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Rhode Island Purchase Contract

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 1     STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS
 2
 3     PROCEEDINGS AT HEARING IN RE   :
 4     SENATE COMMITTEE ON GOVERNMENT :
 5     OVERSIGHT                    :
 6
 7                              AUGUST 6TH, 2008
 8                              3:00 PM
 9                              RHODE ISLAND STATE HOUSE
10                              82 SMITH STREET
11                              PROVIDENCE, RI 02903
12
13     MEMBERS PRESENT FOR THE SENATE COMMITTEE ON GOVERNMENT
14     OVERSIGHT:
15     SENATOR J. MICHAEL LENIHAN, CHAIRMAN
16     SENATOR FRANK A. CICCONE, VICE CHAIRMAN
17     SENATOR CHARLES J. LEVESQUE, MEMBER
18     LINDA GEORGE, ATTORNEY
19     KELLY CARPENTER, STAFF
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0002
 1                          I N D E X
 2
 3     WITNESSES:
 4     LOUIS A. DEQUATTRO, JR., ESQUIRE, CHIEF LEGAL COUNSEL AT
 5     DOA AND CHAIRMAN OF THE ARCHITECTURAL, ENGINEERING &
 6     CONSULTANT SERVICES SELECTION COMMITTEE
 7     LORRAINE A. HYNES, PURCHASING AGENT, DIVISION OF PURCHASES
 8
 9     ALSO PRESENT:
10     MICHAEL MITCHELL, ATTORNEY
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14                     RHODE ISLAND COURT REPORTING
15                        747 NORTH MAIN STREET
16                         PROVIDENCE, RI 02904
17                            401.437.3366
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0003
 1                              (HEARING COMMENCED AT 3:18 PM)
 2                              MR.CHAIRMAN: Good afternoon.
 3     This is the August 6th meeting of the Senate Committee on
 4     Government Oversight. We are continuing our discussions
 5     and questioning regarding the use of the Construction
 6     Management at Risk Contract. Case in point in this case,
 7     the University of Rhode Island.
 8                  We again will be following the format used in
 9     the past. We have a series of the exhibits. That we ask
10     in questions which come from or spring from the
11     documents.
12                  In each case, the Committee Legal Counsel
13     will present the exhibits and I will start the
14     questioning.
15                  So at this point, let me first indicate I had
16     Mr. DeQuattro from the Department of Administration and
17     Lorraine Hynes who is more particularly from the
18     purchasing side aspect of the Department of
19     Administration. They have both come before us before.
20     They both sworn and continue to be under oath.
21                  Having that said, I'd ask the committee legal
22     counsel, Ms. George, to introduce those documents.
23                              MS. GEORGE: Thank you
24     Senator.
25                  This is a continuation of the June 26th, 2008
0004
 1     hearing where we reviewed Exhibits A through O, which are
 2     posted on the Oversight Committee's website.
 3                  We are now up to Exhibit P, which is dated
 4     June 6th, 2006. It is memorandum from URI's Technical
 5     Review Subcommittee to the Chairman of the AE&C Selection
 6     Committee recommending that the contract for the
 7     Construction Management at Risk services for the CBLS
 8     building be awarded to Gilbane Building Company for total
 9     fixed fee of $75,000 for the completion of the documents
10     for this construction. Once that is complete the GMP and
11     Construction Management Agreement is negotiated, the
12     University will recommend an increased award to the
13     construction phase fee, not to exceed $3.5 million.
14                  Exhibit Q is the minutes of the AE&C
15     Selection Committee where the committee approves the
16     contract for the CMAR services, the $75,000.
17                  And Exhibit R, dated June 15th, 2006, is the
18     Director of Administration approving the selection of
19     Gilbane as the CMAR at cost of $75,000 for the
20     construction document phase only. Senator Lenihan.
21                               MR. CHAIRMAN: Thank you. Who
22     determined that this procurement needed to go through the
23     AE&C Selection Committee?
24                               MR. DEQUATTRO: Mr. Moynihan
25     would have made that determination.
0005
 1                              MR. CHAIRMAN: Now the AE&C
 2     Selection Committee considered only the $75,000 for the
 3     CMAR services for the Construction Document Phase rather;
 4     is that correct?
 5                              MR. DEQUATTRO: That is
 6     correct, Senator.
 7                              MR. CHAIRMAN: Did URI contact
 8     the Department of Administration Legal Division?
 9                              MR. DEQUATTRO: Not in
10     writing. What happened they actually hired outside
11     counsel to assist them with negotiating the contract. We
12     did get involved at the tail end just prior to our
13     Director signing the contract.
14                              MR. CHAIRMAN: You say you got
15     in the tail end, in what aspect?
16                              MR. DEQUATTRO: More from a
17     procedural aspect that were being procured that we had the
18     necessary documentation for the Director to find the state
19     that procurement.
20                              MR. CHAIRMAN: Who provided the
21     state with that last minute review?
22                              MR. DEQUATTRO: I did.
23                              MR. CHAIRMAN: The minutes from
24     the June 14th meeting, indicate the University will return
25     to the committee after successful negotiation of the
0006
 1     guaranteed maximum price and the Construction Management
 2     Agreement. URI didn't return to the AE&C Selection
 3     Committee. Why not?
 4                              MR. DEQUATTRO: Well, if you
 5     look at the Director's approval, her approval it didn't
 6     require them to come back.
 7                              MR. CHAIRMAN: Well, the
 8     construction phase of the project, including the
 9     guaranteed maximum price of the contract, were never
10     reviewed, recommended or approved by the AE&C selection
11     committee. Correct?
12                              MR. DEQUATTRO: Well, hiring
13     Gilbane to be the Construction Manager for the project,
14     that was approved. As far as the $44 million, that
15     wouldn't have been approved by A&E, that is construction
16     services rather than design and engineer which falls under
17     the jurisdiction of A&E.
18                              MR. CHAIRMAN: Well the AE&C
19     Committee was making a decision on the, I guess the
20     competence or the ability of the entity to perform a
21     function. Since the only thing that was being dealt with
22     at this point was $75,000 for the Construction Document
23     Phase.
24                              MR. DEQUATTRO: Well they were
25     requesting just approval of the 75,000 for a PO. The
0007
 1     reason they made the request that way was the award -- the
 2     procurement was supposed to be done in three phases,
 3     design phase, construction documents and then construction
 4     management phase.
 5                  URI reserved the right and the RFP not to go
 6     forward with the second phase, if they felt a different
 7     route of construction would be better. But we still
 8     determined the Gilbane was qualified to handle the whole
 9     entire project at that point in time. It was just a
10     matter of what the issue of the PO was 75,000 or 3.5
11     million.
12                              MR. CHAIRMAN: So the AE&C
13     Committee took a formal vote on the Gilbane in terms of
14     the competence for the entire package.
15                              MR. DEQUATTRO:   Correct.   That
16     is right.
17                              MR. CHAIRMAN: I am a little
18     concerned here because this presents that a potential
19     appearance that can be best be summed up by asking a
20     question like is it the general practice for a
21     procurement through the AE&C Selection Committee that
22     procurement is approved for $75,000 and expanded by the
23     user agency to 50 million with no further review?
24                              MR. DEQUATTRO: Well, to take a
25     step back again. What the A&E was responsible any ways
0008
 1     the design component of it and service part of it, which
 2     would have been the whole bid of 3.5 million.
 3                  The 44 million you can consider that the
 4     construction which wouldn't fall under the jurisdiction of
 5     A&E anyway.
 6                              MR. CHAIRMAN: Who would review
 7     that? The difference between the 3.4, 3.5 million and the
 8     balance of the project.
 9                              MR. DEQUATTRO: The user agency
10     at that point in time and then the final contract would be
11     reviewed by the Director of Administration.
12                              MR. CHAIRMAN: This review by
13     DOA, can you explain specifically in this particular case
14     what was the form of that review and who was involved.
15                              MR. DEQUATTRO: My
16     understanding is that Mr. Moynihan would have worked along
17     with URI purchasing and Paul Depace as they bid out the
18     trade contractors, the $44 million price that agreed upon.
19                              MR. CHAIRMAN: Would
20     Mr. Moynihan have forwarded his recommendations or
21     rationale at explanation to the Director?
22                              MR. DEQUATTRO: I don't believe
23     so. I think that the rationale, Jerry just overseen in
24     conjunction with URI learning what they did, how they
25     procured the 44 million. And that was the rolled up into
0009
 1     the contract that would be signed by the Director of
 2     Administration. I don't believe Jerry would have done
 3     anything beyond that.
 4                              MR. CHAIRMAN: From what basis
 5     would the Director then have the ability to make the
 6     judgment and approve?
 7                              MR. DEQUATTRO: To be honest
 8     with you, because URI has their own division of capital
 9     projects and they have their own purchasing division. I
10     think that at that point in time to buy in the state you
11     need the Chief Purchasing Officer to sign that contract.
12     The contract was signed by DOA, Bob at URI and Gilbane.
13                  So by Mr. Weygand signing the contract
14     basically certified that URI did all of the their due
15     diligence.
16                              MR. CHAIRMAN: She nor those
17     immediately responsible to her would not have engaged in
18     the review or presented the results of that review to her.
19     But rather her signature was a legal necessity pro forma?
20                               MR. DEQUATTRO: In that case,
21     yes.   Correct.
22                              MR. CHAIRMAN: Does DOA have
23     written policies and procedures for procuring alternate
24     delivery methods such as a CMAR?
25                              MR. DEQUATTRO: Beyond what was
0010
 1     in the regulations, no.
 2                               MR. CHAIRMAN:    Do you have any
 3     now?
 4                               MR. DEQUATTRO:    Beyond what is
 5     the regulations, no.
 6                              MR. CHAIRMAN: Internally, do
 7     you have any standardized process whereby DOA deals with a
 8     project of this kind?
 9                              MR. DEQUATTRO: That would
10     probably be a question better suited for Mr. Bob Brunell
11     who handles capital projects at DOA. So he supervises all
12     of the construction that would come through DOA. And he
13     would be able to provide you with their thought process
14     and how they determine to use one method over another.
15                              MR. CHAIRMAN: What is his
16     title, sir?
17                              MR. DEQUATTRO: I don't know
18     his title off the top of my head. I could provide it for
19     you.
20                              MR. CHAIRMAN: Could you
21     please?
22                              MR. DEQUATTRO: Absolutely.
23                              MR. CHAIRMAN: Was Mr. Brunell
24     involved in this particular procurement?
25                              MR. DEQUATTRO: No, he was not.
0011
 1                              MR. CHAIRMAN: Ms. George.
 2                              MS. GEORGE: Exhibit S, dated
 3     August 23, 2006, is approximately two months after the
 4     Director approved Gilbane for the CMAR Contract. On
 5     August 23, 2006, the memorandum of understanding was
 6     signed -- rather not a memorandum of understanding for the
 7     Construction Management at Risk Contract for the
 8     construction document phase had a cost not to exceed
 9     $75,000 for 22 weeks. Senator Lenihan.
10                              MR. CHAIRMAN: Was this
11     memorandum of understanding ever reviewed by anyone at
12     DOA?
13                              MR. DEQUATTRO: I did not
14     review it. I am not sure if anybody else.
15                              MS. HYNES: I am not aware of
16     that who did review it, Senator.
17                              MR. CHAIRMAN: You don't have
18     a, according to your testimony, other regulations you
19     don't have a written policy and procedure for procuring
20     alternate delivery methods. Do you have anything within
21     the Department of Administration for dealing with this or
22     in this case reviewing the memorandum of understanding?
23                              MR. DEQUATTRO: I don't believe
24     we have anything in writing. The general practice would
25     be the buyers and the Purchasing Division had a project in
0012
 1     front of them that required review of a contract,
 2     typically that will be sent out to Legal Division to
 3     review. General practice.
 4                               MR. CHAIRMAN: Was it done in
 5     this case?
 6                               MR. DEQUATTRO: This particular
 7     memorandum of understanding, nobody in legal reviewed
 8     this.
 9                               MR. CHAIRMAN: Was that a
10     matter of deliberate decision or was that just the way it
11     came out?
12                               MR. DEQUATTRO: I am not sure
13     why it didn't make it to the Legal Division.
14                               MR. CHAIRMAN: That reference
15     to the Legal Division, that would have been done by the
16     buyer?
17                               MS. HYNES: In this case it
18     would have been Jerry Moynihan.
19                               MR. CHAIRMAN: If that was done
20     and legal provided that review, would they communicate
21     their findings or their recommendations to the, say the
22     buyer in this case, in a written format?
23                               MS. HYNES: It actually would
24     be in the term of the contract itself. The agreement
25     itself would be forwarded to the CPO, the Chief Purchasing
0013
 1     Officer, for the signature. And those discussions would
 2     happen if there was any concern by the Chief Purchasing
 3     Officer by the agreement that were going to signed. So
 4     those discussions would happen at that level.
 5                               MR. CHAIRMAN: So I am going to
 6     follow this. The buyer decides that there is some legal
 7     questions here, he or she then communicates with the Legal
 8     Division, I am assuming this is a formal process in the
 9     sense of a letter or e-mail requesting that they take a
10     look at proposal. Legal does that, again I'm just going
11     through a typical case, let's assume that legal decides,
12     yes there are some issues involved here. What happens
13     next?
14                               MR. DEQUATTRO: Normally when
15     the Legal Division we will have discussions with the
16     parties involved to put together the document to figure
17     out all of the facts and circumstances provided, make
18     decision on whether it needs to be modified or changed and
19     communicate that with the vendor.
20                               MR. CHAIRMAN: They would have
21     a discussion with all of the parties involved in
22     developing the agreement?
23                               MR. DEQUATTRO: All of the
24     necessary parties, yes.
25                               MR. CHAIRMAN: Who would that
0014
 1     be in this case?
 2                              MR. DEQUATTRO: In this case,
 3     in this particular case the folks at URI communicate with
 4     the folks at Gilbane and possibly the buyer at DOA. But,
 5     most likely here URI folks Gilbane directly.
