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Contractor with big donations, questioned performance wins community college projects

The Los Angeles Community College District has awarded a series of multimillion-dollar contracts to a firm that district officials said needed to be babysat to meet construction standards and was doing an “absolutely awful job.”

The firm, Sinanian Development Inc., lost a contract in July 2008 about a month after district officials had criticized its work performance at public meetings.

The same month, the company began contributing $75,000 to the district’s construction bond measure, the first contributions made by the company to any district campaign.

Those donations made Sinanian one of the largest contributors to the successful bond measure among hundreds of contractors and others who donated. The Measure J campaign collected more than $1.5 million in contributions from June 2008 to January 2009. 

Within weeks of the contributions, Sinanian submitted the lowest bid and won back the canceled project to construct a classroom building at Los Angeles Mission College for $36 million. And one year later, the company won a seventh contract valued at $23 million, even though the district used a construction process that allows more flexibility to disqualify troublesome contractors.

The contributions from Sinanian are just one issue at the center of the district’s dealings with the Tarzana-based firm. District officials have grappled with its contracting process and the way it handles companies, such as Sinanian, that underperform – all while it tries to replace obsolete buildings and bring the colleges into the 21st century. As of summer 2009, Sinanian had received more bond money than any other contractor, according to the most recent data from the district.

Larry Eisenberg, the district’s executive director of facilities planning, said the district’s board decided to keep working with Sinanian because the firm’s chief executive had pledged to improve quality. He also said the company’s work on other projects had been better.

He said Sinanian’s campaign contributions were not a factor in the district’s decisions to do business with the company.

“None of us who were working on it had any idea that they had made any donation to Measure J,” Eisenberg said. “We were just simply working to pursue the best interests for the district and the college.”

The construction company’s CEO, Sinan Sinanian, said the firm had competed fairly for each of its contracts and won most of them because it offered the lowest bid. He said the district could have taken action against his firm if it was concerned with performance. But the district hadn’t done so.

In fact, Sinan Sinanian disputes that the district ever informed him of a problem with construction quality, despite Eisenberg’s statements and the minutes of an August 2008 board meeting.

“We have had nothing but happy clients,” he said.

Sinanian said he contributed to Measure J because several people in the district had solicited donations from him and other contractors. He said he believes it’s his obligation as a major contractor to donate – and that it can’t possibly have any bearing on his firm’s ability to win projects under the public bidding process.

Labor violations arise

The Los Angeles Community College District is the largest in California, enrolling more than 140,000 students a year at nine campuses that serve a sprawling 882-square-mile coverage area.

Voters have approved $5.7 billion in taxpayer-funded construction bond measures in 2001, 2003 and 2008. The money has fueled a massive building boom, with 339 projects completed so far and $2.5 billion spent as of May.

Coined “Build LACCD,” the bond program has been touted by the district as one of the nation’s largest green-construction efforts. The projects include elements of energy efficiency and conservation.

The effort also has had its share of troubles. A consultant told district officials in 2005 that excessive reviews of design plans had led to delays and millions of wasted taxpayer dollars, according to a report in the Los Angeles Daily News.

This spring, the board decided to hire an inspector general to root out unauthorized spending after the district’s bond counsel found several examples of district officials or their consultants spending bond money improperly on travel, public relations, tenant improvements and other items not permitted under the law. The lawyer’s report did not focus on construction companies.

Before it won its first contract with the college district in 2006, Sinanian Development was building a name for itself as a general contractor on public works projects throughout the Southland.

The family-run business, founded in 1983, won $56 million from the city of Los Angeles to build or refurbish animal shelters, $69 million for new fire stations and $34 million for new libraries, making Sinanian one of the largest general contractors participating in these city construction programs.

The firm caught the eye of the Carpenters-Contractors Cooperation Committee, a nonprofit watchdog group that monitors labor practices.

In at least four cases in the last seven years, the state Division of Labor Standards Enforcement issued penalties after finding that Sinanian or one of its subcontractors had paid workers less than the required prevailing wage on a public works project, records show.  

In the one case that involved Sinanian directly, the firm paid $15,000 in fines and back wages in 2006 after investigators found the company underpaid two laborers and carpenters on an affordable housing project in Santa Monica.

