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INVESTIGATION: Firm Reaps Over $200M, Gets Large Portland Public Housing Contracts 81% of the Time

Thursday, December 18, 2014

 

Bud Clark Commons: $30 Million public housing construction project awarded Walsh Construction in 2008. Photo credit: Home Forward

A local construction firm has been awarded large Portland public housing contracts 81 percent of the time that it bids on them.

A GoLocalPDX investigation has found that Portland-based Walsh Construction and its affiliates have been awarded 9 of the 11 public housing construction contracts, valued at $5 million or more, that they have competed for since 2003, according to data released from public records.  

Home Forward, formerly known as The Housing Authority of Portland, has awarded Walsh and affiliates over $240 million from these contracts, according to data released to GoLocalPDX.  Two of Walsh's nine contracts had no other bidders.  Another two went to a partnership Walsh created with another company, called O’Neil/Walsh Community Builders.

“Walsh is shrewd,” said James Posey, owner of Work Horse Construction Metro Inc. “It's about who you know in this game.“

Posey, who is chair of the Equity Committee at the Portland Chapter of the Coalition of Black Men, criticized said that the process for selecting large construction contracts was unfair, especially to minority owned firms.

"They're making a killing off these poverty programs," Posey said. "None of these agencies have any transparency."

“No Conflict of Interest”

Home Forward does not dispute the findings. The agency, responsible for funneling federal, grant and other dollars into public housing for the region’s poorest residents, readily admits the success rate begs the question how does Walsh win so many contracts?

“It’s a great question. We ask ourselves that internally, a lot,” said Mike Andrews director of development at Home Forward. “The numbers tell the story.”

Home Forward could not answer the question only to say that Walsh has become an expert in building public housing over a period of decades and knows how to meet the criteria and cost of public housing projects better than anyone else.  Others says the process for selection is unfair.

While Walsh Construction did not respond to requests for comment in time for publication, Home Forward said the process they use to select contractors is run by the book.

“There’s certainly no conflict of interest,” Andrews said. “We are aware of who we use, but we try to have an open and fair competition.”

Who Chooses?

The selection of contractors on large projects can be as simple as lowest bidder. But often it is a complex process where a selection committee weighs each applicant’s proposal on their own merits. Proposals for a large job get judged against criteria that include cost and factors like partnerships with workforce training programs and subcontracting work with minority-owned businesses.

Examination by GoLocalPDX of Home Forward’s selection committee documents over the last decade found that often committees were stacked almost exclusively with Home Forward or City of Portland staff.  Home Forward allowed committee members to vote anonymously up until a little over a year ago.

Stevenson said that all selection committee members were required to sign a conflict of interest disclosure statement.

Fairness Question

New Columbia: A massive 800-unit neighborhood. Walsh was awarded almost $100 million for the project in two phases. Photo credit: Home Forward

Erin Grodem is marketing manager for R&H Construction, a company that has been awarded three large Home Forward construction contracts in the last five years.

Grodem wouldn’t comment on why Walsh was so successful at getting large Home Forward contracts.  But when asked if she believed Home Forward’s selection process was fair she said, “Yes, I believe it is.”

Not everyone agrees.

“Is it fair? Probably not. But what’s fair? Nothing,” said Jeanna Woolley a project management and development consultant.

Woolley sat on a Home Forward selection committee that awarded the $24 million Humboldt Garden public housing project in North Portland to Walsh in 2008.

“I was asked to sit on the committee because there were minority contracts involved,” said Woolley, who is herself, a minority contractor.

Woolley, like almost everyone GoLocalPDX interviewed, said Walsh does excellent work.  But she said that Walsh’s dominance of contracting makes it harder for other firms, especially minority-owned firms, to get a leg up in the market.

“It works against other folks that are trying to get in the mix,” Woolley said. “There are [minority firms] who are capable of doing the work … and they’re struggling mightily. All these public agencies should be mindful of how they are doing business when they are doing public contracts.”

In terms of delivering business to minority-owned firms, Home Forward actually goes above and beyond its own goals, according to Berit Stevenson, procurement and contracts manager for Home Forward.

“We define 'target businesses' as minority-owned, women-owned, or emerging small businesses,” said Stevenson. “For contracts over $200,000, our aspirational goal is for 20 percent of a project’s contracting dollars to go to businesses in these categories.  We have met or exceeded these goals on all of our big projects.  In some cases, that number has been more than 40 percent.”

Posey, who has said he's worked for Walsh in the past, believed the opposite.  He thought the system was rigged in favor of Walsh and its political connections.  Despite that, he didn’t blame the company or its former principal Bob Walsh, for racking up the contract

“He should not be faulted,” Posey said. “The guys who ran Home Forward should be.”

Creating a Niche

Projects done for Home Forward by Walsh over the last decade have varied widely.

In 2003, Walsh won the first of three contracts, totally $110 million, to tear down the 82-acre Columbia Villa public housing project in North Portland and rebuild the area as the 825-unit New Columbia neighborhood.  In 2014, the company took on a $5.9 million renovation of the 110-unit Sellwood Center Section 8 apartment building in Southeast Portland.

When they began the firm in 1961, brothers Bob and Tom Walsh worked out of a Chevy van and kept their records in a shoebox.  Over the years firm made subsidized housing a staple of their brand.

In 2013, the firm had 300 employees with offices in Portland, Seattle and Tacoma, with gross billing close to $232 million, according to a report in the Daily Journal of Commerce.

“Walsh created a niche [in subsidized housing],” said LeLand Jones of the U.S. Housing and Urban Development Agency’s regional office in Seattle Wash. The agency channels federal dollars to agencies like Home Forward. “The outcome we’re looking for [at HUD], is a process that works the way it was designed to and that delivers the product. Walsh has done pretty good.  Every time they’ve been involved, they’ve delivered.”

Rendering of Stephens Creek Crossing, one of only two constructions contracts with Home Forward in the last 11 years that Walsh has lost. Photo Credit: Home Forward

While Posey and other critics say that the process has shut out other firms and minority-owned businesses, others point to projects like Stephen Creek Crossing, a $35 million public housing project built in Southwest Portland, as an example of best practices.

R&H Construction partnered with minority owned Colas Construction LLC and won the Home Forward contract over the O’Neil/Walsh Community Builders in 2011.

“It’s been a great partnership,” Grodem said of Colas.

The two firms have been working together for over four years and have worked on both private and public sector projects, according to Grodem.

Jones said that more than a decade ago, before HUD started awarding big grants like HOPE VI, it was common for housing authorities around the country to work with the same contractor over and over again.

“So, on one hand, I could say, ’81 percent is terrible,’” Jones said of Walsh’s track record. “But the most recent HOPE VI contract was done by R&H/Colas. So maybe that’s a good sign.  Can you say there’s a little too much concentration? You could argue that. But maybe the program is moving some new players into the horizon.”

 

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