 6                               MR. CHAIRMAN: Did that
 7     discussion or that type of discussion take place in this
 8     case?
 9                               MR. DEQUATTRO: For this
10     particular memorandum of understanding, I am not aware of
11     any of those discussions that came from DOA.
12                               MR. CHAIRMAN: At the time
13     these were taking place, what was your position?
14                               MR. DEQUATTRO: At this time,
15     Deputy Chief Legal Counsel. I am charged with the group
16     that would typically deal with construction contracts or
17     any type of procurement contract. If they did, it would
18     have came from my office.
19                               MR. CHAIRMAN: Did it?
20                               MR. DEQUATTRO: It did not.
21                               MR. CHAIRMAN: So reasoning
22     back from what you said before, it did not back before
23     your office that was testified and referred to legal?
24                               MR. DEQUATTRO: Correct.
25                               MR. CHAIRMAN: Does this
0015
 1     memorandum of understanding represent the contract between
 2     URI and Gilbane for the construction document phase?
 3                              MR. DEQUATTRO: Yes.
 4                              MR. CHAIRMAN: What about the
 5     purchase order?
 6                              MR. DEQUATTRO: I apologize. I
 7     guess the full contract would be the MLU purchase order,
 8     the RFP, the solicitation bid submission. Various
 9     documents would be of referred to as the understanding.
10                              MR. CHAIRMAN: The memorandum
11     of understanding doesn't mention the standard terms and
12     conditions. Would this procurement then not be set under
13     the same terms and conditions that any other procurement
14     would be submitted to?
15                              MR. DEQUATTRO: The PO was I
16     believe was attached to it. So the PO the general terms
17     and conditions and incorporates the laws of the Rhode
18     Island the and submissions. We would not have to.
19                              MR. CHAIRMAN: How does that
20     purchase order incorporate all of those things? Is it
21     stated on the purchase order?
22                              MR. DEQUATTRO: That is
23     correct.
24                              MR. CHAIRMAN: This memorandum
25     of understanding references the request for proposal, the
0016
 1     RFP. So was the scope of the services upon under this
 2     contract the scope of services defined in the RFP?
 3                              MR. DEQUATTRO: I believe so.
 4                              MR. CHAIRMAN: So it includes
 5     the demolition of the science building?
 6                              MR. DEQUATTRO: I have to read
 7     through the whole MLU.
 8                              MR. CHAIRMAN: For the benefit
 9     of those who are the watching this, the memorandum of
10     understanding is a single page document and will because
11     of that nature also includes the cost proposal. That we
12     will just as the committee at ease for a moment as
13     Mr. DeQuattro reviews that MLU.
14                              MR. DEQUATTRO: After reviewing
15     the document, it clearly states that the MLU is
16     specifically for the construction document phase of the
17     services which will be the design phase service. I think
18     your question was does it include demolition of the
19     building? It does not include any construction work
20     whatsoever.
21                              MR. CHAIRMAN: Back to the
22     question, was the scope of services under this contract
23     the scope of services defined in the RFP? Your answer was
24     no?
25                              MR. DEQUATTRO: Well, it
0017
 1     references the scope of the services and the particular
 2     section in the RFP. It is referencing and it references
 3     2.5 of the RFP, which is the construction document phase
 4     services.  So that is what it specifically relates to.
 5                              MR. CHAIRMAN: While I am
 6     discussing the matter here with the Legal Counsel. Senator
 7     Ciccone, you have a question?
 8                              MR. CICCONE: Yes. In looking
 9     at, we will start with Exhibit S, the memorandum of
10     understanding, which was dated August 23, 2006, and I
11     believe this gave authorization to Gilbane to begin the
12     construction document phase; is that correct?
13                              MR. DEQUATTRO: That is
14     correct.
15                              MR. CICCONE: In trying to
16     follow the next document which would be T, which is the
17     purchase the official state of Rhode Island purchase order
18     notify of contract purchase agreement, which is the dated
19     September 18th, which --
20                              MR. DEQUATTRO: I apologize.
21     When I answered your question I was wrong. The MLU was
22     not the document. That was the notify to proceed with the
23     actual work. The MLU is documenting what that work will
24     be. And subsequently the purchase order would be the
25     document that authorized the actual commencement of that
0018
 1     work.
 2                              MR. CICCONE: Between the
 3     period of August 24th and September 18th, there was
 4     actually no work going on. Because if it was, I then
 5     would go back to and I am looking at where it says cost
 6     proposal document phase, the back page of it which is part
 7     of the memorandum of understanding, and actually it is the
 8     second paragraph terms and conditions of pricing
 9     agreement.
10                  I think that's what has us a little
11     confused. It appears that the work was ongoing. But yet,
12     it says on the state purchasing order, 37-2-54, no
13     purchase or contracts were defined on the state. So
14     theoretically, somebody authorized the work to go and the
15     state was not, could not be liable for any of those.
16                              MR. DEQUATTRO: I think what
17     ended up happening, very many times where a vendor will
18     start work before they get a PO. And once we issue the
19     PO, it is ratifying the work that has been done in place.
20                              MR. CICCONE: Thank you.
21                              MR. CHAIRMAN: Could you
22     introduce us to Document S, please.
23                              MS. GEORGE: Document T. This
24     was the memorandum of understanding.
25              And exhibit T is the notice of contract.
0019
 1                               MR. CHAIRMAN: In that case,
 2     excuse me. It was my error, I was referring to the wrong
 3     document.
 4               I do have a question relative to the documents
 5     before us. Was the Department of Administration aware of
 6     the fact that the memorandum of understanding was never
 7     signed by URI?
 8                               MS. HYNES: I was not aware of
 9     that. It came up at one of the hearings that it was not a
10     signed document. We do not have one that is signed by
11     URI.
12                               MR. CHAIRMAN: Would that
13     normally cause you in particular, the Department, would
14     that not normally cause you to ask a question? Or was
15     nobody reviewing this?
16                               MS. HYNES: I am not sure if
17     this was a document that we did have in our file. But I
18     do remember some discussions at a previous hearing about
19     not have a signed version, Senator.
20               I don't remember if that was one of the documents
21     that was produced from our file or not. But it would
22     certainly cause some concern if we had a document in there
23     that was not signed by both parties.
24                               MR. CHAIRMAN: You are telling
25     us you never received a copy of the memorandum of
0020
 1     understanding.
 2                              MS. HYNES: I would need to
 3     double check that that was in our file as well. Because I
 4     notified the date stamp on the memorandum of understanding
 5     was received in the office of capital projects. I would
 6     want to check that to see if we had a copy in our file as
 7     well. Or did it go directly to capital projects.
 8              It was date stamped on August 24th. I would want
 9     to double check. And it would be bring some concern if we
10     did not have a signed version by both parties.
11                              MR. CHAIRMAN: Would you
12     normally expect to receive a copy of the memorandum of
13     understanding?
14                              MS. HYNES: Yes, absolutely.
15                              MR. CHAIRMAN: Normally you
16     would expect it. You didn't receive it. So, wouldn't
17     those two in effect automatically put up a bit of a red
18     flag? At least in terms of the issue that goes with the
19     awarding and signing of the contracts?
20                              MS. HYNES: Right. I would
21     also like to check to see if we did have this memorandum
22     of understanding to start to proceed as well. We do quite
23     often received a document that is by one party signed.
24     Sometimes we do have to fax over and we get the other
25     party to sign on a separate document and we have to
0021
 1     combine them.  It does sometimes happen like that.
 2                              MR. CHAIRMAN: I guess in terms
 3     of process. Forgetting for a moment about this particular
 4     contract. In terms of the normal process, you would
 5     expect to receive a document like this. And if it didn't
 6     receive it is a case for concern or questions?
 7                              MS. HYNES: If I received the
 8     memorandum of understanding.
 9                              MR. DEQUATTRO: Not all
10     procurements you have a MLU. It might just be the PO
11     stapled to a number of documents. In this instance,
12     assuming it was sent over to Division of Purchasers by
13     URI. It was signed by the vendor and it you have to
14     assume that they were in agreement with the contents of
15     the it. Somebody would have objected to this document
16     before we issued a PO. I would hope.
17                              MR. CHAIRMAN: Ms. George.
18                              MS. GEORGE: Would you
19     testimony change at all if I tell you that Mr. Paul
20     Depace's previous testimony was that he did indeed forward
21     a copy of the MLU to Division of Purchasers and that this
22     MLU was never executed by URI. What you received was a
23     copy.
24                  Given those set of facts to be true, would
25     your testimony change today? Is it a concern that an MLU
0022
 1     is referenced, this agreement was referenced in a PO that
 2     the was MLU was only signed by one party? You are saying
 3     Ms. Hynes that that's unusual and would cause concern.
 4                              MS. HYNES: Normally we would
 5     both parties signed version in our file. If that is
 6     referenced in the purchase order as well, the memorandum
 7     of understanding as well as the agreement. All parties
 8     should be signing the document.
 9                              MS. GEORGE: How could it -- in
10     this instance why was it not signed?
11                              MS. HYNES: I can't testify to
12     that. I am not sure why. But certainly when we do issue
13     a purchase order should be by all parties prior to us
14     issuing that purchase order.
15                              MS. GEORGE: You said that it
16     raises concerns if a memorandum of understanding is not
17     signed by both parties. What would those concerns be?
18                              MS. HYNES: An incomplete
19     document, in that we would want to attach it in its full
20     form to make sure that everyone is in agreement so when we
21     do reference it in the purchase order that everybody is in
22     agreement with the time frame, the schedule and the
23     agreement itself. To me, I look at memorandum of
24     understanding the same as a regular agreement or a
25     contract. I would treat it the same way.
0023
 1                              MR. CHAIRMAN: Ms. George,
 2     would you take us now to items T and U.
 3                              MS. GEORGE: Exhibit T we have
 4     already discussed. It is the notice of contract purchase
 5     agreement award for the CMAR the CBLS building.
 6                  I will read Exhibit U, our computer is down.
 7     Exhibit U is dated November 6th. It's the University's
 8     purchase order for the construction document phase for the
 9     CMAR for the CBLS. For the total price of $75,000.
10                              MR. CHAIRMAN: Generically,
11     could you please tell the committee what exactly is a
12     notice of contract purchase agreement?
13                              MS. HYNES: The notice of
14     purchase agreement is when the Division of Purchasing
15     Centralized Purchasing is generating our notice to the
16     vendor that we are going to be awarding the contract.
17                  From that point, each one of the agencies
18     would have the ability to do what we consider a release
19     off of that purchase agreement. So this is the initial
20     phase and when we issue this purchase order. In our
21     world, it actually issues the purchase order. It allows
22     the agency to go into the system now and draw off of this
23     purchase order.
24                  This original notice of purchase agreement
25     should normally have all of the appropriate documents
0024
 1     attached to it, such as the agreement, any other
 2     applicable legal documents that we referenced in here
 3     should be attached to this document. And then if we are
 4     were going to do other change orders and so forth that
 5     would come in a different form.
 6                              MR. CHAIRMAN: It this
 7     considered a binding contract?
 8                              MS. HYNES: Yes. When we issue
 9     the purchase order and all of the appropriate documents,
10     the contract and so forth, that is in our purchasing world
11     we consider the contract. Unless, as well as the purchase
12     order, this is what we consider the purchase order.
13     That's the way we enter it into the system. That is the
14     purchase agreement.
15                              MR. CHAIRMAN: Then forgive
16     me. Tell me again, generically, how does this notice of
17     contract purchase agreement differ from the purchase
18     order?
19                              MS. HYNES: It really doesn't.
20     It is basically the terminology is RIFAN the way we word
21     it in RIFAN. It is Centralized Purchasing that actually
22     generates this. This can not be generated by an agency.
23     It has to be generated by us. We do the initial inputting
24     of all of the data, which all the documents that we have
25     in the file.
0025
 1                  That gives the agency the ability to now draw
 2     off of it and be aware of this is what is entered into the
 3     system. It is exact same thing, Senator, as a purchase
 4     order. It's just the RIFAN terminology.
 5                              MR. CHAIRMAN: If it's the same
 6     thing, then why do we have or why do we need to have both
 7     a contract purchase agreement and a purchase order in this
 8     case?
 9                              MS. HYNES: It's the same
10     thing. In our world, it's the same document. It's
11     basically our way of initiating in the system that is our
12     world it's definitely the purchase order. It is notice of
13     agreement. Centralizing Purchasing initiated it. And we
14     go from there.
15                  We do have other agencies do have the ability
16     to do small purchases purchase order. So they are the
17     ones creating that purchase order. In this case, we are
18     creating the notice to do a purchase agreement, which is
19     what consider the contract. Same thing as a purchase
20     order.
21                              MR. CHAIRMAN: What would
22     happen if there were a difference in detail between the
23     notice of contract purchase agreement and the so-called
24     purchase order?
25                              MS. HYNES: It would be the
0026
 1     same in our file, in the contract file, the notice of
 2     purchase agreement is the purchase order.
 3                   Senator, in Exhibit U.
 4                               MR. CHAIRMAN: Just one minute
 5     please.
 6               I am looking at both the purchase order and the
 7     notice of contract purchase agreement in this particular
 8     case. Both of those contain references to documents.
 9     They all have numbers attached to them. In one case, the
10     contract purchase agreement is referenced to a URI
11     document with the number again I go to the what ifs.
12                   Let's suppose in the these two documents
13     which exist you told that are really the same things in
14     your eyes. If there is the difference between the two in
15     references, in purchase numbers, in anything like that,
16     what is the considered to the prevailing document?
17                               MS. HYNES: The Division of
18     Purchasing Centralized Purchasing would be the prevailing
19     document.
20                               MR. CHAIRMAN: And which of
21     these two is that?
22                               MS. HYNES: When I am looking at
23     this other, what would be considered I guess a purchase
24     order in the URI, we the Division of Purchasing would work
25     off of the notice of purchase agreement. We do not very
0027
 1     seldom do we ever even see the URI purchase order.