Sinan Sinanian said it was unfair to focus on a single violation involving two workers when the company had employed thousands of people on dozens of projects.

Subcontractors that worked under Sinanian also have gotten into trouble. Sinanian paid $81,000 after subcontractor Bohannan Brothers Concrete was found to have underpaid 10 workers, records show.

That same year, in 2006, a Sinanian subcontractor named 1-AMD Construction was found to have underpaid workers by $10 to $19 per hour on a Fire Communications Center building in Ventura County. The subcontractor also falsified payroll records and coached workers to lie, documents show. Sinanian paid $90,000 in back wages and penalties.

As a result of those violations, 1-AMD Construction is barred from bidding on public works contracts through 2012.

In a smaller penalty, Sinanian subcontractor AT & TZ Electrical Contractor paid $5,500 in back wages after it failed to pay an electrician the correct amount.

Sinan Sinanian said the public contract code requires him to work with subcontractors that submit the lowest bids. The company monitors subcontractors for labor compliance, but sometimes the firms can cheat nonetheless, he said.

Before 1-AMD was caught cheating, Sinanian had hired the subcontractor a handful of times on previous public works projects, he said. The firm stopped working with 1-AMD altogether after the labor violation. Sinanian had never worked with Bohannan before that company’s violation, he said.

Quality control questioned

Concerns about Sinanian’s labor issues came up when the company won its first construction job at the Los Angeles Community College District. Sinanian bid $16.6 million on a project to build the Martin Luther King Jr. Library at Los Angeles City College in April 2006. That was about $200,000 less than the next-lowest bidder.

California Watch photo by Katie PerezOfficials reported problems with Sinanian's first project with the district, the Martin Luther King Jr. Library.

A representative with the Carpenters-Contractors Cooperation Committee told district trustees that the firm had a habit of hiring subcontractors that didn’t follow labor laws, referring to the violations discovered by the Division of Labor Standards Enforcement.

Eisenberg, the district’s construction chief, said in an interview that the district spent extra time monitoring compliance at job sites where Sinanian was the general contractor because of the past concerns. The extra vigilance did not involve added costs for overtime or additional compliance officers, but it did mean less time spent monitoring other projects, Eisenberg said.

By February 2008, Sinanian had won four more competitively bid projects valued at more than $150 million. The projects included classroom and science buildings at West Los Angeles, Pierce and Los Angeles City colleges.

Meanwhile, it was becoming clear that the Martin Luther King Jr. Library posed problems, according to district officials. Nearly two years into the project, the district’s deputy director of inspections, Frank Alaniz, told Eisenberg that Sinanian was lacking in quality control.

“LACC (Los Angeles City College) has had (and continues) to babysit Sinanian in all construction aspects, including QC, from the very beginning for the good of the project,” Alaniz wrote in February 2008.

“Sinanian has three major projects at City, Pierce and West. … Should we be concerned?”

The president of Los Angeles City College, Jamillah Moore, told Eisenberg in an April 2008 e-mail that Sinanian was “doing an absolutely awful job.”

In May 2008, Alaniz said Sinanian was rushing to finish without fixing thousands of needed corrections identified by the project inspector, including fire and life-safety issues.

“On this job at LACC, it’s come down to the contractor trying to meet unrealistic PM (project manager) schedules, on behalf of the schools, that pushes them to doing construction without complying with building codes,” Alaniz wrote in an e-mail to Eisenberg.

Sinanian was covering up the walls and ceilings, Alaniz said, making the areas that needed fixing inaccessible.

“These areas might need to be torn apart later to make them comply,” Alaniz wrote. “I just don’t understand the logic about pushing to build something, possibly, unsafe.”

The project inspector, Cliff Clark, told Alaniz the contractor still had about 8,000 unresolved inspection issues and the project was nearing its scheduled completion date.

“Some of it involves: Fire, Life, Safety, and you know that I cannot sign off on the building, so let me know what you want me to do,” Clark wrote to Alaniz.

Alaniz also said Sinanian lacked competent superintendents and was not adequately supervising subcontractors, resulting in shoddy or incomplete work. Neither Alaniz nor Clark responded to requests for interviews.

