Mortenson, Trammell Crow reach $9M settlement on Colorado Convention Center project

UPDATE: Jan. 5, 2021: The city and county of Denver have entered into a $9 million agreement with Mortenson Construction and Trammell Crow to settle civil claims for violating pubic procurement rules related to the Colorado Convention Center project.

The settlement agreement requires:

A $9 million cash payment ($4.5 million from each contractor), which will reimburse the project for damages and resolve civil claims.
Mortenson to not bid on city contracts for three years.
A public apology to the city.

In a written statement sent to Construction Dive, Dan Johnson, CEO and president of Mortenson, said: “Reaching this resolution with the city of Denver is an important step in moving forward. Mortenson has served the people of Colorado and has been a part of the Denver community for nearly 40 years. Our actions in the procurement of the Colorado Convention Center project were contrary to who we are as a company, inconsistent with our longstanding reputation and were completely unacceptable. We are truly sorry, and we have accepted responsibility for our role in what transpired.”

UPDATE: May 1, 2020: Colorado Attorney General Phil Weiser announced this week a second settlement related to bid-rigging allegations on the Colorado Convention Center expansion project.

Trammell Crow, former program manager for the expansion, will pay $250,000 to the state to settle charges that it and former employee Michael Sullivan improperly provided Mortenson with confidential information that it did not share with other bidders.

Weiser also said that Trammell Crow benefited from Mortenson's work after Sullivan asked the general contractor for help in preparing estimates and interview questions to use in the convention center procurement process and presented the information as his own.

The attorney general’s office is still investigating Sullivan.

Dive Brief:

Colorado Attorney General Phil Weiser announced this week that the state has settled charges of alleged bid-rigging on the $233 million Colorado Convention Center project with general contractor M.A. Mortenson Co. for a total of $1.3 million. Mortenson has agreed to pay $650,000 to the Colorado Department of Law and donate construction services for a COVID-19 project valued at $650,000 or more in the Denver area.
In addition to the cash payment, the agreement requires Mortenson to cover all construction expenses for the as-of-yet unidentified COVID-19 project, including design costs, supervision, labor, materials and change orders that increase the project cost up to 15%. As a condition of the agreement, the officers and employees involved in the alleged bid-rigging must be actively involved in the work or management of the COVID-19 project.
The agreement settles and ends the AG's investigation into Mortenson's actions while bidding on the convention center, and the general contractor's willingness to settle is not an admission of guilt.

Dive Insight:

The investigation into former project manager Trammell Crow and its representative on the convention center project is still pending. The allegations are that Trammell Crow’s rep passed confidential information about the project and bidding process to Mortenson.

The additional terms of the settlement include that Mortenson:

Take steps to ensure future compliance with the Colorado Antitrust Act;
Disclose that it is has made this agreement with the AG's office to potential clients when bidding on projects for Colorado local or state government entities for the next two years;
Disclose the same information to state and local government clients on successfully bid and pending projects for the last two years;
Strictly comply with all state procurement regulations and processes in the future;
Retain an independent construction expert to monitor the COVID-19 project;
Maintain a director of compliance to ensure Mortenson meets its obligations under the settlement;
Promote the use of minority- and women-owned businesses on public projects in Colorado; and
For the next three years submit a certification of noncollusion with each bid to state or local public agencies.

The employees involved in the convention center project must:

Make a presentation on ethics and antitrust compliance issues on public projects to the Construction Industry Ethics and Compliance Initiative (“CIECI”) Best Practices Forum that will take place in Denver in October;
Make an annual presentation for three years at a four-year Colorado college or university on the topic of ethics as it relates to the bid-rigging allegations; and
Earn a Certificate in Corporate Social Responsibility offered by the University Of Colorado Leeds School Of Business within two years.

Dan Johnson, Mortenson's president and CEO, issued a statement addressing the settlement. "While we have resolved the Colorado Convention Center matter with the Colorado Attorney General without adjudication or finding of liability, our involvement in this matter was neither consistent with who we are as a company nor our longstanding reputation. Simply put, we did not meet our own expectations. Striving to do the right thing means learning from times when we may fall short.

"We are committed to the assurances outlined in our agreement and have made several changes to our compliance and training programs as a result. We will also share the lessons we’ve learned with others in our industry," Johnson continued. "The most immediate example of how important this relationship is to us is our commitment to the Attorney General that Mortenson will donate construction services support to help Colorado’s efforts to battle the COVID-19 pandemic."