 2                  I am just kind of looking at this right now,
 3     Senator. That the URI purchase order. But what we
 4     actually generate in Centralized Purchasing is the
 5     purchase agreement that is sent to the vendor from
 6     Centralized Purchasing.
 7                              MR. CHAIRMAN: I am going to
 8     refer to this, but in the mean time, Senator Ciccone.
 9                              MR. CICCONE: Thank you
10     Chairman. Referring back to the notice of contract
11     purchase agreement. Normally your purchase orders from
12     the state do have purchase order on the top of it;
13     correct? In the description of purchase order they would
14     refer similar to what you have here as a requisition
15     number or a bid number in the scope of the work.
16                  There is only one thing lacking on this that
17     I see. No price. No dollar amount. So you are referring
18     to you are referring to a bid number that URI and here is
19     where I think is the problematic for myself and the
20     committee, with no dollar amount on here you are
21     authorizing URI to engage work with Gilbane, in this case,
22     based on whatever discussions Gilbane may have had with
23     URI on a memorandum of agreement that was unsigned. And
24     there is really realistically no limit on this purchase
25     order that you have, the purchase agreement.
0028
 1                  Contrary to when you do issue a normal
 2     purchase order from the state of Rhode Island. It has a
 3     set dollar amount. That's where I think I am having the
 4     problem.
 5                              MS. HYNES: Yeah, it's not
 6     clear to you. I would have to go back and take a look at
 7     the attached documents to this. Normally we would
 8     reference in the purchase order based on the conditions
 9     and within the agreement dated and so forth. So you could
10     reference the agreement and the date of that. The
11     agreement could be several pages and it would reference in
12     an amount not to exceed and so forth and the scope of
13     work.
14                              MR. CICCONE: Thank you.
15                              MR. CHAIRMAN: I am still
16     trying to these wade through these two documents. For
17     example, I am looking at the notice of contract purchase
18     agreement, which you tell me rather is the prevailing
19     document in this case. There is a reference in here I am
20     going to quote here, "The construction manager at risk for
21     the Center of Biotechnology and Life Sciences in the North
22     District, Kingston, Rhode Island in accordance with the
23     request for proposal b06248."
24                  The next is the phrase I want to focus
25     attention on. "In the attached agreement, which if in
0029
 1     conflict, is subservient to the state's general conditions
 2     of purchasing."
 3                  What is the attached agreement? Is that the
 4     memorandum of understanding?
 5                              MR. DEQUATTRO: Yeah. I think
 6     so, Senator. I understand your concerns. It doesn't say
 7     memorandum of understanding.
 8                              MR. CHAIRMAN: If it is in fact
 9     the memorandum of understanding which you say it probably
10     is, again I go back to the question you are asking
11     earlier. Since this document was never signed by URI, why
12     wasn't there a flag going up at that point, saying look we
13     are referencing a document here in our contract purchase
14     agreement which has only been signed by one side?
15                              MS. HYNES: I would have to go
16     back and look at that, Senator. And it was not signed you
17     know I would need to look that the. Or if there was
18     another.
19                              MR. DEQUATTRO: Senator, as
20     Jerome Moynihan signed it and issued it, maybe he would
21     have some explanation as to why there was no further
22     follow up. The URI signature not going on the document.
23                              MR. CHAIRMAN: We may make a
24     third effort to have Mr. Moynihan appear before us.
25                  I don't want to tie us up too much in detail
0030
 1     here. Again, I have these two different documents, the
 2     purchase order from URI.
 3                  We have these two documents. One from URI
 4     and one that is your document, the contract purchase
 5     agreement. Each of these is blessed with a plethora to
 6     different numbers. PO, bid numbers, requisition numbers.
 7     It's account number. A project number. I recognize that
 8     we are generalists here and so much of this is beyond our
 9     comprehension. But, how does one determine that these are
10     in the affiliated or somehow?
11                              MS. HYNES: In the -- I can't
12     really speak to the URI purchase order. This is actually
13     the first time I have seen that. Normally the Division of
14     Centralized Purchasing would not see that because that is
15     a evidently their own purchase order that they generate.
16                  For ours, Centralizing Purchasing, when we
17     issue our notice of purchase agreement, that is the
18     purchase order. If they internally submit another
19     document, and I am not even sure who gets their purchase
20     order as it is described here. I don't even know where
21     that goes.
22                              MR. CHAIRMAN: Ms. Carpenter?
23                              MS. CARPENTER: Let's just
24     assume the memorandum of agreement is the document
25     attached. This contract, this purchase agreement, is
0031
 1     limited to $75,000 at this time, just point out; correct?
 2                  Out of the all of the numbers on here, what
 3     number would I look for in the state's accounting system
 4     to track the payments made under this contract?
 5                              MS. HYNES. This is a contract
 6     purchase agreement. So there would be contract releases
 7     off of this purchase order here. And it would actually
 8     when you're looking at the releases, they would be
 9     different, it would be like or what we consider contract
10     release numbers.
11                  When it is a blanket agreement, it actually
12     will follow suit on the purchase order number and allow a
13     two digit release number off.
14                  So in the RIFAN system, there are two
15     mechanisms, through a contract release and through a
16     blanket release. This one is set up as a contract
17     release.
18                  Quite often they are set up as a contract
19     release because there is our tremendous amount of
20     narrative that goes into the document itself, which
21     creates it becomes cumbersome for RIFAN to capture all
22     that. So we do it in a contract agreement. And there are
23     actually releases that come off of that.
24                              MS. CARPENTER: Where on here
25     is the number to just correspond? Well I showed you that
0032
 1     chart that I cap payments made. What number on here, any
 2     kind of identifier would show up in the accounting system
 3     so that you could track the payments made under this
 4     contract?
 5                              MS. HYNES: We would start off
 6     with the award number. In the RIFAN system, we would have
 7     the ability through that award number to pull it up and
 8     get the appropriate payments or releases off of that.
 9                  And I think that is where I will certainly
10     get you all of the payment recontract releases off of that
11     award, so that you could see each one of those. I will
12     get you as much as we can so we can bring it up to that
13     dollar amount.
14                  And I will be more than happy to someone come
15     into Purchasing and we'll generate that report right
16     there. We will print out the release. It is cumbersome,
17     I do realize that. There is certain people that have the
18     expertise. We are improving it as we go along. It does
19     take a little bit work to do that. It does take some
20     understanding. We will certainly walk you through that.
21     And I would be more than happy to have anybody come over.
22                              MR. CHAIRMAN: Senator Ciccone.
23                              MR. CICCONE: Let me, following
24     the documents as everyone was talking, I have a different
25     scenario. And I think this is what might have happened,
0033
 1     since all of the material we have has no invoices for
 2     payment.
 3                  Let's start with Exhibit T, the notice of
 4     contract purchase agreement. If you follow the numbers
 5     that are on here, your award number is up in the right
 6     hand block, top right hand block. It is 3,074.09.
 7                  If you then look at Exhibit U, which is the
 8     official purchase order from URI, they reference it in
 9     accordance with the attached notice of contract purchase
10     agreement 3,074.09. And they put the dollar amount in
11     there.
12                  I am going to assume at this point, that once
13     you issued your notice of contract purchase agreement,
14     where if you look down the block right under the award
15     number the vendor is to bill URI directly for payment. So
16     you authorized URI to accept and make payments through its
17     own internal process.
18                  Once the $75,000 was utilized under their
19     purchase order, then they either internally kept all of
20     the invoices to balance the purchase order out, and I
21     don't know I'm not sure if you received a copy of it or
22     not to attach to your contract purchase agreement or you
23     were noticed internally somehow via e-mail or some
24     internal document saying that the $75,000 has been
25     completed and this purchase order has been encumbered.
0034
 1                  So my assumption is that you authorized
 2     $75,000 via one document. And at that point, Division of
 3     Purchasing was completely out of it. Am I kind of
 4     correct?
 5                               MS. HYNES: You are
 6     absolutely. We are looking for people to hire.
 7                               MR. CICCONE: I have dealt with
 8     purchasing over 30 years.
 9                               MS. HYNES: That's exactly what
10     it is, Senator. We issue, Centralizing Purchasing, issues
11     this purchase agreement for that amount of dollars. That
12     then allows them to go into the system, start making their
13     payments, because we have said that this is the dollar
14     amount that you cannot exceed in the system.
15                  They then can go and make monthly payments,
16     weekly payments, whatever they prefer because they have
17     that amount.
18                               MR. CICCONE: I am just going
19     to follow it up, the account number on the bottom of their
20     purchase order, these things change yearly with the budget
21     accounts. I am going to assume it is a URI account
22     number.
23                               MS. HYNES: Yes, it would.
24                               MR. CICCONE: When they
25     authorized it, they authorized it probably through the
0035
 1     controller down at URI, not the controller from the state
 2     of Rhode Island? So realistically the in place purchasing
 3     and the controls that come out of your agency and the
 4     accounts and controls and the state controllers office,
 5     were no longer utilized because it is an internal system.
 6     Because they have their own purchasing system down at URI.
 7                              MS. HYNES: They could not
 8     generate this purchase order without us. They don't have
 9     the ability to create.
10                              MS. CARPENTER: But I just want
11     to follow up on what is going with that. I am not even
12     sure. I can't tell if this account number is a general
13     obligation bond.
14                              MS. HYNES: I don't know. I
15     was just looking at that Kelly. I am not sure.
16                              MS. CARPENTER: Let's assume
17     that it is. Does the fact that it is a general obligation
18     bond, create another a different between just be carefully
19     of how the money is spent? Because URI has the authority
20     to spend the general obligation bond on its own or does it
21     need to go through the State Purchasing?
22                              MS. HYNES: I believe it does.
23     I can't testify to how it does go through the budget
24     process. But we would need to check with them. There is
25     a work flow. We would need them to verify that.
0036
 1                              MR. CHAIRMAN:   You have told us
 2     just a minute ago in reference to this document, this is
 3     the notice of contract agreement, contract purchase
 4     agreement, this is a binding contract.
 5                              MS. HYNES: Yes.
 6                              MR. CHAIRMAN: Second document
 7     we have been discussing, which is Exhibit U, which is the
 8     URI purchase order. Is this a binding contract?
 9                              MS. HYNES: I am not a lawyer.
10     I am going to stay by my purchase order in Centralized
11     Purchasing.
12                              MR. DEQUATTRO: Senator, I
13     believe it's the document coming out of DOA Purchasing.
14     That would be a binding document. The URI purchase order
15     would not be the binding document.
16                              MR. CHAIRMAN: So if there were
17     in any kind of a, conflicts the wrong word, discrepancy
18     between the contract purchase agreement and this URI
19     purchase order, this is the document which prevails. The
20     contract purchasing agreement.
21                              MR. DEQUATTRO: At this time, I
22     would say yes. It depends what would be more beneficial
23     for the state at the time.
24                              MR. CHAIRMAN: Ms. George will
25     you take us to Exhibit V, please.
0037
 1                              MS. GEORGE: Exhibit V, dated
 2     November 10th, 2006, is a bid description posted on the
 3     Division of Purchasing website identifying an opportunity
 4     for trade contractors interested in performing work on the
 5     CBLS project to pre qualify online at ibidpro.com, which
 6     is Gilbane's proprietary website. Each interested
 7     contractor was required to complete the pre qualification
 8     information and submit a letter of interest to Gilbane
 9     Building Company by November 24th, 2006. That is Exhibit
10     V.
11                              MR. CHAIRMAN: First off, does
12     RIVIP have pre qualification process?
13                              MS. HYNES: Senator, I can't
14     testify whether we have had that a pre qualification
15     process. I would assume we have. But I can't actually
16     say for sure.
17                              MR. CHAIRMAN: That makes my
18     second question.
19                              MR. DEQUATTRO: Is your
20     question does RIVIP system have a pre qualification
21     component to it?
22                              MR. CHAIRMAN: Yeah.
23                              MS. HYNES: Senator, I'm
24     sorry. I misunderstood the question. If we have the
25     ability in the RIFAN system to capture information on
0038
 1     pre qualified vendors; is that correct?
 2                              MR. CHAIRMAN: For purposes of
 3     trying to get some information, I will say yes.
 4                  The second question I guess is even more
 5     problematic because what I wanted to ask you was, what
 6     kind of information is provided in the pre qualification
 7     process through RIVIP?
 8                              MS. HYNES: Through the RIVIP,
 9     they would need to be a registered vendor. And just to be
10     a registered vendor, they would have to do the W9. They
11     have to complete all of their corporate information and so
12     forth. So, in the RIVIP that's the vendor registration
13     portion of it. And they would just, that's controlled
14     through the accounts and controls for auditing purposes.
15                              MR. CHAIRMAN: And if I were to
16     be a vendor that qualified under these terms, then any
17     vendor who met those requirements would be able to
18     participate in the process of bidding?
19                              MS. HYNES: Once they were
20     qualified, yes.
21                              MR. CHAIRMAN: I am not sure
22     you answered this, but I will ask it again anyway. It is
23     my information, my understanding that the RIVIP process
24     for pre qualification, while it does require a lot of
25     specific information thresholds that you must meet, is
0039
 1     less burdensome than ibid.pro process through Gilbane's
 2     website?
 3                  So I guess I am getting to the point at, one
 4     point. Which is the better way to go? You've told me
 5     that in the case of the RIVIP process, that once you have
 6     gone through and met the criteria for the qualifications,
 7     you are entitled to bid.
 8                  Is there anything in the process involving
 9     ibid.pro which would allow Gilbane to in effect screen
10     someone out of the process so that they would not be able
11     to bid later on?
12                              MS. HYNES: No. There is no
13     reason that the state of Rhode Island would not enter a
14     vendor into the vendor registration. That certainly
15     allows that vendor to bid on this project or any project
16     within the state.
17                  Basically the vendor registration is we are a
18     corporation. We have filled out the appropriate forms.