Sinanian chalked up the e-mails to an “overzealous” inspector.

Eisenberg said in an interview with California Watch that during the final stretch, Sinanian struggled to get the right workers – and enough laborers – at the job site. All the safety issues raised by inspectors have since been resolved, he said.

“They learn how to do the low-bid process well and then when it comes time to do the construction, their actual performance varies,” Eisenberg said. “Sometimes it can be very good and sometimes it can be less than good.”

Sinanian wins back canceled contract

About a month after the Alaniz e-mails, Sinanian came in as the lowest bidder on what would become its sixth project with the district, the Family and Consumer Studies Building at Los Angeles Mission College.

Trustees Georgia Mercer and Sylvia Scott-Hayes pulled the contract from the consent calendar during a June 2008 meeting. They said the district had had issues with Sinanian and the contract should be discussed.

Mercer said in an e-mail to California Watch that she and other trustees raised questions about Sinanian because “we were aware that the company had missed several deadlines during the construction of the MLK Library at LA City College.”

Trustee Nancy Pearlman “inquired if there is a provision in the law that states the district can go to the next highest bidder that has a higher ranking or service competency level,” records show.

Responding to those concerns, Eisenberg publicly acknowledged problems with Sinanian Development.

“Sinanian Development has expertise in the bidding process but has been only marginal with respect to project execution,” Eisenberg told the board. He said the firm had a “lack of expertise” in construction, according to the minutes.

The problem, Eisenberg told trustees, was that the district had to select Sinanian because the firm was the lowest bidder. The solution, he said, was a process called “design-build” that would allow the district to prescreen contractors and select them based on quality – not just cost.

Sinanian’s problems were not bad enough to warrant disqualification as a responsible bidder, Eisenberg said. But he suggested that the design-build process would allow the district to bypass a company like Sinanian.

“The project that Sinanian is working on was well under way before the law was changed last year that gave the district the ability to expand design-build,” he said, according to the minutes.

The next month at a board meeting, Eisenberg told trustees he had gotten approval to cancel the contract with the firm and restart the bidding process for the Family and Consumer Studies building.

At that meeting, Eisenberg said he and James Sohn, program director of Build LACCD, met with Sinan Sinanian to talk about his approach to the five projects already under way, and Sinanian “pledged they would ‘step up the quality’ of their work across the numerous projects in which they are involved,” records show.

Sinan Sinanian and Eisenberg have contradictory explanations as to why the district re-bid the Family and Consumer Studies project.

In an initial interview, Eisenberg said the district was considering canceling the project, but decided not to after Sinanian pledged to improve performance.

In a later interview, Eisenberg recalled that the district had, in fact, canceled the contract with Sinanian because all the bids had come in above the district’s estimate for the job.

Eisenberg acknowledged that around that time, he and Sohn talked to Sinan Sinanian about his team’s ability to get the library job done on schedule. Eisenberg said Sinanian agreed to improve. But that discussion had nothing to do with the cancellation of the firm’s first bid, he said.

“It turned out that it was a coincidence,” Eisenberg said. “People were raising the concerns, but at the same time, the college project manager decided they didn’t want to allocate that much funds to that project. … Even when the trustees have a concern, the low-bidding process is pretty sacrosanct.”

But Sinan Sinanian remembers an entirely different conversation. He said he didn’t promise to improve because his company’s job performance never came up.

Sinan Sinanian said that when he asked why the district had canceled the Mission College bid, Eisenberg and Sohn said Moore, the Los Angeles City College president, had complained about delays. Moore declined to be interviewed by California Watch.

Neither Eisenberg nor Sohn had ever said anything about the bids being too high, Sinan Sinanian said.

“That’s maybe their excuse, because their justification was not right to do it,” he said. “I was the one that got damaged in the whole thing, but I kept my mouth shut.”

The CEO said the district’s reasoning had angered him. He blamed delays entirely on the district, particularly officials’ decision to change the roof design.

Even though Sinan Sinanian believed the district’s cancelation was improper, he didn’t fight it because that’s not his company’s style, he said.

