The Real Deal New York

State ups AECOM Tishman’s contract at Javits Center to $95M

Some raised concern over the actual cost of the contract
By Kathryn Brenzel | April 21, 2017 08:00AM

Rendering of Javits Center (credit for inset images: Getty Images)

Nearly a year after an $8 million contract to AECOM Tishman raised concerns over potential conflicts of interest, the agency redeveloping the Jacob K. Javits Center upped the company’s contract to $95 million.

The Empire State Development Corp. on Wednesday approved upgrading Tishman’s role to construction manager-at-risk, meaning the company will hire subcontractors and oversee construction of certain parts of the project, specifically a new transformer building on the site. Tishman, which recently changed its name from Tishman Construction, is also overseeing the entire $1.5 billion renovation of the Javits Center as project manager.

The dramatic increase follows a brief kerfuffle over the original $8 million contract, which was approved at a May 2016 meeting held by the Convention Center Development Corporation, a subsidiary of ESD. At the time, Peter Wertheim, board member and Deputy Mayor Alicia Glen’s chief of staff, noted that Dan Tishman was a top donor to Gov. Andrew Cuomo. (Dan Tishman serves as chair of the construction company, which he sold to AECOM in 2010.) Wertheim hinted that Dan Tishman’s connection to the governor perhaps tainted the decision to award the contract, an idea both the state and Dan Tishman vehemently denied.

Wertheim didn’t speak out against the new contract, which is more than 11-times the size of the original, at Wednesday’s meeting and declined to comment on Thursday. A representative for Tishman also declined to comment.

As construction manager at risk, Tishman will receive a 5 percent fee of the project’s guaranteed maximum price (GMP), which has not yet officially been set. The company is also eligible for an incentive bonus if the project’s costs end up being lower than the GMP. A few board members voiced concern about approving the new contract without having a set GMP, since Tishman stands to benefit from a higher maximum price.

“There’s no incentive for them to keep the GMP at a low price,” said board member David Emil.

Another board member, Robin Stout, noted that the project’s budget won’t be impacted by the contract upgrade since the agency would’ve had to hire subcontractors for the project anyway. Changing Tishman’s contract simply shifts the responsibility of adhering to a set cost and schedule from CCDC to the construction company, Stout said. He also indicated that ESD has closely studied the possible conflicts that could arise from Tishman serving as both project manager and CM at risk. The setup essentially means that the company will oversee itself as it constructs the transformer building.

Tishman, which part of a team that built the original center and worked on an earlier renovation of the convention center from 2005 to 2014, was precluded from bidding on the overall renovation of the exhibition center. Tishman also agreed to pay $20 million in 2015 to settle federal charges that it overbilled its clients on several projects, including the first Javits expansion.

The state selected Lendlease and Turner Construction for the job in January.