19     We have provided for what type of payments and how we want
20     our payments to be made. They register for NIGP codes and
21     what categories they have an interest in.
22                  That would be just a general registration for
23     them to become. So that they could actually download the
24     bidder's cover sheet on any bid they were into bidding
25     in. There wouldn't be any reason to not enter. But they
0040
 1     could not bid unless they were entered in the RIVIP vendor
 2     registration part. They can not bid unless they do that.
 3                              MR. CHAIRMAN: I guess what I
 4     am getting at is I concur the RIVIP process is open, it is
 5     effective and cut to the quick, it works. What I am more
 6     concerned is by allowing the process for pre qualification
 7     to go through someone else's screening, that something
 8     might happen that wouldn't happen in the RIVIP system.
 9                  For example, URI said every firm that
10     registered and completed pre qualification forms was
11     allowed to bid on this particular project. But the key
12     word is the key problem is there some kind of an unseen
13     trap door that allows the owner of the website in effect
14     to screen firms out at that point, so they never come up
15     to the process where they can register.
16                  You go to the website you are not allowed
17     in. You know that is not going to take place with RIVIP.
18     You have no knowledge of whether or not that could take
19     place with an outside firm. Do you?
20                              MS. HYNES: No.
21                              MR. DEQUATTRO: I guess I would
22     agree with that too, Senator. I guess the only difference
23     here is Gilbane was procuring the trade contractor. I
24     guess they should have the flexibility to produce whatever
25     requirements they would need to assess that they have a
0041
 1     good trade contractor that can bid on their projects.
 2                              MR. CHAIRMAN: So you're
 3     saying, if I can translate, it is possible that that could
 4     happen. But that you feel it would be justified because
 5     Gilbane should have the right to screen people out of the
 6     process?
 7                              MR. DEQUATTRO: If they are
 8     going to be hold those trade contracts, that vendor should
 9     have the ability to screen the trade contractors, that
10     hopefully it is fair criteria. But I think they should
11     have that ability, sure.
12                              MR. CHAIRMAN: RIVIP would not
13     subject a firm to that kind of exclusion at this point in
14     the process.
15                              MR. DEQUATTRO: You mean just
16     to get on the system? Oh, I apologize.
17                  All of the trade contractors should be able
18     to put in their information to be evaluated. Whether it
19     is our system or the Gilbane system.
20                              MR. CHAIRMAN: Senator Ciccone.
21                              MR. CICCONE: I think the
22     concern that, as I am listening that I would have is
23     assuming that Gilbane has a vendor, subcontractor, that
24     has done work in the past. The performance of the work is
25     more than adequate. But there might have been a
0042
 1     discrepancy in the price. So Gilbane makes the
 2     determination that I am not going to use company a any
 3     longer because they sued me, they came after me.
 4                              MR. CHAIRMAN: Going back to
 5     RIVIP for a second, isn't it possible to use RIVIP to put
 6     together the sub bids that were solicited in this case?
 7                              MS. HYNES: If the state of
 8     Rhode Island were going to do the actual subbing itself
 9     and put those out and register on the RIVIP, Senator?
10                              MR. CHAIRMAN: Could they do
11     that?
12                              MS. HYNES: We have had other
13     projects what we had to do was enter them in as a
14     separate bid. We actually did that on a training school.
15     Where we actually did all of the subbing, the state did
16     all of the subbing. And we had separate bids where we
17     actually put those out through the Division of Purchasing.
18                              MR. CHAIRMAN: How is it more
19     cumbersome? That was your term.
20                              MS. HYNES: We are then
21     tracking all of those bids and we are trying to coordinate
22     the timing of those sub bids going out. We have to, if it
23     is an extensive project and there are say 30 subs that are
24     going, we have to coordinate that with the general to make
25     sure all of those are timed at the same time.
0043
 1                  It can be done. It definitely be done. It
 2     is an open process that way. Everybody has an opportunity
 3     to bid on each section.
 4                              MR. CHAIRMAN: Ms. George.
 5                              MS. GEORGE: In that particular
 6     case, who held the contracts for the subcontractors? The
 7     state or the general contractor?
 8                              MS. HYNES: I believe it was
 9     the state. Don't hold me to that. We did individual
10     bids. Individual purchase orders.
11                              MS. GEORGE: Is there any
12     reason why these subs couldn't be bid through RIVIP and
13     the direction of say a Construction Manager at Risk and
14     then the Construction Manager at Risk approve whichever
15     sub and then have that Construction Manager hold the
16     contract?
17                              MS. HYNES: Which would be
18     similar to what we did with the training school. Just in
19     a little different fashion.
20                              MS. GEORGE: Thank you.
21                              MR. CHAIRMAN: I am trying to
22     take from here the advantages and the disadvantages
23     between product that the state has in place, the RIVIP
24     system, and whatever processes being produced by an
25     outside company. Is the state I am asking myself
0044
 1     questions, is the state paying more money for these
 2     subcontracts by allowing, Gilbane, in this case to bid and
 3     negotiate the cost of reimbursement contracts?
 4                              MS. HYNES: I wouldn't be able
 5     testify to that, Senator. We have to do some kind of an
 6     analysis on that.
 7                              MR. CHAIRMAN: How would you
 8     measure that? How would you analyze that?
 9                              MR. DEQUATTRO: I am not sure,
10     Senator. Maybe Bob Brunell, the head of Capital
11     Projects.
12                              MR. CHAIRMAN: Ms. George is
13     just reminding me that this is a reimbursement contract.
14     Gilbane doesn't have the incentive or would not have the
15     incentive to necessarily get the lowest bidder, because
16     whoever they pick that is what is going to be paid. Where
17     in RIVIP you have a different set of criteria.
18                  All right. Would you take us to the next
19     batch of documents, Ms. George.
20                              MS. GEORGE: Yes, Senator. The
21     next set of documents, Exhibits W, X, Y, Z and ZA are a
22     series of e-mails to and from URI and DOA concerning
23     negotiating the CMAR contract.
24                  Exhibit W is the memorandum prepared by the
25     attorney for URI concluding that this state is not
0045
 1     required to bond the CMAR. That is dated December 14th,
 2     2006.
 3              The remaining exhibits are e-mails reflecting a
 4     certain level of involvement on the negotiated terms.
 5                              Mr. Chairman: I think what I
 6     am going to do at this point is provide you with the
 7     opportunity for the next five minutes to look through
 8     those prior to our questions.
 9                  The reason I am stopping at this point is a
10     natural place to stop. I also want to give our
11     stenographer a chance to just to get a little R&R, so to
12     speak. I am going to take give us about a five minute
13     pause here.
14                      (HEARING OFF THE RECORD AT 4:29 PM)
15                      (HEARING BACK ON THE RECORD AT 4:40 PM)
16                              MR. CHAIRMAN: If the committee
17     could return to order, please. I want to continue our
18     questioning.
19                  We have had five documents introduced to us
20     by Legal Counsel, documents W, X, Y, Z and ZA. And the
21     questions spring from those documents.
22                  My first question is did URI seek and obtain
23     DOA approval performance bond for the Construction Manager
24     at Risk? The waiver of.
25                              MR. DEQUATTRO: They didn't
0046
 1     seek approval. I am sorry. They provided me with an
 2     opinion from the private legal counsel that they hired to
 3     work on the contract of URI. Provided that to me. I read
 4     it. And thought it was a reasonable legal opinion.
 5                  At that point in time, it was a business
 6     decision for URI whether they would a waiver on limit to
 7     the construction management services of the project.
 8                              MR. CHAIRMAN: Do you have a
 9     written record of that approval that you gave?
10                              MR. DEQUATTRO: Well, I
11     wouldn't say I gave an approval. I guess I concurred. I
12     don't think I actually put it in an e-mail format. I
13     think the signing of the contract excluded the bond from
14     the project. Construction management service.
15                              MR. CHAIRMAN: I have a little
16     more concern. You seem to have and that in talking about
17     a considerable amount of money and elimination of waiver
18     on a performance bond.
19                  You have indicated that you're, I think the
20     right word is now, your approval, or whatever it is was
21     something you gave over the phone based upon reading the
22     letter from Mr. Whitney, justifying or arguing for the
23     non requirement of the performance bond.
24                              MR. DEQUATTRO: Correct.
25                              MR. CHAIRMAN: Has the
0047
 1     Department of Administration authorized the waiver of the
 2     contract in bond with other cases, other projects?
 3                              MR. DEQUATTRO: For
 4     construction management services?
 5                              MR. CHAIRMAN: Waiver of a
 6     contract bond in other projects, period. Which would
 7     include CMARs. But not just CMARs.
 8                              MR. DEQUATTRO: I believe we
 9     have the statute gave us flexibility. Trade work of
10     construction work. Not to exceed 100 percent of a
11     construction project, but not less than 50 percent. I
12     know we had one below 100 percent in the past, but I can't
13     recall the projects off the top of my head. But
14     definitely not a waiver for construction work itself.
15                              MR. CHAIRMAN: Under what
16     circumstances would you do something like that?
17                              MR. DEQUATTRO: I am not really
18     sure. In this particular case, when they waived the bond
19     for the construction management piece. I guess the idea
20     was not to double pay on the bond. They did bond $44
21     million. And they waived a bond. Really the general
22     conditions for Gilbane, which was the $3.5 million
23     services that they were performing.
24                  So the rest that URI was saying is Gilbane
25     going belly up. And the state would have to go and
0048
 1     procure the services of a new construction manager. But
 2     you would still have all of the bonding for the trade
 3     contractors, as URI and Gilbane were dual operates. The
 4     risk is Gilbane going belly up in this circumstance.
 5                              MR. CHAIRMAN: It seems to be
 6     there is a problem then the intention however likely it is
 7     that as you phrased it, Gilbane would go it belly up.
 8                  Let's suppose there are problems on the job.
 9     The bonding, we have testified here, the bonding that out
10     that other than the 3.4 million that was directly
11     Gilbane's. The bonding that went out it was the
12     individual subs.
13                  Wouldn't that leave URI and therefore the
14     state in a position where it was a problem of having to
15     ascertain which sub or subs were responsible in taking on
16     that legal process on their own, as opposed to just going
17     to the single entity. And saying look, you are the one
18     responsible for this.
19                              MR. DEQUATTRO: Well Gilbane,
20     their dual obligations are Gilbane's responsibility. If
21     Gilbane was out of the picture, we would have a new
22     construction manager that would come in. It would still
23     be that construction manager who would deal with all of
24     these particular issues and problems. We would have that
25     ability to step into the shoes of the construction
0049
 1     manager.
 2                              MR. CHAIRMAN: Something as
 3     simple as the fact that the wiring wasn't done correctly.
 4     And you go to the whoever had the contract for the
 5     wiring. And the state would have to go after that
 6     reimbursement or that satisfaction under the individual
 7     bonding that that subcontractor had.
 8                              MR. DEQUATTRO: Well, I have to
 9     go back and really analyze the whole thing. I think we
10     still have the ability to go after Gilbane or whoever the
11     construction manager is and then they can go directly at
12     the trade contractor for that particular work. I am not
13     100 percent sure.
14                              MR. CHAIRMAN: That is the
15     directly this whole scheme was designed so that the state
16     would not go to, URI wouldn't go to the requirement of
17     having Gilbane get a general performance bond, thereby
18     saving since it is a cost reimbursement, thereby saving
19     the cost entered to that bonding. But nevertheless each
20     of the individual subcontracts would have to have
21     bonding.
22                  And further more, it was pretty specific that
23     Gilbane's obligations here were limited to the $3.4
24     million for managing. So it still leaves a situation
25     where there is a problem with the subcontractor, it would
0050
 1     be up to URI and or the state to seek relief with that
 2     individual subcontractor and whoever held their bond.
 3                              MR. MITCHELL: If I may,
 4     Senator.
 5                              MR. CHAIRMAN: Can you identify
 6     yourself under the record, sir?
 7                              MR. MITCHELL: Michael
 8     Mitchell. I am Chief Deputy of Legal Services at the
 9     Department of Administration. I am not here to testify, I
10     am here in the capacity of an attorney.
11                              MR. CHAIRMAN: Excuse me. I
12     know you're saying you are not testifying. If you are
13     going to be providing anything to the committee by way of
14     facts, we would rather have you sworn in.
15                              MR. MITCHELL: I appreciate
16     that, Senator. I was just going to try and explain the
17     legal relationship on these bonds. But if you prefer that
18     I not do that.
19                              MR. CHAIRMAN: No, I am not
20     preferring that you not do that, but I would like you be
21     sworn before you offer the testimony.
22                              MR. MITCHELL: I am not
23     offering testimony, Senator. I am offering a legal
24     explanation. I will not go under oath to offer legal
25     explanation. My role is as an attorney here, not as a
0051
 1     witness.
 2                              MR. CHAIRMAN: Thank you, sir.
 3     In that case we will go on with the hearing.
 4                              MR. DEQUATTRO: I think I would
 5     differ any further legal analysis. Mike is more of an
 6     expert on the construction bond area than I certainly am.
 7                              MR. CHAIRMAN: Was the
 8     Department of Administration involved in the negotiation
 9     process at all for the CMAR contract?
10                              MR. DEQUATTRO: No.
11                              MR. CHAIRMAN:   Yes,
12     Ms. Carpenter.
13                              MS. CARPENTER: Mr. DeQuattro,
14     you said that you just reviewed DOA's memo. You have
15     heard now that there was other expertise with DOA with
16     bonding issue. Did you inquire? Did you ask anyone
17     else's opinion within DOA, as to whether or not it is was
18     prudent to waive this bond?
19                              MR. DEQUATTRO: Not at DOA.
20     Who was hired as outside counsel who is an expert better
21     in the construction industry.
22                              MS. CARPENTER: But you did not
23     utilize the in house expertise that you had?
