Florida Keys News
Friday, June 13, 2014
District, Coastal in audit agreement
Mediation used to sort out issues

The Monroe County School District and its former contractor have inked a deal that could see the beginning of the end of the longstanding legal fight over construction of the Horace O'Bryant School.

The agreement stipulates that Coastal Construction Group of Miami will henceforth cooperate with McGladrey LLP of Chicago, whom the district hired to audit the HOB project on Oct. 22.

The audit ground to a halt in early January when Coastal refused to cooperate with McGladrey. The district sued Coastal in state court on Jan. 15 for breach of contract, and for contravening Chapter 119 of the Florida statutes, which covers public records requests.

The contractor promptly countersued, resulting in a legal stalemate that only now appears to be moving towards a resolution. According to the terms of the settlement, Coastal has 60 days, which began June 5, to deliver to McGladrey all documents related to the HOB construction project.

In return, the district is withdrawing the delinquency status of Coastal, without prejudice, which prevents the company from bidding on district projects and could potentially blemish Coastal's reputation.

Also hanging over the proceedings was the possibility of debarment proceedings against Coastal, which would have prohibited the company from bidding on any public construction jobs in the state, a potentially devastating blow to its business.

Following the audit, the district and Coastal will again appear before mediators to sort out any issues which may arise as a result of McGladrey's work.

In addition, Coastal will conduct a "dual-tracked" audit of its own. The contractor has agreed not to bid on any district contracts for the next 90 days, also as of June 5.

Superintendent of Schools Mark Porter on Thursday was cautiously optimistic about the turn of events.

"Essentially, we're in mediation, but in the meantime we are going to get our audit completed; we're going to get our records," Porter said. "Coastal came to the table, and made the initiative to meet in a mediation context. I don't know if I'd call it a change of heart just yet, but there does seem to be a change in the method of how we're going to proceed. We're having a much more productive conversation about getting this resolved."

Porter cautioned, however, that the development, while welcome, was still just a part of the process.

"It's a step forward," Porter said. "Not a final resolution."

District 3 board member Ed Davidson, who has long championed the audit, was less sanguine about the deal.

"I am embargoed from saying much about it," Davidson said. "But the overwhelming significance is that after spending over $40,000 of school district money, we are finally getting access, for our auditors, of our own documents on a $37 million construction project. Contrary to some previous assertions, the district never had access to much of this documentation, because the scope of Mr. Pribramsky's CPA review was highly restricted. For instance, he was only supposed to look at 13 of the 83 change orders."

Change orders were at the heart of the tussle between the district and Coastal, representing possible savings on the cost of the project to be split 60/40 between the district and contractor. Key West CPA Steven Pribramsky conducted an "attestation" of the project last spring to ensure the savings were achieved through cost efficiencies and working smart, not by cutting corners on essential elements of the process.

The final check to Coastal was cut on June 19 of last year. The school opened on time and under budget.

Stuart Kessler, the district's Audit and Finance Committee chairman, had mixed feelings about the news.

"I'm very happy that we can finally proceed with the audit, now that [McGladrey] has the resources," Kessler said. "However, the whole episode could have been prevented by the district maintaining businesslike records to begin with."

Kessler noted the audit came about because he and Davidson had discovered just how few of the documents were in the district's possession.

"We were appointed by the board to investigate the unapproved change orders," said Kessler. "That's when I discovered that we had a bigger problem with incomplete records. The idea that the district doesn't have complete records of a project the size of HOB is unconscionable."

Coastal Construction has refused to discuss the matter with The Citizen since the issue first arose.

tschmida@keysnews.com

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