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Auditors question Alvin H. Butz courthouse contract: Deal to manage Northampton County work should have been bid out, report says.
[October 15, 2006]

Auditors question Alvin H. Butz courthouse contract: Deal to manage Northampton County work should have been bid out, report says.

(Morning Call, The (Allentown, PA) (KRT) Via Thomson Dialog NewsEdge) Oct. 15--Northampton County should have sought bids for a construction manager to oversee the $45 million courthouse addition, instead of hiring a firm that did previous work at the government complex, auditors say.

The county controller's office says the county does not have a valid contract with Alvin H. Butz Inc. of South Whitehall Township.

The county is paying based on terms of a previous contract with Butz. Auditors said that contract is vague, and it is unclear whether that ambiguity has led to county taxpayers overpaying for Butz's work.

Through August, the county had paid the company about $3.6 million.

This is not the first criticism of the contract.

Councilman Ron Angle, council solicitor Leonard Zito and District Attorney John Morganelli previously raised concerns about its ambiguity.

The concerns are enough that county officials say they will not agree to similar terms in future contracts.

County Executive John Stoffa said because the courthouse project is so far along, the county will continue to retain Butz to finish the job, which he expects to be done by August.

After negotiations with Stoffa, Butz agreed to deduct 10 percent from future bills.

The county hired Butz to oversee the $43 million project to build a courthouse addition and renovate the old courthouse. That work is about nine months behind schedule and at least $2 million over budget.

County administrators asked the controller's office to review the Butz contract to determine if it was valid and to examine the expenses the company has charged.

The county first hired Butz in 1996, under then-County Executive Bill Brackbill, to oversee work including renovations at the Gracedale nursing home in Upper Nazareth Township, a new heating plant for the courthouse and prison in Easton, and expansion of a juvenile detention center near the courthouse.

That contract also called for Butz to oversee "possible additional administrative facilities" and renovations on "existing court and administrative facilities."

Citing that language, then-County Executive Glenn Reibman retained Butz in 2001 to oversee the courthouse expansion. He said his attorney ruled the county was bound to hire Butz based on Brackbill's 1996 contract.

Last week, the controller's office ruled the contract should not have applied to the courthouse work. It said the county should have solicited bids, as required by its purchasing laws.

Company President Greg Butz said he believes the contract does cover the work.

"It certainly seems to us that it applies," he said, questioning the significance of investigating it now, with the work nearly complete.

In following the terms of the 1996 contract, the county paid Butz 4 percent of the construction cost, plus expenses including the salaries of site managers.

Controller's office auditors said those terms were not clear enough. They questioned whether some of the personnel expenses the county has paid should have been covered by the 4 percent fee.

"The contract was poorly written with regard to fees and costs that were to be billed to the county," lead auditor Kathleen Kuzma wrote.

Controller's officials said they could not determine if that resulted in the county paying too much.

"We paid for everything that was given to us," audit manager Frank Kedl said. "Whether we should have been paying all of that, that's the real question."

In the audit, county Fiscal Affairs Director Vic Mazziotti said the county no longer would enter contracts to pay based on a percentage of the project cost, plus expenses such as supervisory fees.

The Construction Management Association of America recommends against that type of contract, and state purchasing laws prohibit state agencies from using those terms, according to the audit.

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Copyright (c) 2006, The Morning Call, Allentown, Pa.
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