24                              MR. DEQUATTRO: No, I did not.
25                              MR. CHAIRMAN: Okay. Ms.
0052
 1     George, will you take us to the next documents, please.
 2                              MR. CICCONE: Let me ask this
 3     question. Thank you, Mr. Chairman. The under bonding
 4     once more, we waive the bond for Gilbane, but we require
 5     the bonding for the subcontractors. That's correct. And
 6     normally from what we heard through earlier testimony, you
 7     would have required the bond from Gilbane and then Gilbane
 8     internally all though we wouldn't might not have required,
 9     Gilbane would have required the subs to be bonded to
10     Gilbane.
11                              MR. DEQUATTRO: I believe so.
12                              MR. CICCONE: So, I am at a
13     loss of where the potential savings would have been for
14     the state where it appears that we paid more money by
15     individually bonding the subs. I think the savings would
16     have been by just bonding Gilbane. The reference that URI
17     gave, was well if we bonded Gilbane, then we have also
18     required and we would have had to pay for the bonding of
19     the subcontractors too. I don't believe that would have
20     taken place.
21                              MR. DEQUATTRO: I am pretty
22     sure that the bonding company for would have required
23     Gilbane to get bonds for all of the trade contractors.
24                              MR. CICCONE: Okay. Thank
25     you. One last question. Could Gilbane have appropriated
0053
 1     a bond if required at that point in time?
 2                              MR. DEQUATTRO: Could they
 3     have? I assume they could have. I don't know. I didn't
 4     ask that question at that time. I would hope they would
 5     have bonded.
 6                              MR. CICCONE: Thank you.
 7                              MR. CHAIRMAN: Senator
 8     Levesque, did you have any questions that you wanted to
 9     ask?
10                              MR. LEVESQUE: I apologize a
11     little bit. But the last colloquy kind of got my ears
12     up. Particularly that the gentlemen sitting at the table
13     indicated he is here as an attorney, not to testify. And
14     I would like ask to the two witnesses who are here
15     testifying, why exactly do you have any attorney sitting
16     beside you at the desk here?
17                              MR. DEQUATTRO: Sure. The
18     reason we had Mike come along is because we had, we do
19     still have a lawsuit with in connection with a lot of the
20     issues that we are discussing at the hearings. And we
21     just want to make sure that we not at one point in time
22     did we over step our bonds in testimony with that
23     particular lawsuit. So we asked Mike to come along, as a
24     non witness, to step in and advise us if we.
25                              MR. LEVESQUE: I can appreciate
0054
 1     that reservation. Although, usually in that you will see
 2     the look back and forth upon answering a question as to
 3     whether or not this is one that gets close to that area.
 4     I haven't noticed either of you referring to him at any
 5     point.
 6                  I am assuming you feel secure that all of the
 7     questions we are asking are not going in that too close to
 8     that area.
 9                              MR. DEQUATTRO: We have had
10     plenty of discussions previously about testimony and how
11     it would go about. If we do have questions, we have
12     enough knowledge to seek counsel before we answer a
13     question.
14                              MR. LEVESQUE: If you
15     understand you correctly, you have conversations with
16     counsel with regards to anything that might come up here
17     and what might touch upon the pending litigation?
18                              MR. DEQUATTRO: That is
19     correct. I am not sure if you were at the last hearing.
20     There were issues in the connection with the questions on
21     the regulation of the process, issues. I was referring
22     from answering those questions. Mike stepped in and
23     appealed some of those.
24                  It is only because of the pending
25     litigation. Otherwise it wouldn't be necessary.
0055
 1                              MR. LEVESQUE: Thank you very
 2     much.
 3                              MR. CHAIRMAN: Will you take us
 4     to the next exhibits.  Ms. George.
 5                              MS. GEORGE: I have a -- on the
 6     issue of bonding, Mr. DeQuattro you stated that bonding
 7     Gilbane in this particular case would be double bonding.
 8     But, doesn't Gilbane Building Company have a
 9     responsibility separate and apart from all of the subs?
10     Gilbane is the only entity responsible for delivering the
11     entire complete project, in this case the CBLS building.
12     The subs are only responsible for their portion of the
13     building.
14                  So for example, if there's a leak in the
15     third floor building. And URI sues the sub who put the
16     window in. And that sub brings in the roofer. And the
17     roofer brings in the guy who put in the framework. You
18     understand the scenario. You have five subs all pointing
19     the finger at somebody else. That get to be very
20     expensive litigation. Very hard to prove. Very time
21     consuming.
22                  It would be a different scenario if URI could
23     go to Gilbane's bonding company and say pay us for the
24     water damage, you figure out which subs did it. So to say
25     that it is double bonding here, paying twice for the same
0056
 1     risk, really isn't accurate, is it?
 2                              MR. DEQUATTRO: It is
 3     accurate. Because the assurity to bond the whole entire
 4     project, which would have been Gilbane and the subs for I
 5     think it was $280,000 they wouldn't just bond Gilbane for
 6     the general conditions. If they under order of that way
 7     it would have much less of the premium. They would wanted
 8     to bond the whole project in its entirety. The whole $44
 9     million. In this circumstance, it would have been
10     doubled.
11                  I am not saying the issues that bringing up
12     are not issues. But as far as the money. Certainly
13     paying a lot. I am not concluding whether it is was a
14     good or bad decision. It was a business decision.
15                              MS. GEORGE: Mr. DeQuattro,
16     isn't that the your job to conclude whether it a good or
17     bad decision? That is not just for URI and it is for the
18     state. And as Legal Counsel for DOA, you should have
19     weighed in one way or the other?
20                              MR. DEQUATTRO: I weighed in
21     the with the legal opinion. Once that decision is made,
22     then it is up to the business people to determine whether
23     they want to do that and take on that business risk.
24     That's not my responsibility at that time.
25                              MS. GEORGE: Whose
0057
 1     responsibility was it?
 2                              MR. DEQUATTRO:   The business
 3     people.
 4                              MS. GEORGE: At URI or at DOA?
 5                              MR. DEQUATTRO: At URI.
 6                              MS. GEORGE: If you have would
 7     have concluded that bond should not have been waived,
 8     would URI had to bond Gilbane?
 9                              MR. DEQUATTRO: Yes.
10                              MS. GEORGE: Could you have
11     made that decision?
12                              MR. DEQUATTRO: Could I have
13     made that decision? If there was no opinion similar to
14     Mr. Whitney, absolutely.
15                              MS. GEORGE: I have one more
16     question. Mr. Whitney's opinion was, and I am not
17     agreeing or disagreeing with it, his opinion was that it
18     was legally permissible to waive the bond. He wasn't
19     making an opinion as to whether or not the bond should be
20     waived in this case.
21                              MR. DEQUATTRO: I believe you
22     are correct. I wasn't making a decision whether it should
23     be waived or not.
24                              MS. GEORGE: In future cases,
25     would you have an opinion as to waive the bond or not?
0058
 1                              MR. DEQUATTRO: If I was in a
 2     different capacity, other than a lawyer, probably.
 3                              MS. GEORGE: What would that
 4     opinion be?
 5                              MR. DEQUATTRO: In a future
 6     case, it depends on the facts and circumstance and the
 7     risk that the state is going to take on.
 8                              MS. GEORGE: I have no further
 9     questions.
10                              MR. CHAIRMAN: Senator
11     Ciccone.
12                              MR. CICCONE: Knowing that the
13     committee has some information that the waiving of the
14     some of the bonds in the words was performing had problems
15     in other areas. Did anyone from URI mention to the
16     Department of Administration Purchasing that prior to
17     requesting the waiver of the bond to do any research on
18     any problems that Gilbane might have had in any states or
19     areas?
20                              MR. DEQUATTRO: Not to the best
21     of my knowledge.
22                              MR. CICCONE: I think the
23     concern that we are having is, as this came up and we were
24     listening to URI we started doing our own research. And
25     it appears maybe they weren't very prudent in asking the
0059
 1     question of whether it should be waived.
 2                  But, I have this packet and maybe I am not
 3     ask Kelly to get up. I can get it over to you and look at
 4     it for a minute maybe you would have might have one.
 5     Maybe you would have had second thoughts.
 6                              MR. DEQUATTRO: Senator,
 7     certainly this is all very important information that
 8     should be taken into consideration. Not only bonding a
 9     particular contractor. Certainly information like this
10     would be very valuable and helpful.
11                              MR. CICCONE: I think at the
12     time that the question might have been asked to you. I
13     did ask Mr. Whitney was he aware of any of this. And
14     first he said no. And then the second meeting he came
15     back and he said, I did look into it and no, I wasn't
16     aware of it. I think when they asked you the question
17     presented all of the information that they should have.
18                              MR. DEQUATTRO: The question is
19     dealt with was limited to the statute. As far as the
20     business question, you should be looking at liability of
21     the company, in this case Gilbane. You do need to do your
22     due diligence.
23                              MR. CICCONE: The part that
24     came to my attention, I think it was state of New Jersey.
25     Thank you.
0060
 1                              MR. CHAIRMAN: Senator Ciccone,
 2     could you tell us it itech methodology you used to get all
 3     of that information?
 4                              MR. DEQUATTRO: Google?
 5                              MR. CICCONE: It was tool on
 6     the Internet. And as we started looking at, we went to
 7     each and these come from different newspapers, trade
 8     journals, local newspapers. We actually went to their
 9     link and brought up the news articles. It was a little
10     time consuming. It wasn't hard. You Google it.
11                              MR. CHAIRMAN: Thank you. I
12     guess one of the things at this point now is the
13     methodology of whatever it happens to be or not be, is the
14     importance of the review process in that there is a
15     process in place.
16                  In this instance, it would appear to be that
17     the review process was in URI's hands. That the
18     Department of Administration's role in this was technical
19     conformed to the literal requirements of the law to
20     provide a signature and documents, as opposed to doing any
21     kind of review.
22                  Would you take us to the next documents,
23     please.
24                              MS. GEORGE: The computer went
25     done, again, so. If you would all refer to your
0061
 1     handouts. We are currently on Exhibit ZC, dated March
 2     19th, 2007. That is the GMP submitted by Gilbane in the
 3     amount of $44.6 million for the CBLS building. The GMP
 4     includes the construction manager's fee, hard cost of the
 5     work, the construction manager and owner's contingency.
 6     The GMP excludes North District Utilities and the
 7     demolition of the Biological Science Center. And also
 8     excludes the bond on the construction manager, Gilbane.
 9     And this was signed on March 23rd, 2007, by the Director
10     of DOA and Mr. Weygand of URI.
11                  Exhibit ZD, dated March 20th, is the value
12     engineering log, which shows scope of review adjustments
13     and saves approximately $850,000 dollars. Again, deleted
14     in the construction manager's bond, the demolition of the
15     existing Biological Science Building and the North
16     District Utilities, saving a total of $44.9 million?
17     Senator Lenihan.
18                              MR. CHAIRMAN: First, was DOA
19     involved in the negotiating process for this guaranteed
20     maximum price?
21                              MR. DEQUATTRO: No.
22                              MR. CHAIRMAN: Why not?
23                              MR. DEQUATTRO: Again, that was
24     URI's project. They had the responsibility to negotiate
25     that contract and use outside staff to do that.
0062
 1                              MR. CHAIRMAN: If this was left
 2     entirely in the hands of URI, why is it that the Director
 3     of the Department of Administration had to sign that
 4     letter jointly with Mr. Weygand on March 23rd, 2007?
 5                              MR. DEQUATTRO: To buy in the
 6     contract in the document. I am not sure if there were
 7     discussions of prior points in time to delegate full
 8     authority to URI.
 9                              MR. CHAIRMAN: One of the
10     things that the contract provided was that the owner is
11     providing builder's risk insurance. Are you familiar with
12     builder's risk insurance?
13                               MR. DEQUATTRO: I am familiar
14     with in general the on site program at URI. I know they
15     had in place since the late 90's.
16                               MR. CHAIRMAN: Can you give us
17     a description, for example, of the difference between a
18     performance bond and an insurance policy?
19                               MR. DEQUATTRO: Performance
20     bond is basically a document between the contractor and
21     the principle to ensure that a contractor performs the
22     work as required, and also has payment terms to make sure
23     that that contractor is paying its bills on time.
24                  An insurance policy is an indemnity type
25     policy where it can cover a variety of risks and issues
0063
 1     that be can incurred on a particular property or project,
 2     property damage, liability damage, that sort of stuff. It
 3     could include provisions for paying for counsel if
 4     lawsuits arise.
 5                              MR. CHAIRMAN: So there is a
 6     difference between those two, the insurance and a
 7     performance bond?
 8                              MR. DEQUATTRO: Absolutely.
 9                              MR. CHAIRMAN: In this
10     particular case, the Director signed the contract and
11     included that the owner was providing this builder's risk
12     insurance. Did you or anything else explain to then
13     Director exactly what this was all about?
14                              MR. DEQUATTRO: No.
15                              MR. CHAIRMAN: To your
16     knowledge, and I know you are not the person who is the
17     answer this first hand, to your knowledge was Ms. Najarian
18     aware of the fact that she was signing a document that
19     included the use of this owner's provided insurance as an
20     alternative to the bonding?
21                              MR. DEQUATTRO: I am not sure I
22     follow the question.
23                              MR. CHAIRMAN: I am going to
24     rephrase the question. Was Ms. Najarian aware of the fact
25     that the document that she signed with Mr. Weygand
0064
 1     included the fact that was owner was providing builder's
 2     risk insurance, that this was their way of dealing with
 3     some of the potential mishaps and missteps in the
 4     process. I.E, was she familiar with what the product was?
 5                              MR. DEQUATTRO: Probably not.
 6     I think she differed to URI in connection with that.
 7                              MR. CHAIRMAN: Is there any
 8     other that uses this owner provided insurance?
 9                              MR. DEQUATTRO: Not to the best
10     of my knowledge. I think it's just URI.
11                              MR. CHAIRMAN: Exhibit Y, there
12     is a quotation in there from you to Paul Depace. And I
13     quote, "The only remaining issue, I believe, is bringing
14     the matter back before with the final agreed upon costs."
