the county got a high price. The contractors ran scared and priced themselves up to a comfortable level."

That theory was disputed Thursday by the construction firm on the project and airport and county officials, who said they do not believe construction bids were inflated.

County Budgeted $39 Million

The county originally budgeted the project at $39 million. Leason Pomeroy Associates, the airport architect, hired the Saylor firm to provide cost estimates so that the cost of the terminal design would not exceed the county's target.

The cost of the new terminal became an issue recently when county officials accused the architect of mistakes and delays that resulted in cost overruns and a need to cut more than $10 million in the terminal's price tag.

The county is trying to cut costs by eliminating items such as marble floors and by redesigning the structural support for the curved roof. The building now is expected to cost something more like $48 million, part of a larger $300-million expansion of the airport that constitutes the largest public works project in county history.

But after trimming such niceties, the county will end up with a "bare-bones" building, Saylor said.

Many of the people interviewed Thursday said privately that they believe the closeness of the bids on the terminal by the contractors precluded large amounts being hidden in the bids to cover possible late penalties.

On the other hand, construction estimates are rarely that far off, particularly ones made by prominent firms such as Lee Saylor. Lee Saylor's estimate was so far off as to be almost inexplicable, say experts in the construction industry.

A member of the Board of Supervisors said Thursday that Saylor was questioning the motives of the county airport staff.

"Obviously they (Saylor officials) are impugning the character of the airport manager," said County Supervisor Thomas F. Riley, whose district includes the airport. "Neither I nor any other member of the board would accept that. . . . I'm not prepared to criticize our people until I find out what happened."

In a wide-ranging interview Thursday, Saylor insisted that his $40.8-million cost estimate for the new terminal was "right on the money," given the information on which it was based. He said his firm advised the county in writing not to accept any of the bids because they were too high. He added that his firm was refused a chance to adjust its cost estimate after 240 additional architectural drawings were completed in May.

Saylor said he believes, but cannot prove, that construction bids were inflated to cover anticipated lawsuits and the $25,000-per-day fines that contractors would have to pay the county if they didn't meet the airport terminal construction deadlines.

A spokesman for Taylor Woodrow Corp., the low bidder, said Thursday that it had not added any additional money to its bid to cover expected penalties, or "liquidated damages," as they are called in the construction industry.

The company declined further comment, but William Ostfeld, a Taylor Woodrow vice president, said the firm would issue a joint statement with county officials today.

According to Saylor, Taylor Woodrow's contract mandates completion by the end of February, 1990, despite Saylor's written advice to the county that the construction schedule is 6 months too short. The county plans to open the terminal to the public on April 1, 1990.

Saylor on Thursday released copies of an Aug. 5 letter sent by Saylor Vice President M. Roy Stauffer to architect Pomeroy, copies of which went to county officials on Aug. 8.

In that letter, Stauffer stated that Orange County-based contractors refused to bid on the project because of the tight construction schedule and the potential fines. The letter added that a lack of such bid competition helped boost the project's price tag. "We feel that the county is paying a premium price and that given a different set of conditions, a substantial price reduction could be realized," Stauffer wrote.

Assistant Airport Manager Jan Mittermeier said that Saylor's statements about inflated bids imply "collusion" among contractors and "I don't think that's possible."

"We considered whether, in fact, we should deny the bids, but we decided that would cost us a lot of time, and we did not know whether, in fact, that would buy us a cheaper building," she said.

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