The Incredible Expanding Contract

More than a decade ago, the city hired the engineering firm CRS Sirrine to design storm sewer and street reconstruction improvements on East Little York and Northline. The $400,000 contract covered labor as well as a variety of services, including soil investigations and topographic surveys. The deal was approved by City Council in December 1986.

A little more than a year later, the city agreed to a $60,000 supplement to the contract. The reason: Construction estimates had increased by more than $700,000, and since the design fee was calculated as a percentage of the construction costs, CRS Sirrine was owed extra, even though its workload remained basically the same.

A construction contract was issued to Holt & Sons Construction for the storm sewer phase of the project, and work commenced in June 1988. But according to city documents, Holt ran into financial problems and defaulted on the contract, and the work had to be mopped up in 1990 by another company. Because of the complications, the storm sewer on East Little York was deleted from the project.

Two years later, the city decided to revisit the project. CRS Sirrine, which had since changed its name to CRSS Civil Engineers, proposed to update the design and add a few traffic-control items for $128,000. Senior design engineer Parke Reid, who was managing the project from the public works department’s end, found the figure too high for several reasons, which he noted in a memo to his boss. After two months of dickering, Reid ratcheted the design fee down to $60,000, plus $10,000 for surveying and other services. That contract was signed in September.

The city continued to make minor revisions to the project, and in April 1993, CRSS proposed tacking another $95,000 onto the job. Reid met with company officials in May, according to his notes, and “informed them that this proposal was too high.” In July, the company (which had again changed its name, to WSBC Civil Engineers) submitted a revised proposal, this time for $110,000. Again Reid argued that because many of the revisions were minor or unnecessary, the costs were grossly inflated. Finally, he suggested to his boss, Philip Barnard, that the redesign be done in-house. “I feel you should step in if you decide to lower this cost,” Reid wrote.

The actual construction of the project sat on the back burner as the city waited for the funds to materialize. WSBC periodically submitted proposals to redesign the project, and Reid continued to object. “It was ridiculous,” he recalls. “I wasted more than a year fighting with them.”

Finally, Reid says, he’d had enough. The project was handed over to Rust/Lichliter Jameson, the consultant for the Street and Bridge Division of the public works department. “I was kind of taken out of the loop at that time,” he says. “I haven’t seen [the project] since then.”

After Reid got out of the way, negotiations evidently went more smoothly. In February of this year, WSBC met with new project manager Giti Zarenkelk to discuss its latest proposal, which totaled $337,000. Further negotiations upped the figure to almost $450,000.

John Hatch, the head of the Street and Bridge Division, offers conflicting explanations for why WSBC got the latest contract and why it ballooned over the years to near-epic proportions. “Because of the institutional knowledge, it made sense to go back to [WSBC],” he says.

At the same time, Hatch says, so much has changed in the vicinity of the project that the old data was practically useless. He disputes the claim that much of the design work consists of minor revisions of work already done by WSBC. “We had to start from scratch to do the design,” he says.

Others familiar with the neighborhood dispute the latter assertion. Nor do the documents support the notion that scratch is the place from which WSBC will start.

If anything, the evidence indicates that WSBC’s latest contract may be seriously inflated. A May 28 review of WSBC’s proposal by the consulting firm Dannenbaum Engineering noted various concerns, including that “a number of the tasks have man-hours which appear to be too high; a number of the tasks are allocated to senior staff where it appears that junior staff would be appropriate; several tasks appear to be unnecessary.”

Furthermore, Dannenbaum wrote, “WSBC’s average salary is $82.97/hour. It is our experience that the average salary range should be $68/hour to $72/hour.”

If anyone paid attention to the consultant’s concerns, there’s no record of it. (Zarenkelk would not discuss the matter.) WSBC got the contract for almost $450,000, slightly more than the proposal reviewed by Dannenbaum. By the time the project is completed, WSBC will have collected almost $1 million for the design — unless they come back to the table for another helping.

While the city was being generous to WSBC, the company was generous in its support of Lanier’s political campaigns, contributing $3,500 toward the mayor’s 1995 election and another $3,000 to defeat the proposed minimum-wage increase earlier this year. Most recently, WSBC tossed $10,000 into the kitty of Rebuild Houston/ Together PAC, which supports Lanier’s positions on the bond and affirmative action referendums on next week’s ballot.

WSBC principal Jeff Collins would not discuss his company’s dealings with the city on the East Little York project.

“We don’t comment on a project without permission from the client,” Collins said.

— Bob Burtman