15     Did DOA review the proposed GMP between URI and Gilbane?
16                              MR. DEQUATTRO: When I wrote
17     this e-mail at the time I thought they had to but it was
18     referring to coming back to A&E. I remember I did that
19     analysis early on to determine that they didn't have to
20     come back to the A&E.
21                              MR. CHAIRMAN: The June 9th
22     2008 Oversight Hearing, Ms. Hynes, you testified that
23     Jerome Moynihan reviews the procurement contracts in
24     compliance with the RFP and the state's term and
25     conditions. What is the standard review used to evaluate
0065
 1     a procurement contract?  What does Mr. Moynihan look for?
 2                              MS. HYNES: It would be the RFP
 3     to make sure all of those requirements are met. As well
 4     as the bid proposal that is coming in for the pricing and
 5     the agreement time frame. All of that information is
 6     reviewed and incorporated into the contract slash
 7     agreement.
 8                  If it is a larger contract or agreement, it
 9     would be referred to legal to make sure all of the
10     appropriate components are included in the agreement. And
11     then once that would come back from legal or from the
12     Chief Purchasing Officer, we would then generate the
13     purchase order.
14                              MR. CHAIRMAN: Mr. Moynihan is
15     not here today. But, let me ask some questions you may be
16     able to answer on his behalf.
17                  Number one, is Mr. Moynihan an attorney?
18                              MS. HYNES: No, he is not.
19                              MR. CHAIRMAN: What is his
20     background and training?
21                              MS. HYNES: He has the
22     certification, the Purchasing Officer requirement, which
23     is requirement of his job description as well. He has
24     also an adjunct professor at Dean College for Economics.
25     He also teaches in as a certified for the National
0066
 1     Institute of Procurement officers throughout the country.
 2     He is the only one licensed here, in the New England
 3     area. Teaches in other states as required and requested.
 4                  I believe he has been with the State of Rhode
 5     Island for a number of years. He handles the higher level
 6     RFPs that are very involved. And works with most of the
 7     agencies throughout the state.
 8                              MR. CHAIRMAN: Thank you. The
 9     contract we have been talking about that was reviewed by
10     the Director. Was it reviewed by anyone else besides
11     Mr. Moynihan before being signed by the Director?
12                              MS. HYNES: Mr. Moynihan would
13     basically coordinate all of the information, along the
14     agency. We work hand in hand.
15                              MR. CHAIRMAN: So your answer
16     is yes, if there are legal issues.
17                              MS. HYNES: If there are legal
18     issues, yes it goes upstairs to legal.
19                              MR. CHAIRMAN: Is there any
20     kind of documentation of a review process?
21                              MS. HYNES: We have the review
22     in particular for an RFP, the steps that need to be taken
23     on an RFP, which we use those instructions.
24                              MR. CHAIRMAN: In this
25     particular case this particular contract, who, if anybody,
0067
 1     reviewed this contract, this document prior to the
 2     Director's signature?
 3                              MR. DEQUATTRO: It did come to
 4     our legal office. We reviewed it from a procedural
 5     standpoint, rather than structural. Again, I reiterate
 6     that URI hired outside counsel to work on the agreements;
 7     that is who we relied upon for that advice.
 8                              MR. CHAIRMAN: You reviewed it
 9     from a procedural rather than structural content?
10                              MR. DEQUATTRO: The parties
11     signing the document. The contract would reflect the
12     procurement that went out for those services. Make sure
13     we have all of the documents in place.
14                              MR. CHAIRMAN: So in this
15     particular contract, it was reviewed then by Mr. Moynihan
16     and then for procedural issues by the Legal Department at
17     DOA?
18                              MR. DEQUATTRO: Correct.
19                              MR. CHAIRMAN: Who exactly in
20     the Legal Department? Was it you, Mr. DeQuattro?
21                              MR. DEQUATTRO: Yes.
22                              MR. CHAIRMAN: Anyone else?
23                              MR. DEQUATTRO: No.
24                              MR. CHAIRMAN: Was the Director
25     informed before she signed a document that the guaranteed
0068
 1     maximum price contract narrowed the scope of the RFP by
 2     among other things deleting demolition of the Bio Science
 3     Building, to delete the North District Utilities and the
 4     deletion of any performance bond. Was she aware of those
 5     changes?
 6                              MR. DEQUATTRO: Well, she was
 7     presented with the actual contract which would include or
 8     exclude certain things. Other than the actual document
 9     that we signed, unless there was some other correspondence
10     from URI that I am unaware of.
11                              MR. CHAIRMAN: So to your
12     knowledge, no one said it to her at the time. This is a
13     difference from what you saw was out there in the RFP?
14                              MR. DEQUATTRO: Correct.
15                              MR. CHAIRMAN: No one did that?
16                              MR. DEQUATTRO: No.
17                              MR. CHAIRMAN: How the narrowed
18     scope of the guaranteed maximum price interact with the
19     terms of the PO? In other words, if the guaranteed
20     maximum price contracts the purchase order and the
21     attached RFP, which document rules?
22                              MR. DEQUATTRO: In this case,
23     the final contract and the purchase order. Actually, if I
24     could ask the question again so I understand it.
25                              MR. CHAIRMAN:   My first general
0069
 1     question was, how does the narrow scope of the guaranteed
 2     maximum price interact with the terms of the purchase
 3     order? In other words, if the guaranteed maximum price
 4     contradicts the purchase order and the attached RFP.
 5     Which document rules?
 6                              MR. DEQUATTRO: Well, I'd have
 7     to read the contract. Normally there is a section of the
 8     contract that describes which documents, or I am losing
 9     the word I am looking for -- order of precedence. I would
10     have to read through to see what the order of precedence
11     is. What takes precedence over the other.
12                              MR. CHAIRMAN: The Oversight
13     Committee staff requested from DOA through Ms. Hynes all
14     documents, including correspondence, concerning this CMAR
15     document and further requested that the if the Department
16     of Administration, was not providing documents to identify
17     the document and the reasons for not producing it.
18                  Exhibit Y we referred to just a few minutes
19     ago, was Mr. DeQuattro's e-mail. Why was this not
20     provided to staff as part of the request from Ms. Hynes?
21     You can refer to both documents X and Y.
22                              MR. DEQUATTRO: I recall at the
23     time I had to print my e-mails and provide them
24     Purchasing. I think I had produced all of the e-mails
25     that were relative to it. If this was e-mail was not
0070
 1     produced, it was an oversight.
 2                              MR. CHAIRMAN: There is about
 3     five e-mails back and forth between you and URI. We got
 4     the document because URI provided it to us.
 5                  My question is, when we made the request to
 6     DOA, why were not these documents there?
 7                              MS. HYNES: I am not sure if
 8     these were those were produced later. Based on your
 9     request; correct?
10                              MR. CHAIRMAN: No. These were
11     produced by URI. That's where we got the information
12     from.
13                              MS. HYNES: If we had the
14     files, these were not in the files that were produced with
15     it.
16                              MR. DEQUATTRO: I apologize.
17     The e-mails that I have here, these would have been on
18     Purchasing, these were on my personal e-mail system. So
19     maybe the request for those didn't get to me. I am pretty
20     sure I recall producing whatever e-mails I had.
21                              MR. CHAIRMAN: We didn't ask
22     for what was in the file. We asked for all documents. I
23     am -- we have a history between the committee and DOA and
24     that is if of making a request for documents and that we
25     receive what we ask for.
0071
 1                  In this particular case, we have a series of
 2     e-mails back and forth between you and the University of
 3     Rhode Island. URI found them and forwarded them to us
 4     immediately. In the case of DOA, we never would have
 5     received this. I just want to know why.
 6                              MR. DEQUATTRO: I think that I
 7     would have to go back and look at what we actually
 8     produced. I am pretty sure we produced whatever we had. I
 9     am not sure where there was an oversight.
10                              MR. CHAIRMAN: Do have you a
11     system -- do you have any kind of system you can go back
12     and retrieve and look at your e-mails?
13                              MR. DEQUATTRO: Well, certain
14     e-mails are archived. They get deleted after so much
15     time. These were 2007, so I assume those would still be
16     in the system now. Over a certain period of time it gets
17     deleted. Like I said, I am pretty sure I produced these
18     and provided them to Purchasing. If they didn't get to
19     you, I apologize.
20                              MR. CHAIRMAN: Your testimony
21     then is that you pretty sure that you gave these documents
22     to Purchasing in response to our request?
23                              MR. DEQUATTRO: Put it this
24     way, I am not surprised that they were on your request.
25                              MR. CHAIRMAN: Let me get to a
0072
 1     certain scenario, that is in fact you did produce them.
 2     You gave them to Purchasing. We didn't receive them from
 3     Purchasing. I guess my question is, why not?
 4                              MS. HYNES: Was that a later
 5     request from April 28th that your office made an
 6     additional request to Purchasing to also gather any other
 7     e-mails and things like that, that we did not have in
 8     file. And was that a production of the e-mails later that
 9     there was like a secondary after the initial review of the
10     file?
11                              MR. CHAIRMAN: I would call on
12     Ms. George for that.
13                              MS. GEORGE: Ms. Hynes, you're
14     absolutely correct. I sent you an e-mail requesting not
15     just documents in the public file that Ms. Carpenter and I
16     had gone to DOA and reviewed and you very timely forwarded
17     to us. But it was apparent in reading that file, that
18     there were no e-mails, there were no correspondents. It
19     was a very incomplete file.
20                  I had a conversation with you and you I
21     followed that with an e-mail that said, I am looking just
22     in a public file. The committee staff wants every
23     document pertaining to this procurement. And I identified
24     some of those documents. Business, e-mails,
25     correspondents, memos to file, phone logs may be. Any
0073
 1     document that exists that in any way pertains to
 2     procurement of the CBLS building, we wanted. We asked
 3     for. And if you were not producing a document, you would
 4     identify what it was. These e-mails certainly fall within
 5     that.
 6                  And I would respectfully ask Mr. DeQuattro to
 7     forward a copy of those e-mails that you have. We only
 8     have the few that URI gave us. Perhaps there are others.
 9     Additionally, if your archived e-mails, we would ask that
10     you retrieve those and forward those along as well.
11                              MR. CHAIRMAN: It may have well
12     have been just a matter of human error. If it didn't
13     produce the documents to the committee, what I am trying
14     to find out is why not? Where did it fall short so that
15     if we have occasion to utilize the practice in the future
16     we don't fall short.
17                              MS. GEORGE: So that e-mail
18     that I sent Ms. Hynes was prompted by a conversation, we
19     weren't looking for just the public file. We were looking
20     for all documents pertaining to the procurement.
21                              MS. CARPENTER: Mr. DeQuattro,
22     did you ask anyone at URI or URI's outside counsel whether
23     or not all of the outside legal counsel's recommendations
24     were incorporated into the contract?
25                              MR. DEQUATTRO: No, I didn't
0074
 1     ask that specific question.
 2                              MS. CARPENTER: And you said
 3     that legal only reviewed the contract for procedural
 4     issues. Is it a matter of process would the Director
 5     generally read the contract prior to signature?
 6                              MR. DEQUATTRO: Ms. Najarian
 7     was more of a macro manager. She was more, you know,
 8     explain it and she will sign it rather than reading the
 9     whole document. What she did with this one, I'm not sure.
10                              MS. CARPENTER: So there is no
11     process set up to assure that this contract of this
12     magnitude would have been reviewed.
13                              MR. DEQUATTRO: This is just
14     this particular contract. They did hire outside counsel.
15     Our normal standard course of conduct is to be very
16     involved with all of the contracts, provide the Director
17     with some sort of memo describing the contract and what
18     gets signed. This is unique because it is coming from
19     URI.
20                              MS. CARPENTER: But you don't
21     know if they were able to incorporate outside counsel's
22     recommendations or not?
23                              MR. DEQUATTRO: I didn't ask
24     that question.
25                              MS. CARPENTER: However, the
0075
 1     final approval of the contract would constitute, based on
 2     your previous testimony, the Director's signature on that
 3     contract does provide final approval for the substantive
 4     terms of that contract?
 5                              MR. DEQUATTRO: It binds the
 6     state to that contract in its entirety.
 7                              MR. CHAIRMAN: Ms. George.
 8                              MS. GEORGE: The next document
 9     is Exhibit ZF, dated March 23rd, 2007. It is the contract
10     signed where the CBLS building with Gilbane as
11     Construction Manager at Risk. Senator Lenihan.
12                              MR. CHAIRMAN: Did the
13     Department of Administration review the proposed agreement
14     slash contract between URI and Gilbane?
15                              MR. DEQUATTRO: As previously
16     testified, from a procedural standpoint we did.
17                              MR. CHAIRMAN: If I remember
18     correctly, you indicated that there is no written
19     documentation of this review, other than just the signing
20     of the contract?
21                              MR. DEQUATTRO: I believe so.
22                              MR. CHAIRMAN: Now did URI
23     really need DOA's approval or were they just seeking your
24     input?
25                              MR. DEQUATTRO: For this
0076
 1     contract, I don't think they have delegated authority.
 2                              MR. CHAIRMAN: Were you
 3     Mr. DeQuattro or Mr. Moynihan aware of the exclusions in
 4     the contract from the initial RFP? That, you know, the
 5     ones I have indicated, the waiving liability of
 6     environmental issues requiring URI to reimburse for all
 7     legal and costs and finally obligating that URI pays the
 8     cost and incentive bonuses to Gilbane's employees?
 9                              MR. DEQUATTRO: No.
10                              MR. CHAIRMAN: Now, one of the
11     reasons for procuring a CMAR contract, as least by way of
12     some of the testimony we have had, was to shift the risk
13     of delivering the CBLS building from URI to Construction
14     Manager at Risk. Doesn't limiting Gilbane's liability to
15     its fee, shift the risk back to URI?
16                              MR. DEQUATTRO: I would have to
17     read through the contract, but the way it described it
18     would appear to do that.
