Construction teams have been working for months building their partnerships in order to chase contracts to build the Nashville’s new downtown convention center, the largest construction project in the state's history.
The contract is valued at $338 million for just the convention center and bids for construction management services are due Wednesday.
Who wins will depend partly on minority participation in the teams.
The goal is 20 percent participation for small, women-owned and minority-owned businesses. But it's not just about participation. The teams will be scored on their qualifications and experience across the board and that includes the minority partners.
“It depends how they are used in the job and what their experience is,” said Phil Ryan, executive director of the Metropolitan Housing and Development Agency, on evaluating the minority partners on the teams.
In the case of the major minority partners in the three teams expected to bid, the experience varies from none to highly experienced. With one, Pinnacle Construction Partners, the construction industry has been buzzing because of who is involved. The founders lack construction experience but do have political influence, prompting questions of conflict of interest.
Darrell Freeman, founder of Zycron Inc. and chairman of the Nashville Area Chamber of Commerce, formed the company with entrepreneur Michael Carter and teamed with Skanska and American Constructors to vie for the convention center work.
As Chamber chair, Freeman played a major role in pitching the need for the convention center.
Each of the teams intending to bid on the project has spent the past year building their partnerships and recruiting minority subcontractors they can use should they win, each employing a different philosophy.
“Our objective was to get people on our team who have built stuff,” said Steve Campbell, director of business development at Bell & Associates Construction. Bell is teamed with Bethesda, Md.-based Clark Construction Group.
Their minority partner is a different partnership of three minority-owned companies. Harmony consists of Nashville-based firms Don Hardin Group, Hermosa Companies and Knoxville-based East Tennessee Mechanical Contractors. These companies and teamed up before the convention center was an option.
“We’ve worked projects together for years,” Hardin said.
They decided to construct an office building and be the tenants and pay rent to themselves, he said.
East Tennessee Mechanical Contractors has done work at Oak Ridge. Hardin has been involved with construction at Nissan in Smyrna and in Mississippi. Hermosa has been involved with the construction of medical office buildings.
“These guys have a pretty significant role in our group,” Campbell said.
Indianapolis-based Hunt Construction teamed with Nashville-based Hardaway Construction and took a different approach to minority partners in the team.
Hunt landed Atlanta-based H.J. Russell & Co., the largest minority contractor in the Southeast. In Nashville, Hunt brought in SRS Inc. of Gallatin.
“Our goal was to find four companies in Nashville that together were the size of SRS,” said Bill Palmer, vice president of business development for Hunt. “We couldn't find it.”
SRS isn't just along for the ride either.
“Everyone has a stake in the game,” Palmer said.
All of the partners are bonded and have risk.
SRS expects to do $40 million business this year. Most of its construction management work has been with Fort Campbell but also has done work for the U.S. Department of Veterans Affairs, Corps of Engineers and Metro.
For its team, Skanska created a minority partner company from scratch by working with Freeman and Carter.
“We thought about who large minority contractors are in the Southeast region,” said Joe Hatch, co-chief operating officer of Skanska.
Hatch said H.J. Russell was the only one and that Nashville needs a large, capable minority contractor. H.J. Russell has teamed with Indianapolis-based Hunt Construction and Hardaway Construction of Nashville.
“Nashville, Tennessee is ready for a company along those lines,” he said of H.J. Russell.
Hatch said he knew Freeman and Carter from non-profit work and chose to bring them together on the company.
“I know Darrell Freeman and Michael Carter don't have an ounce of construction experience,” Hatch said.
He said when he met with Freeman and Carter, he told them, “This is not a free ride.”
They have to contribute and work, Hatch said, adding that there have been monthly meetings in the chase.
Pinnacle hired an experienced construction industry veteran in Dale Randels Jr., who had previously been a vice president with Heery International and overseen $6 billion in commercial construction, mostly building schools.
Hatch said he and American Constructors helped review the candidates for Pinnacle's chief executive officer.
Music City Center conflicts
Hatch conceded his group did consider the issue of a possible conflict of interest concerning Freeman and the conventions center project.
Freeman is in his second term as chairman of the Nashville Area Chamber of Commerce, one of the most active participants in the Music City Center Coalition — the group that lobbied Metro and state government for the convention center project.
Hatch said they had talked about it and that Freeman talked to business and city leaders about whether would be. Hatch said Freeman was told it wouldn't be a conflict.
"We were cautious about it," he said, adding. "We are not surprised that people are wondering about it and thinking about it."
Recently, the partnership involving Freeman submitted an unsolicited query letter to MDHA suggesting the city award a different contract for one company to be the overall developer of the convention center, an adjacent hotel and other ancillary developments.
Freeman said the effort was not an attempt to wield influence.
"We're a community of volunteers,” Freeman said. “…We are not trying to bring that to bear on this process. To think we could influence that would be stupid of us."
Getting over the fear
Going beyond the experience of the minority partners with the general contractors, each of the teams has been holding recruiting sessions with various potential small, women-owned and minority-owned businesses.
Hunt's Palmer said it's important with projects the size of the convention center help bring the subcontractors up and show them how to improve their business so they have more experience to chase future projects.
Joe Shaw with SRS said a lot of the subcontractors live check-to-check and struggle with cash flow. That is where the general contractors can help by showing the subs how to bid and how to improve accounting, Shaw said.
"That knowledge will help them get over their fear," he said.
Government tends to use public building projects to boost the local economy through helping minority contractors get work.
"The convention center will benefit a lot of smaller homegrown companies that we work with," Hardin said.
That can be a challenge, said Kirk Huddleston, director of corporate and community development for Knoxville-based Blaine Construction, which isn't chasing the convention center work and may go after the expansion at Gaylord Opryland Resort & Convention Center.
Huddleston is on the Knoxville Airport Authority. He said the airport tries to hit the goals of more diversity business enterprise but falls short.
"Sometimes it gets a little disheartening," he said. "It's hard to fit all the pieces together."
But he was in Nashville for he pre-bid conference on construction management services and said the room was half filled by small, women-owned or minority owned businesses.
"There were some sharp folks in there," he said.