The Turnagain Marine Construction barge Brightwater stands ready to drive piles for the floating dock (pictured just behind the barge) at Sitka’s Gary Paxton Industrial Park. At press time, the project was awaiting a permit from the Army Corps of Engineers — a permit which required additional biological consultation due to the presence of marine mammals (humpback whales, Steller’s sea lions) in Silver Bay. The footing for the drive-down ramp is in the foreground. (KCAW photo/Robert Woolsey)
Both parties in a lawsuit over the construction of an industrial dock in Sitka have asked the court to forego a trial, and to reach a judgement based on underlying legal principles.
Former Sitka mayor Marko Dapcevich filed a motion for summary judgement in the case in early September. The City of Sitka filed one of their own about two weeks later.
The outcome won’t affect whether the dock gets built, but it may change the way Sitka does business in the future.
Note: A hearing date is pending in Sitka Superior Court, on the motions for summary judgement in the case of Dapcevich vs. City of Sitka, Matt Hunter, and Mark Gorman.
According to his attorney, Joe Geldhof, former Sitka mayor Marko Dapcevich doesn’t want anything other than the simple acknowledgement that he is right.
“What Mr. Dapcevich is asking the judge to rule on is the meaning of the charter. Does it in fact require competitive bidding?”
The Sitka Charter plainly does require competitive bidding. But it is a foundational document — Sitka’s constitution, basically — and like all other constitutions it is subject to interpretation.
John MacKinnon is a former Deputy Commissioner of Transportation and 4-term member of the Juneau assembly, who is now the executive director of the Associated General Contractors of Alaska. Competitive bidding — as it existed when Sitka was incorporated in 1971 — is still a thing, especially on small projects or equipment. But he says governments everywhere have begun to look at overall value when they put a major project out to bid, rather than just the lowest number. MacKinnon says nowadays it’s about who can deliver the best project for a given amount of money.
“You get to a point in design where the contractor is asked to give their final estimate, and if it’s within budget, the owner is able to say, Okay, move on to construction and you have to build it for the dollar amount you said. The beauty of that is the price that is determined at that point is the guaranteed maximum price of the project.”
That’s exactly what happened in Sitka. In 2012 Sitka received a grant for $7.5 million for a new dock at the Gary Paxton Industrial Park. Some of that money was sliced off for design and preparation, leaving $6.8 million to actually build it within 5 years (note: the city would later ask for, and receive, a one-year extension).
The project was put out to bid in 2016, and all four bidders came in above the amount of available money.
In the view of former mayor Marko Dapcevich, that means one thing, says attorney Geldhof.
“The normal — and very common — response if the bids come in high is you either cancel the entire procurement and start over again. You know, reformat the purpose and need and design, and put it out to bid again.”
That’s where Sitka officials chose another path — a path that is becoming increasingly common in large municipal projects: City Hall went back to all the bidders and asked if they could design a project that would fit within the budget. Three of the four responded, an Turnagain Marine Construction’s $6.2 million proposal was considered to be the “best value.” The contract was approved by the board of the industrial park and the Sitka assembly, and signed by Sitka’s then-administrator Mark Gorman.
John MacKinnon considers this competitive bidding by another name.
“It wasn’t a sealed bid with a number on the bottom line. It was more of, Give us a proposal and a number, and work with us on getting to that finished product. I think it was probably the lowest bid; they just arrived at it in a slightly different manner.”
The project is already underway in Sitka. A 250-foot floating barge is in the water at the industrial park, and should be operational by the end of the year.
What if the court now says it was illegal?
Geldhof says it boils down to a matter of principle.
“I’m not sure that Mr. Dapcevich wants to stop the project, and I’m not sure that the judge as a matter of equity would grant an injunction stopping it. But the law is the law here. And I think the judge will come to a resolution and say, No the charter doesn’t mean what it says and you can do whatever you want, or The charter means what it says and competitive bidding is competitive bidding. It’s not just a procurement schmooze-a-thon just because it’s more expedient when you run out of money.”
If the court agrees in the strict interpretation of the charter and rules in favor of Dapcevich, it may result in nothing more than expensive slap on the wrist for the city, which is racking up legal bills contesting the suit. But when his initial demands for a settlement went unmet, Dapcevich upped the ante: Again, citing specific language in the charter, he named former Sitka administrator Mark Gorman and current Mayor Matt Hunter co-defendants in the suit, holding them individually liable for any difference between what Sitka has paid for the dock, and what it might have paid if the project had been procured legally.
Geldof says that making Gorman and Hunter pay — quite literally — is not the big fish.
“The charter and following the competitive bid standards in the charter are a nice big piece of chinook. Whether Gorman and some of the other people got cute or creative or didn’t follow the law — that’s basically the parsley on the side of the plate here.”
Geldhof admits that the dock project may have been expedient — even if illegal — and governments are under pressure from rising costs to not prolong the procurement process. Sitkans might actually prefer that the city seek “best value” on big jobs, rather than cling to competitive bidding in the strictest sense.
During the municipal election in Juneau this October, voters were asked to amend their charter to allow “best value.” The existing clause in the Juneau charter was virtually identical to Sitka’s regarding competitive bidding. In the 1980s, a citizen activist sued both the City of Juneau and then-mayor Fran Ulmer on virtually the same grounds.
Geldhof this fall editorialized in the Juneau Empire opposing the new language, arguing it would give local bureaucrats too much discretion in approving projects.
Nevertheless, Juneau voters approved the charter amendment by a two-thirds majority.
Until Sitkans do the same, Geldhof — and his client Marko Dapcevich — are resolved that the existing language on competitive bidding should be strictly followed. “The charter is the charter,” Geldhof says.