19                              MR. CHAIRMAN: In the case of
20     environmental issues which have specifically were excluded
21     from the responsibility of Gilbane Corporation, who would
22     be at the risk if there were environmental issues? I mean
23     by that, mold, kind of things that were turned up on the
24     Google search or the work in other states?
25                              MR. DEQUATTRO: Who would be at
0077
 1     risk? I guess it depends on the circumstances. I am not
 2     sure. I didn't read the contract in detail. I am not
 3     sure what the language is, how it reads.
 4                              MR. CHAIRMAN: From what you
 5     know about them, can you see how any of these provisions
 6     will benefit the State of Rhode Island, these exclusions
 7     from the contract?
 8                              MR. DEQUATTRO: I am going to
 9     be honest, I don't want to answer the question and answer
10     it incorrectly.
11                              MR. CHAIRMAN: Fair. So my
12     second question I am assuming you give the same answer,
13     should any of these terms that were excluded in this
14     contract be included in future contracts?
15                              MR. DEQUATTRO: If the terms
16     and conditions were not in the best interest of the state,
17     then those terms and conditions should not be used.
18                              MR. CHAIRMAN: You are not
19     familiar with the terms.  Ms. George?
20                              MS. GEORGE: Should a future
21     CMAR contract come across your desk, would you review it
22     more closely? Even if there were outside Legal Counsel,
23     would be more inclined to look at more than procedural
24     issues?
25                              MR. DEQUATTRO: We would be
0078
 1     more involved.
 2                              MS. GEORGE: Thank you.
 3                              MR. CHAIRMAN: At a previous
 4     hearing on June 9th of 2008 at the Oversight Committee
 5     Hearing, you Ms. Hynes testified that Jerome Moynihan
 6     reviews the procurement contracts in compliance with the
 7     RFP and the state's terms and conditions. What is the
 8     standard of review use to evaluate the procurement
 9     contract?
10                              MS. HYNES: It would be
11     reviewing all of the scope of work within the RFP to make
12     sure that that is inclusive and the proposal is matching
13     and the apparent low bidder is a responsive responsible
14     bidder. That is the pricing is appropriate. And then all
15     of this information would be incorporated into the
16     contract slash agreement. And then a purchase order would
17     then be generated.
18                              MR. CHAIRMAN: Based on
19     previous testimony by the University of Rhode Island
20     representatives, this is in the GMP agreement are the only
21     contracts signed by both Gilbane and URI for any
22     development in the North District. What kind of potential
23     liabilities might there be to the state for performing
24     work without a signed contract?
25                              MR. DEQUATTRO: Well, typically
0079
 1     you don't want a vendor to start work unless you have a
 2     signed contract, probably for more a problem for the
 3     vendor than the state. If something fell through the
 4     statues say that unless there is a binding contract --
 5     excuse me, unless there is a signed contract, there is no
 6     contract. It is probably worse for the vendor than the
 7     state at that point.
 8                               MR. CHAIRMAN: Are there any
 9     liabilities to the state?
10                               MR. DEQUATTRO: I can see some
11     issues. Normally we don't issue the PO unless we have the
12     insurances and what have you in place. That would be to
13     the biggest disadvantage if you don't have all of that
14     documentation in place to know that the state is insured.
15                               MR. CHAIRMAN: Is performing
16     work and approving POs without a signed contract a
17     weakness in the procurement process now?
18                               MS. HYNES: I would say no,
19     Senator.
20                               MR. CICCONE: Entirely
21     different question pertaining to the project that keeps
22     coming up. I keep hearing that URI hired a special
23     counsel to advise in the process of preparing this bid and
24     award. But no where in the documentation provided is the
25     contract with that attorney, nor is there any
0080
 1     documentation on what that individual is being paid.
 2                  Can somebody provide that to us? Because my
 3     concern would be this, as we know the state has channeled
 4     all of its resources into reorganizing and consolidating
 5     and we have a Department of Legal Services. I would
 6     assume that if we were looking to save money, and make it
 7     work the way it was supposed to be put together, that URI
 8     would have tapped into the resources of the new Legal
 9     Services department instead of going out and spending this
10     additional money.
11                  That's just the concern that I keep hearing
12     every once in a while when we talk about the outside
13     counsel that was hired to prepare all of this
14     documentation. If we could somehow get a hold of that and
15     take a look at that.
16                              MR. DEQUATTRO: You want
17     whatever documentations we have for Mr. Whitney and how
18     much we paid the law firm?
19                              MR. CICCONE: Correct. Thank
20     you.
21                              MR. CHAIRMAN: Ms. George.
22                              MS. GEORGE: Exhibit ZG, dated
23     March 26th, 2007, is the purchase agreement amendment
24     increasing the purchase order for the Construction
25     Management at Risk services from $75,000 to approximately
0081
 1     $44.6 million. It is signed by Mr. Moynihan.
 2                  Exhibit ZH, dated March 27th, 2007, is the
 3     break down of the costs for the GMP. It includes a
 4     construction contingency and an owner's contingency.
 5                  Exhibit ZI, dated March 28th, 2007, is the
 6     purchase order change order for the Construction
 7     Management at Risk Contract increasing the purchase order
 8     from $44.6 million increasing it approximately $65,000.
 9     Senator Lenihan.
10                              MR. CHAIRMAN: Is there such a
11     thing as a purchase order amendment?
12                              MS. HYNES: That's what we
13     would consider a change order.
14                              MR. CHAIRMAN: The terms are
15     interchangeable?
16                              MS. HYNES: Yes.
17                              MR. CHAIRMAN: The increase in
18     the purchase agreement amendment from 75,000 to 44.7
19     million is for different services under the contract, for
20     document phase and construction phase; is that correct?
21                              MS. HYNES: Yes, it is,
22     Senator.
23                              MS. GEORGE: Mr. Moynihan
24     signed the document increasing that amount of money. Did
25     he need automatization to do that with such a large amount
0082
 1     of money?
 2                              MS. HYNES:   He had the
 3     agreement that was attached to it, which was signed by the
 4     CPO in order for him to do that. He basically had the
 5     agreement that was in the binder, that was attached to
 6     this purchase agreement amendment in order to increase
 7     that. So the ability of the CPO to sign that agreement
 8     empowers us to do a purchase order on that level.
 9                              MS. GEORGE: Exhibit ZJ, dated
10     May 31, 2007, from the Director of Capital Projects at URI
11     for bid for electrical equipment totaling $386,000 for the
12     North District Utilities. This work was not included in
13     the GMP and so it's the change order would be submitted by
14     Gilbane.
15                  Exhibit ZK, dated July 1, 2007, is a URI
16     requisition increasing the purchase order for the
17     construction for the CMAR contract by $1.2 million for the
18     North District Utility Company.
19                  And Exhibit ZL, dated August 8, 2007, is a
20     purchase agreement amendment from DOA increasing the
21     purchase order for the CBLS by $1.2 million for North
22     District Utilities campus. Senator Lenihan.
23                              MR. CHAIRMAN: The utility work
24     that was not included in the guaranteed maximum price,
25     which provided the basis for the 44.69 million and the
0083
 1     March 28th, 2007 purchase order change order, does
 2     increasing the purchase order automatically expand the
 3     contract to include the utility work?
 4                              MS. HYNES: In this case, there
 5     was an item that was not within the contract. That allows
 6     us the ability to do the amendment in relation to that
 7     line item that had no dollar amount within the actual
 8     bid. That's why on our amendment it's showing going into
 9     that 44.609 million bringing it up 45.909.
10                  We want to make sure it's showing the
11     relationship to that original contract. That was an item
12     was not included in that bid already to increase that
13     amount of money.
14                              MR. CICCONE: Going back to the
15     maybe the Chair Person or our attorney just glazed over
16     it, when you look at Exhibit ZG, there was a change order
17     that changed the amount from $75,000 to approximately
18     $44.5 million. And I think your statement was that the
19     change order was based on the scope of the work. Would it
20     not be -- strike that -- there I am going to ask it this
21     way, the scope of the work was for the construction
22     document phase of services which was the $75,000. Looking
23     at it as a completely different aspect of the job we were
24     now getting in from preparing the plans, why would we
25     issue a change order if we were not changing any of the
0084
 1     work that is involved with the document phase. We are
 2     actually morphing into the construction phase.
 3                  Shouldn't that have been a completely new
 4     purchase requisition pertaining to the construction
 5     phase? You know it is incomprehensible to go from $75,000
 6     to $44.5 million without going out. I think if the public
 7     hears we agreed to a change order without and the change
 8     order basically changes the scope of the work. That's
 9     where the concern that we have here right now.
10                  I am not trying to criticize Purchasing. I
11     know your direction is coming internally from URI saying
12     this is what we agree to. But, the $75,000 was according
13     to what we have here, was hiring someone to prepare
14     documents to continue to go out and complete a project.
15                  My concern is, we now have the person that
16     prepared the documents that is actually submit a bid for
17     $44 million. I know there is documents here. But doesn't
18     that give that individual, you know, an advantage over
19     everyone else?
20                              MR. DEQUATTRO: I guess the
21     question I have is who is everyone else at this point in
22     time?
23                              MR. CICCONE: What is taking
24     place here you got it appears there were two or three
25     contractors or whatever you want to call them,
0085
 1     construction people companies, that bid on this. I looked
 2     at the documents that justified the change and I question
 3     URI on. I know you are just the signature after URI.
 4                  I think it leads to some concern that it
 5     didn't go out in a different method. Let's put it that
 6     way. I can understand that URI said well there is a
 7     problem with the project. If you stop it when you really
 8     didn't have to stop it.
 9                              MS. HYNES: I think our intent
10     was to keep all of that work intact, together, within that
11     one contract file. So anybody picking it up could see the
12     beginning of it and the progression of it. We were
13     uncomfortable at that time doing that.
14                              MR. CICCONE: If you were
15     uncomfortable then, you should see how we are right now.
16     Thank you.
17                              MR. CHAIRMAN: Ms. George.
18                              MS. GEORGE: Exhibit ZM is
19     dated September 7th, 2007. It is a URI requisition to
20     increase the purchase order for the CBLS building by $5.4
21     million for a total of $51.3 million, including 148,000
22     for Gilbane's supervision and 488,000 as a 10 percent
23     electrical installation contingency.
24                  Exhibit ZN, dated October 29th, 2007, is a
25     purchase agreement amendment signed by Mr. Moynihan to
0086
 1     increase the PO by the amount identified in the previous
 2     exhibit. So the total contract for this CMAR services
 3     increases from 45.9 million to 54 million. Senator
 4     Lenihan.
 5                              MR. CHAIRMAN: What contract
 6     does this work fall under?
 7                              MS. HYNES: Senator, it is from
 8     the same contract.
 9                              MR. CHAIRMAN: You said that
10     purchase order in this contract then was expanded by about
11     11.8 percent by this change. At what point would DOA say
12     you have to re bid this?
13                              MS. HYNES: As you know
14     Senator, we have no particular guidelines right now on
15     that. Anything that starts to exceed 10 percent is
16     usually escalated up to myself as a purchasing agent or
17     the CPO.
18                  In this case though where those items and I
19     will double check were not included in the bid, I believe
20     that is what it was and we did the charge orders in order
21     to bid later. I am not sure on that.
22                  Usually it is a 10 percent guideline that we
23     use if it starts to exceed 10 percent of the contract.
24                              MR. CHAIRMAN: Okay. Could you
25     explain to me why, in this case, you had an expansion of
0087
 1     almost 10 percent.   Why didn't we go to a re bid?   Why
 2     wasn't considered?
 3                               MS. HYNES: Senator, I have to
 4     go back on those change orders. I would like to the
 5     opportunity to look at that. We do extensive work on
 6     that.
 7                               MR. CHAIRMAN: It is unusual
 8     for a change order to include a contingency fund?
 9                               MR. DEQUATTRO: It is unique.
10     I would say it is unique.
11                               MR. CHAIRMAN: There were
12     already two contingency funds in here. One by Gilbane and
13     one by the URI. Now you have got a third. Since it's
14     unique, under what circumstances. I will rephrase that do
15     you think you should or do you have any policies and
16     procedures in place governing a practice like this?
17                               MR. DEQUATTRO: Like when you
18     say a practice you mean for the allowance you mean?
19                               MR. CHAIRMAN: Yeah, the
20     contingency within the change order.
21                               MR. DEQUATTRO: Maybe we should
22     have a policy and procedure in place for it. I am
23     thinking through as you read this and why they would have
24     did it this way. I guess they were just trying to follow
25     the logic with the procurement itself.
0088
 1                              MR. CHAIRMAN: Sort of
 2     following the bouncing ball here, we had an RFP that
 3     included, in this particular case, this electrical work.
 4     Then they we don't have enough money to do all that and
 5     they were at one point going to take shift monies from the
 6     next building in line to do the electrical work. Now we
 7     find that on the election this coming up in November a
 8     proposal for URI to do the North District work. And
 9     certainly interesting set of shifts.
10                              MR. DEQUATTRO: Would you re
11     bid the 5.4 million separately where the state would go
12     over contracts for that electrical work.
13                              MR. CHAIRMAN: Do have you any
14     policies and procedure existing to deal with a situation
15     like this? Which you have already indicated is above the
16     10 percent threshold and is unique in terms on including a
17     contingency fund? Senator Ciccone.
18                              MR. CICCONE: I would probably
19     like the first answer, since it was the Chairman said that
20     it was excluded, so that eliminated it from that project.
21     Your answer was I think maybe we should have re bid.
22     Because now it is not part of that project any more
23     because they eliminated. At that point URI should have
24     come forward and said since we eliminated it from the
25     original bid, we are now going to include it and allow
0089
 1     several put it out as a special bid.
 2                              MR. DEQUATTRO: Actually when I
 3     did say that I meant I re bid it and add it into the
 4     contract, but make sure the 5.4 was at least bid. Make
 5     sure there were trades that were bidded on. Absolutely.
