Lawsuit filed to void state lab construction contract at EBDI

Daily Record Business Writer//February 6, 2012

Lawsuit filed to void state lab construction contract at EBDI

By Melody Simmons

//Daily Record Business Writer

//February 6, 2012

A lawsuit seeking to void the $170 million construction contract awarded for a new state Department of Health and Mental Hygiene lab at the East Baltimore Development Inc. site was filed Monday as plaintiffs charge that the contract was awarded to Turner Construction Co. without competitive bidding.

The 82-page suit was filed in Baltimore City Circuit Court against the state Department of General Services, DGS Assistant Secretary Michael Gaines, the Maryland Economic Development Corp., Forest City-New East Baltimore Partnership LLC and Turner Construction by Arnold M. Jolivet, his wife, JoAnn, the Maryland Minority Contractors Association Inc., and JCM Control Systems Inc., a minority-owned business based in Baltimore County. Jolivet is managing director of the contractors association.

The group is seeking $12 million in damages.

“Rather than issuing a request for proposals as required by [state law], DGS … issued a request for expression of interest for a private developer to design and build” the Department of Health and Mental Hygiene lab at the EBDI site, the lawsuit states. “DGS failed to advertise the subject request for expression of interest to all qualified and interested” parties.

The lawsuit also charges that on Jan. 20, 2010, the Department of General Services awarded two contracts without competitive bidding to design, develop and construct the DHMH lab — one to Forest City for and the other to the Maryland Economic Development Corp., the state’s development agency. That set up a “smoke screen as a deceptive mechanism for purposes of retaining and maintaining complete control over the subject contracts” of the DHMH building, the lawsuit states.

In addition, the suit charges, the DGS awarded a 20-year lease to MEDCO for the lab for an annual payment of $15.3 million, also without competitive bidding.

“It was somewhat of a complicated process,” said Neal M. Janey, attorney for the plaintiffs and a Baltimore City Solicitor during the administration of Mayor Kurt L. Schmoke. “But it was not open to a competition. Not a selective participation.”

Gaines said in an email he was unable to comment because he had not seen the lawsuit.

Robert C. Brennan, executive director of MEDCO, said the project, awarded in December, was competitively bid.

“It was a solicitation,” Brennan said of the process to build the new lab. “It was public. Mr. Jolivet also put in a public information act request last month, and we are getting the documents together for that. I’d like to think that once he receives that information, he’ll get a better understanding of the project.”

Scott Levitan, senior vice president for Forest City-New East Baltimore Partnership, the master developer of the $1.8 billion redevelopment of Middle East, did not respond to a request for comment.

Construction of the new lab at the 88-acre site was expected to begin last month, state officials said.

The lab was originally planned for a suburban location, but in 2009 Gov. Martin O’Malley directed the state to build it at the EBDI site. The site, at Ashland Avenue near Broadway, was originally cleared to hold a private biotech building, but that plan has stalled, and only one of as many as five planned life sciences buildings has been built in Middle East.

The cost of the new DHMH lab is expected to be $184 million.

The lawsuit filed Monday states that while Turner Construction was one of three bidders for the project along with Hensel Phelps Construction Co. and Barton Malow Co., the pre-existing noncompetitive development agreement between the DGS and MEDCO “unlawfully delegated” the authority to select the DHMH lab’s general contractor outside of state procurement laws.

Turner Construction was endorsed by DGS and MEDCO officials, but not Forest City executives, MEDCO’s Brennan said in December.

The argument is similar to the central focus of a lawsuit now in litigation in Baltimore City Circuit Court filed by a group of downtown property owners regarding DGS and the Maryland Department of Transportation in the planned redevelopment of State Center, Jolivet said. That suit, now in discovery, charges the state violated its own procurement rules when it awarded a development contract to a private group without competitive bidding for the $1.5 billion mixed-use redevelopment.

Jolivet said Monday the lawsuit was justified because the agreement also excluded qualified minority contractors from bidding on the DHMH lab.

“We have never heard of a state agency building a new state building without competitive bidding,” Jolivet said. “We believe the state agency should not have their hands in the procurement process.

“We feel very strongly that this lawsuit was needed. It was timely. And it will correct some systematic problems that the state DGS has in awarding state contracts.”

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