Boss
is out at agency to build schools
Board approves major overhaul of
$8.6B construction program
Wednesday, May 11, 2005 • BY DUNSTAN McNICHOL •
Star-Ledger Staff
The chairman of New Jersey's $8.6 billion
school construction program stepped down yesterday, and the
program's board approved a top-to-bottom overhaul, including
wholesale changes in the way the corporation pays for and
uses contractors, architects and other
professionals.
Board chairman Jack Kocsis had drawn
criticism for serving as chairman of the New Jersey Schools
Construction Corp. at the same time he served as executive
director and lobbyist for a building trade group whose
members have been awarded more than $1 billion in work
through the program.
Acting Gov. Richard Codey promptly
replaced Kocsis as chairman with former Public Service
Electric & Gas Co. president Alfred C.
Koeppe.
"Al Koeppe has a proven record of
integrity and accountability," Codey said in a statement
announcing the changes. "He will bring new accountability
and new oversight to the program."
Codey asked Kocsis to remain on the SCC
board as a member.
"I am gratified that the governor has
recognized my commitment to the program, and at the
governor's request, I will continue to serve as a member of
the SCC board," Kocsis, executive director of the Building
Contractors Association of New Jersey, said in a statement
released after his resignation. "I look forward to working
with Al Koeppe and have pledged my ongoing support to
complete the mission of building safe and modern classrooms
for the students and teachers of our state."
Kocsis submitted his resignation as
chairman shortly after the SCC board voted 11-0 in special
session to approve a sweeping menu of reforms suggested in
an inspector general's review last month.
Among other things, the board voted to
cap "change orders" -- amendments to building contracts that
have added tens of millions of dollars in costs -- at 5
percent of a school's overall price tag. It also agreed to
seek refunds from architects whose design mistakes add costs
to construction work, and to scale back the tasks assigned
to 13 project management firms that were scheduled to
collect $462.5 million in fees.
The board also plans to hire a chief
financial officer by May 31 and to terminate, by the end of
July, a $25 million contract for temporary professional help
the inspector general had criticized as costly and
questionable.
"I believe we will be able to save money
and stretch the money moving forward," said Jack Spencer,
chief executive officer of the SCC. "They are more than just
oversight (changes)."
The changes are the corporation's first
step toward lifting a ban on new school construction
projects that Codey imposed in March, after Inspector
General Mary Jane Cooper told him her review was finding
evidence of waste and inefficiency.
Codey ordered the inspector general's
review in February after a Star-Ledger analysis found that
the six schools built by the SCC since 2002 cost on average
45 percent more than the 19 schools built without the
agency's oversight during the same period.
The Star-Ledger analysis found, among
other things, that the SCC pays its project management firms
fees that amount to 10 percent of a school's construction
cost -- more than triple the rate that non-SCC jobs paid
their construction managers -- and that architects on SCC
jobs are paid about double the industry standard.
In her initial report in April, Cooper
questioned those professional fees and also raised questions
about SCC employee bonuses, the $25 million temporary worker
contract and the approval of costly change
orders.
"We're pleased the SCC is moving to
implement the inspector general's reforms so swiftly," said
Kelley Heck, a spokeswoman for Codey. "We look forward to
these reforms being implemented so New Jersey's residents
can be assured their tax dollars are spent wisely and
productively in the building of new schools."
The new changes will have a dramatic
effect on the 13 construction companies hired by the SCC as
project management firms. They have already been paid $231
million, about half what their long-term contracts are
worth.
Yesterday, the SCC board agreed to scale
back those contracts and to turn much of the
project-oversight duties to SCC staff or to construction
managers hired for particular school jobs.
In addition, the SCC changed its rules to
specify that the same company cannot serve as a project
management firm on some school jobs and a builder on
others.
"It takes away the perception or the
possibility of a conflict of interest," Spencer said. "Some
are going to have to make a business decision whether they
are going to continue to work as a project management firm
or as a project contractor."
In another fundamental policy change, the
SCC board agreed to adopt standardized design and materials
for SCC project schools by Aug. 15.
The changes are coming as the Schools
Construction Corp. is nearing the end of its first allotment
of state funds. The corporation was formed 2 1/2 years ago
to implement a state Supreme Court order, in the
long-running Abbott vs. Burke school funding case, requiring
the state to repair or replace hundreds of "crumbling and
obsolescent" school buildings in 31 needy
communities.
Spencer said the $6 billion lawmakers
authorized for the program will be tapped out by January,
with work under way on fewer than half the needed
schools.
Joan Ponessa, who is monitoring the
school building program on behalf of the Education Law
Center, the Newark not-for-profit that pressed the Abbott
lawsuit, said she is hopeful yesterday's changes will
improve the building program.
"They can't hurt," she said. "The chief
financial officer is really critical."
Dunstan McNichol covers state government issues. He may
be reached at dmcnichol@starledger.com or (609) 989-0341.
© 2005 The Star-Ledger. Used by NJ.com with
permission.
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