 6     Some are the sort of competitive bid.
 7                              MS. GEORGE: Senator Lenihan
 8     mentioned the RFP included development of the North
 9     District Utility. During negotiation of the GMP, the
10     North District Utilities was taken out. It was in and
11     then it was taken out. Because URI could not afford it,
12     so the have been put back in.
13                  Is this just a fancy way, would you look at
14     this as a cost over run? Originally URI wanted utilities
15     the so they needed pull it out needed funding, then put it
16     in. Would you look at this like a cost overrun? Is it a
17     change of scope?
18                  I guess what I am getting at is, is this a
19     change of scope from the original contract because the GMP
20     didn't include it? Or is it a cost overrun, if you look
21     at the original RFP which included it? How do you look at
22     this?
23                              MR. DEQUATTRO: I don't know if
24     I would call it a change in scope.
25                              MS. GEORGE: So is it a cost
0090
 1     overrun?
 2                              MR. DEQUATTRO: If it was money
 3     for a separate building. I would say that is certainly a
 4     change in scope. Cost overrun? You know, possibly, sure.
 5                              MR. CHAIRMAN: Does the URI
 6     requisition get submitted to the Department of
 7     Administration or is there another form that is used?
 8                              MS. HYNES: URI prepares their
 9     own requisition and then it is come into the RIFAN system
10     in RIFAN requisition. They actually generate that within
11     their system. It is almost like a duplicate where they
12     have generate it in order for it to work with RIFAN.
13                              MS. CARPENTER: As we discussed
14     earlier, this project was being paid for general
15     obligation bonds. As we know from previous testimony here
16     this committee that this was a bond, this specific
17     project, and then there was another general obligation
18     bond from another project. And funds were actually being
19     used from the account for the other project to do some of
20     this additional work.
21                  I was just looking at the DOA documents and I
22     am just trying to see on there if there is another step in
23     the process to get approval or notify anyone else, maybe
24     the budget department, that this was going on. I just I
25     don't see anything on here. Is there I'm just missing
0091
 1     it?  Is there a notice in place to let them know?
 2                              MS. HYNES: Any of the agencies
 3     that are have to work with budget as far as in particular
 4     when they were going to float the money, during what
 5     fiscal year. Purchasing would not get involved in that.
 6                              MS. CARPENTER: Prior to this
 7     purchase agreement being signed by Mr. Moynihan, would
 8     there have to be any kind of review by someone in budget
 9     to assure the funds were there? How does that appear?
10     How do we know when we look at this document that it
11     occurred?
12                              MS. HYNES: I think that you
13     would need to talk to budget about. As it passes through
14     the RIFAN system and when they encumbering monies is when
15     it would stop within the system. It has its own level,
16     dollar levels. They would be able to tell you better how
17     that works. If the funding is not available, their
18     processing of the PO would not move.
19                              MS. CARPENTER: For example,
20     request for legal services. You have to have specific one
21     of which includes the budget officers, pretty much
22     documenting that the funds are there.
23                              MS. HYNES: What I could do is
24     we would be able to print out what we have in the system
25     and that would show the different entities that this
0092
 1     particular purchase order to has to be routed for
 2     approval. So I could give you copy of that. It is an
 3     internal working at RIFAN. Even the agencies don't have
 4     access to that. We have the access that. And so I could
 5     print that out and show the divisions signing off on it.
 6                              MR. CHAIRMAN: The URI
 7     requisition, I have a copy of it here, includes an account
 8     number for funds. The account number is provided down at
 9     the bottom towards the bottom left. This is Exhibit ZM.
10     And it gives us an account number of 965-458-0000-0000.
11     Why is this account number provided?
12                              MS. HYNES: I really don't
13     know, Senator. I don't have that answer for that.
14                              MR. CHAIRMAN: Do you have in
15     front of you the Exhibit ZM?
16                              MS. HYNES: Yes, I do.
17                              MR. CHAIRMAN: You see where I
18     am referring?
19                              MS. HYNES: Yes, I do. I am not
20     sure if that would be their accounting. I would have to
21     go back into RIFAN and they have a certain location
22     numbers that are assigned to URI. 9955 might be URI. So
23     I am not sure. I don't want to testify.
24                              MR. CHAIRMAN: Would it be
25     likely to show the source of the funds for the increase?
0093
 1                              MS. HYNES:   It could very well
 2     be. The only difference that my concern is where it has
 3     all of the 0's. That is why I am not sure where that
 4     would trail to.
 5                              MR. CHAIRMAN: Do you know what
 6     account this number is for?
 7                              MS. HYNES: No, I don't. I am
 8     even questioning the 9655, whether that's the
 9     identification of what we call a location number for URI.
10     I would have to look in the system.
11                              MR. CHAIRMAN: I am speculating
12     here, that it's the bond account for the pharmacy
13     building.
14                              MS. HYNES: It could be. It
15     could be. But, normally the first few digits identify the
16     location, being agency for us, and then the other
17     identifying numbers get into the sourcing of the funding
18     and various levels and then it can even track it down to
19     budget line items. I am not quite sure because of their
20     system People Soft if they have their own mechanism and
21     then reverts into RIFAN.
22                              MR. CHAIRMAN: Is this number
23     included on the RIFAN's purchase order change form?
24                              MS. HYNES: That account
25     number?
0094
 1                             MR. CHAIRMAN: Yes.
 2                             MS. HYNES: I don't believe so,
 3     Senator.
 4                              MR. CHAIRMAN: Is this account
 5     number included on the purchase agreement amendment?
 6                              MS. HYNES: I don't believe
 7     so. But I have to double check that.
 8                              MR. CHAIRMAN: Then finally in
 9     the sequence of questions without the account number, how
10     does anyone know the source of the funds?
11                              MS. HYNES: That's why I have to
12     look at our purchase order and our change order. And then
13     I could have budget translate it for me to find out
14     exactly where it was coming from.
15                              MR. CHAIRMAN: Senator Ciccone.
16                              MR. CICCONE: I think it is a
17     completely different project and a completely different
18     account number. Because the account number for the
19     project at the Life Science Building is 9656457. And the
20     project is P070140. And if you look this one here, it's a
21     completely different project number and different set of
22     account numbers. So it is definitely not within the same
23     scope of work for that project.
24                              MR. CHAIRMAN: If I could just
25     sort of summarize a lot of long, tedious testimony here,
0095
 1     could you explain to the committee, in summary what is the
 2     process in place at the Department of Administration for a
 3     procurement of a Construction Manager at Risk contract?
 4                  If I could, in your explanation could you
 5     explain how that would differ from the process for the
 6     procurement of any other service? And is it a written
 7     process? And I will follow through that with one final
 8     question. Just go through what I said.
 9                  In summary, what is the process in place at
10     DOA of the procurement of a CMAR?
11                              MR. DEQUATTRO: Currently,
12     under the regulations the agency has the desire to select
13     alternative methods of construction need to put in writing
14     to regulation what method they want to select. Given the
15     rationale for it in compliance with the regulation, CMAR
16     being one of those items in the regulation, as an
17     alternative method of construction. That would start the
18     ball rolling from the purchasing standpoint.
19                  The Director assuming approval of that would
20     send it to Purchasing. She would send a letter to the
21     agency requesting approval. And they can move forward
22     with putting together a request for proposal to go out to
23     bid for Construction Management Services.
24                  That would take place. Bids would come in.
25     The University or the agency would evaluate the bids for
0096
 1     Construction Manager. Score those bidders. Determine who
 2     is the appropriate vendor. I think going forward,
 3     previously they were going through the A&E Committee. I
 4     don't think that is actually required.
 5                  That would be done by the agency. Forward it
 6     to Purchasing for final approval of that particular
 7     vendor. Then assuming it's similar to our prior project
 8     having a two phase component it, a contract should be
 9     entered into for phase one of the project.
10                  Phase one would move forward. If phase two
11     was deemed to be in the best interest of the state. And
12     move forward until completion of the work is done. That
13     is globally the process.
14                               MR. CHAIRMAN: How is that
15     process you described different or is it different from
16     the procurement that you follow, process that you follow
17     for any other services?
18                               MR. DEQUATTRO: The only
19     difference I think in that process that I described would
20     be the approval for the type of construction management
21     that you need to procure.
22                  Let's say it is was information technology
23     project, there wouldn't be any approval for the type of
24     technology that you are trying to procure from the Chief
25     Purchasing Officer. Agency would determine what their
0097
 1     needs were, go to purchasing with the requisition to
 2     propose an RFP process. Put that process together. Move
 3     forward in a similar fashion that I just explained. Make
 4     sure they have the appropriate committees in place to
 5     evaluate the bidders. And once a bidder is successful,
 6     enter into a contract for the services that were being
 7     selected. The appropriate paperwork is issued from
 8     Purchasing.
 9                              MR. CHAIRMAN: The process you
10     described in your presentation here, is it written
11     anywhere what this is?
12                               MR. DEQUATTRO: In the statute
13     and regulations.   It's in the statute and regulations.
14     It's in the law.
15                               MR. CHAIRMAN: Would you think
16     it would be advisable or necessary or helpful to expand
17     upon just the statements in the regulation and law for
18     someone else coming into the process after you or after
19     some of the other people?
20                              MR. DEQUATTRO: I think so. I
21     know we do have a policy and procedure handbook in
22     Purchasing. I don't know how well often it is used. It
23     probably needs to be updated.
24                  I 100 percent agree that we should have a
25     good policy and procedure manual that gets into the very
0098
 1     specifics of processing and who does what.
 2                              MR. CHAIRMAN: I guess I
 3     probably better address to you, Ms. Hynes, but do you know
 4     in the last time that handbook was revised?
 5                              MS. HYNES: I looked at it the
 6     other day. It is probably about six or seven years old.
 7     It does need to be updated, along with out regulations
 8     which we are trying address that as well.
 9                              MR. CHAIRMAN: Are there any
10     questions from the Committee?
11                              MS. GEORGE: Mr. DeQuattro, you
12     said in future procurements for CMAR contracts, those
13     contracts will not go through the AE&C Committee, not even
14     the first portion, the pre construction document phase?
15                              MR. DEQUATTRO: I don't think
16     it's necessary. Only because if you read the law in
17     connection with what goes through the A&E Committee, it is
18     exclusively for the A&E Committee to select who is
19     professionally and potentially and then it would have go
20     onto the Chief Purchasing Officer.
21                              MS. GEORGE: Who would review
22     these contracts? If you had a similar one URI building
23     the pharmacy building?
24                              MR. DEQUATTRO: The same folks
25     that would be reviewing all of the other hundreds or
0099
 1     thousands of contracts that we have.
 2                              MS. GEORGE: What we learned in
 3     this particular case was that DOA relied on URI's
 4     expertise and outside legal counsel to prepare this legal
 5     contract, would DOA provide a greater level of review
 6     given what you have learned about this particular
 7     procurement?
 8                              MR. DEQUATTRO: I think so.
 9                              MS. GEORGE: What would that
10     review be? I think that is what the Chairman was getting
11     at.
12                              MR. DEQUATTRO: I will be
13     honest with you, we are going forward the review I think
14     everybody is more focused on the contract. With outside
15     counsel and contractors feel comfortable. In this
16     instance, you know, maybe relying on URI and outside
17     counsel too heavily. But we were all representing the
18     state. You don't want to do a duplication of effort. But
19     maybe go for a basis we can put some more procedures in
20     place to have a review of that particular thing. It will
21     be more involved in the selection of outside counsel.
22                              MR. CHAIRMAN: I am not
23     suggesting a replication of process, but way of analogy,
24     we have a House in the Senate, we are all in the interest
25     of the state. Why don't we eliminate the governor's
0100
 1     ability to veto. It isn't so much that somebody is trying
 2     to do something wrong, as it the case of just making sure
 3     that another pair of eyes looks at the same material to
 4     see if someone missed it beforehand.
 5                              MR. DEQUATTRO: Good point.
 6     There is a high volume of work that we have. So it's what
 7     level of second scrutiny do you need. If we have are
 8     hiring outside counsel, normally they have given us good
 9     advice. I am not saying anybody did a bad job here from
10     that end. URI does have their own counsel. I do
11     understand your point.
12                              MR. CHAIRMAN: I guess in this
13     particular case while I appreciate the necessity of
14     maximizing the limited finite resources you have to do
15     this kind of review, it seemed that you're encountering a
16     process which is relatively new that would tend to draw
17     more of your attention until it becomes a process by which
18     you are very familiar. And you can shift your intensity
19     to some other location. CMAR is still relatively new.
20     Although it has been utilized elsewhere.
21                              MR. DEQUATTRO: Yeah. And I
22     think when it comes to construction, you have a lot of
23     turns to specialists in that particular area. Even though
24     we have done or a couple and become experts in the area,
25     there are guys out there that do it on a daily basis that
0101
 1     need input and advice.
 2                               MR. CHAIRMAN: Any further
 3     questions?   That will conclude our hearing for this
 4     evening.
 5                  I would hope that if we have occasion to ask
 6     for his presence again, Mr. Moynihan will find a way to
 7     not be on vacation or at a National Institute of
 8     Government Procurement Conference. His name came up
 9     repeatedly tonight as a source of information. And that
10     need to call on him, we would appreciate your assistance
11     in making sure he will be here.
12                  Any other business before the Committee? In
13     that case, we will consider the hearing adjourned.
14                              (HEARING CLOSED AT 6:24 PM)
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25                      C E R T I F I C A T E
0102
 1
 2                  I, Cassandra M. Capraro, a Notary Public in
 3     and for the State of Rhode Island, hereby certify that the
 4     foregoing pages are a true and accurate record of my
 5     stenographic notes that were reduced to print through
 6     computer-aided transcription.
 7                  In witness whereof, I hereunto set my hand
 8     this 6th day of August, 2008.
 9
10         ______________________________________________________
11                       CASSANDRA M. CAPRARO
12                     CERTIFIED COURT REPORTER
13                          NOTARY PUBLIC
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