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After DIA’s Great Hall construction issues, the Auditor’s Office says airport officials don’t have enough oversight of big projects (Local Tips & Reviews)

In 2017, the Denver International Airport (DIA) began a 34-year contract with a company that would complete massive renovations and run retail at the airport. But that partnership fell apart in 2019 because of controversies, delays and cost overruns.

It cost DIA $184 million to end the partnership. Now, DIA expects to finish the project with a new firm, Hensel Phelps, in 2028 for a total of $2.1 billion.

But concerns remain about how the airport handled the Great Hall’s construction problems and how it contracts for big projects, the Denver Auditor’s Office said in a report released Thursday.

“Denver International Airport’s lax approach to construction oversight continues to put it at risk of overspending, a lack of transparency, and unfair contracting,” wrote Auditor’s Office spokesperson Tayler Overschmidt in a Thursday press release.

Airport officials say DIA needed to respond quickly to an unexpected and complicated situation following the Great Hall contracting dispute, and that the airport already does some of the suggestions outlined in the report, while disagreeing with others. DIA accepted just three out of the auditor’s 10 recommendations.

“DEN assuming control from the former developer was challenging and there was no precedent to follow,” wrote DIA spokesperson Stephanie Figueroa in a statement responding to the report. “With a mostly demolished terminal, there were safety concerns for airport users and employees.  As a result, DEN focused on quickly mobilizing a new contractor. The process was not typical and it was expedited, but it was competitive and followed all procurement rules.”

The audit report said DIA struggled with how to manage the Great Hall project and shied away from transparency.

According to the report, DIA officials said choosing a public-private partnership with less airport control led to some of the problems with the original contractor. After expediting the selection process for the second contractor, the report said airport officials were not transparent about the decision.

“Airport executives directed managers at the time to limit documentation related to the project because of the number of open records requests the airport received from the public,” wrote the report.

Auditor Timothy O’Brien criticized this decision for damaging trust with the public. “Intentionally limiting documentation to avoid public scrutiny is a clear red flag that there is something wrong with this process,” he said in the report.

In a letter responding to the report, DIA Senior Vice President Michael Sheehan disagreed with this account and the audit’s recommendations around documentation.

“We are not aware of a directive from Airport Management at that time directing staff to minimize records due to the number of open records requests; rather the focus was on a swift, efficient, fair and competitive selection process to get construction restarted as soon as possible,” Sheehan wrote.

A model of the future of Denver International Airport's great hall. those things up top will one day be security, leaving the north side for shops and hangouts. Oct. 28, 2022.
Kevin J. Beaty/Denverite

The audit also took issue with the way the airport manages its projects and subcontractors.

The report said Hensel Phelps, the current contractor, awarded some subcontracts for the Great Hall project without a competitive bidding process, and that other subcontracts may not have gone to the lowest bidder, which is required in the contract with Hensel Phelps.

The auditor’s office also criticized the airport for allowing Hensel Phelps to subcontract $242,000 worth of work with itself. It’s a practice accepted in construction, but the report said airport officials did not know about some of the work, which raised concerns about increasing costs and a lack of oversight.

“I am surprised that airport leadership does not see the risk of leaving its contractor to make decisions that will impact its own profit,” O’Brien said Thursday. “I am puzzled by the refusal to strengthen this oversight.”

DIA officials agreed to recommendations around better documentation regarding subcontractors but disagreed with other suggestions arguing DIA already does a lot of work overseeing subcontracting.

In response to the audit, airport officials emphasized that the Great Hall project remains on track and on budget with the new schedule.

“Passengers are already seeing the benefits of the terminal capacity expansion with check-in facilities and soon will enjoy these new security facilities,” Figueroa said.

But O’Brien remains unconvinced. As the airport continues to grow, major construction projects will likely continue to be a fixture at DIA.

“I had truly hoped for better,” he said in a statement released alongside the audit report. “I hoped the airport would learn more from the disappointment of the first iteration of the Great Hall project, but we are still seeing a clear lack of oversight and a lot of opportunity for wasting public resources.”

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