No Strings Attached

Virvus Jones says he opposed a contractor that fumbled hotel job

Apr 24, 2002 at 4:00 am
Virvus Jones is putting distance between himself and a minority contracting firm that ran into trouble on the downtown convention-center hotel -- a move that comes as news to other key players in the deal.

Not only does the former city comptroller insist he opposed giving a $3.05 million contract to DKW Construction Co., he says he didn't pull any strings to secure an additional $800,000 for the firm after it fell months behind on its job of gutting the old Gateway Hotel.

He says he opposed giving the business to DKW but now refuses to say what his reasons were. "I don't think it was fair of me to say," he says. Once DKW was picked for the project by hotel developer Historic Restoration Inc., Jones says, he believed it was no longer appropriate to voice any objections.

Jones' opposition came as news to others involved in the hotel project, including Eddie Hasan, head of MoKan, a city-funded organization that works to assist minority-owned contractors.

"That was never expressed to me," says Hasan, who helped DKW put together the winning bid for the Gateway Hotel portion of the $265.5 million, 1,080-room hotel. Hasan says that he and Jones had "conversations" about DKW's involvement in the project before the company was selected but that Jones never raised any concerns about DKW.

And DKW president Dorrie K. Wise, in a recent interview, credited Jones and Hasan with assisting her business in putting together the winning bid. Wise said the two men -- Jones and Hasan -- "wanted the job to be minority." DKW, she said, won the bid because it could meet bonding requirements on the job [Geri L. Dreiling, "Little Fix," April 17]. Wise did not return calls for this story.

Jones says he voiced his concerns about DKW during a selection meeting in January or February 2000. He was at the meeting as a representative of Roberts & Roberts, a company working as a consultant to HRI to make sure minorities and women would participate in the hotel project. Jones says he told representatives of HRI, then-general contractor Clark Construction, and the independent construction-monitoring firm Benham/Kwame that he didn't want DKW on the job. His objections were made "verbally," he says -- he didn't write anything down, nor were minutes taken at the meeting. As for the other people in the meeting, he says, they're gone: HRI's representatives at the time have since returned to New Orleans, Clark Construction has left the job and Benham/Kwame's representative is dead.

According to an article published in the St. Louis American shortly after DKW was selected, Roberts & Roberts is credited with putting together the winning team, which also included minority-owned City Design and H&H Development. A photograph accompanying the story includes Jones and executives of the construction and development firms.

DKW started work on the project in March 2000. The contract required DKW to finish the job in four months, but nine months in, the job was nowhere near completion as the company ran into difficulties with its subcontractors. NSC Corp., which was added to the project at Clark's insistence, filed for bankruptcy, and DKW fired City Design from the job.

Wise said that the job was a lot harder and involved more work than she had anticipated. She'd already gone through a large portion of the $3.05 million, and getting a contractor to take City Design's place was expected to be costly. She needed more money to get the job done, and she says that she turned to Jones, the developer's consultant, for help.

At that point, DKW could have been fired from the job and a claim made against its bond. That choice would have meant additional delays as a replacement contractor was identified and hired. Forcing DKW to abide by the original contract could have caused the 13-year-old firm to seek bankruptcy protection, according to a source familiar with the project. That also would have meant delays.

Rather than force DKW off the job or force it to complete the job, the developer of the publicly financed hotel agreed to increase the contract amount by $800,000.

A December financial statement, prepared by DKW; Alberici Construction, the general contractor that succeeded Clark; and HCI, a sister company of HRI, identifies the additional funds as a claim amount offered by the city of St. Louis. A settlement agreement, signed in January 2001 by DKW, HRI and Alberici, required DKW to complete the work "originally contracted for." And a March 2001 payment application describes the additional $800,000 as an "inefficiency claim."

HRI vice president Ron Silverman describes the "inefficiency claim" as an "inartfully drafted" change order.

Jones, who was present during some of the discussions between HRI and DKW about additional payments, says he understood the $800,000 to be payment for additional work performed by the firm -- and because it was additional work, he understood it to be a legitimate change order.

Jones says Hasan and Wise may have misunderstood his role in the selection process -- and his presence at meetings during which additional funds were discussed. "Well, they may have misinterpreted my role there," he says. "Was I trying to be helpful to them? Yeah, I was trying to be helpful. I was trying to be helpful to everybody."

The additional payment didn't solve DKW's problems. The company took 13 months to complete the job, and DKW contends it is still owed $350,000. The company also is being sued by another subcontractor on the project.

In addition, the FBI is looking at DKW's work as a subcontractor to St. Louis Bridge Construction Co. on an unrelated highway job. Sources say the FBI also has made inquiries about DKW's work on the hotel project. However, Wise, Hasan, Jones and Silverman say they haven't been contacted.

The feds got curious about DKW after an inspector with the Missouri Department of Transportation concluded that DKW didn't perform a "commercially useful function" on the highway job and instead hired a nonminority firm to do its work.

DKW's troubles have contributed to a delay of several months on the convention-center hotel, but cost overruns are expected to be covered by the project's contingency fund.