Weeks after the July 2008 meeting, Sinanian Development contributed $75,000 in two installments to the district’s Measure J campaign. The firm and its CEO later gave $14,000 to the election campaign for trustees, including $1,000 to Nancy Pearlman, $10,000 to Miguel Santiago, $500 to Kelly Candaele and $2,500 to Angela Reddock, a trustee who lost her re-election bid.

Pearlman, Santiago, Candaele and Reddock did not respond to requests for comment.

It’s not uncommon for contractors to contribute to bond measures or trustees. In fact, construction companies and other contractors constitute the bulk of campaign contributors to Measure J.

Sinanian’s $75,000 contribution stands out as the largest from a contractor. During the eight months when money flowed into the Yes on Measure J committee, only one group gave more – the Los Angeles College Faculty Guild, with a $100,000 donation.

Sinanian said he started donating when he did because the measure was on the ballot that November – not because of any other reason.

“You cannot get a bid if you’re not the lowest bidder,” he said. “It’s a ridiculous question.”

One month after Sinanian’s campaign contributions started arriving, the Family and Consumer Studies contract was back on the consent calendar for the August 20, 2008, board meeting. All the bids were lower this time around, and Sinanian’s came in as the lowest – $2.7 million less than the firm’s earlier bid.

The day of the meeting, Sinan Sinanian came before the board. Meeting minutes indicate he told trustees he hoped to win the contract. Eisenberg then told trustees Sinanian had “acknowledged the low-quality performance of his company and is committed to improving the quality of the work on the construction projects.” Eisenberg and trustee Mercer also told California Watch that Sinan Sinanian admitted quality problems.

Sinan Sinanian, however, said he didn’t say anything of the sort.

“It’s not true. I never said there were any quality issues with my work,” he said. “They asked me questions about my company.”

The board authorized the contract. The district said it does not have a recording of the meeting because it does not keep recordings for that long.

Ultimately, the Martin Luther King Jr. Library was completed five months behind schedule, records show.

Even though the district’s contract gave it the option of assessing liquidated damages against Sinanian for missing deadlines, district officials decided against such a move, Eisenberg said, in part because the district had contributed to delays on the library project by pushing back the start date.

Contractor meets new prequalifications

The district began changing its contracting practices in 2008. The new design-build program allowed officials to prequalify teams of general contractors, architects, engineers and other key contractors. In scoring the companies, the district evaluates the firm’s past experience on the specific type of project involved, its references and its personnel.

The design-build process was supposed to allow the district to weed out low-bid contractors that had performed poorly in the past – and Eisenberg even told trustees the previous summer that a contractor like Sinanian could be avoided under the new approach.

But in November 2009, Sinanian won a seventh project, a $23 million design-build contract for the athletic fields complex at Mission College.

Not all of Sinanian’s bids for construction work at the district have been winners. The firm provided a list of 12 traditional low-bid projects and eight design-build projects that the company had pursued and lost in the last two years.

The district also has prequalified Sinanian for future stadium facilities and classroom buildings, meaning the construction company is among a select group of contractors that can bid on big contracts.

Eisenberg said the district prequalified Sinanian for design-build projects based on the management team and subcontractors with which the company proposed to work. The district scores each team on a points system, with the highest scorers winning prequalification.

While Sinanian had problems on the library project, the company has the ability to perform well when it assigns the right supervisors, Eisenberg said. He cited both the Pierce College Center for the Sciences and the Los Angeles City College Science and Technology building as successful projects.

Bob Miller, a project director for Turner Construction Co. who worked with Sinanian on two buildings at West Los Angeles College, said the firm had performed well, particularly in light of problems that arose on those projects that were beyond Sinanian’s control.

Mercer, one of the trustees who first expressed concern about Sinanian’s performance, said in a written response to California Watch that “to date, Sinanian Development has performed in a very adequate manner.”

“It really is the issue of the nature of the team,” Eisenberg said. “A very large contractor has multiple kind of folks that they can bring to bear on a project, and if they present their A-team, they can do a really fine job.”

This story was edited by Mark Katches and copy edited by Nikki Werking and Austin Fast.

Filed under: Higher Ed


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