Safety wasn’t in the equation

By Alexandra Berzon, Michael Mishak

Saturday, July 19, 2008 | 2 a.m.

At this week’s Clark County Commission meeting, Commissioner Chris Giunchigliani noted a curiosity: Two weeks earlier, in the same meeting room, she and other public officials had expressed deep concern about worker safety at CityCenter.

Now the commission was poised to award a $1.2 billion contract for a new terminal at McCarran International Airport to Perini Building Co., the contractor that had overseen the projects whose safety problems were the focus of the earlier meeting. There have been six fatalities at Perini’s CityCenter site in 19 months, and three more workers have died on other Las Vegas Perini projects during that time.

As Giunchigliani noted, the county’s evaluation of Perini and other bidders vying for the airport contract did not take safety into account.

Some industry representatives saw that omission coming. Steve Holloway, vice president of Associated General Contractors in Las Vegas, had written a letter to commissioners before the hearing that said, in part: “I can see the headline now: Clark County Commissioners reward Perini for killing six workers.”

Holloway was representing a competing bidder for the airport project, a joint venture of contractors that are members of his trade organization. Perini is not a member.

Holloway said the trade group supports greater emphasis on safety in bidding for public jobs. He also said state law allowed commissioners to look more closely at Perini’s safety record in awarding the McCarran contract.

Nonetheless, safety was not an issue in the decision. Perini won the contract in a 6-1 vote, including Giunchigliani’s vote in favor, demonstrating that the construction giant with its competitive pricing continues to enjoy tremendous clout in Las Vegas, where the company plans to move its national headquarters within a couple of years. Perini’s $1.2 billion bid was lowest by a full $200 million.

As Avram Fisher, a construction industry analyst for BMO Capital Markets, explained: “Perini has a very good reputation with owners. Just like anyone with any reputation, it takes a lot to change that. They’d be on the top of the list for any project.”

At the hearing, commissioners debated technical issues. The bidder Holloway represented, a joint venture of McCarthy Building Cos. and Kiewitt Western, argued that Perini’s application had irregularities. McCarthy/Kiewitt did not mention safety as a concern. Giunchigliani asked Clark County Aviation Director Randall Walker to assure commissioners safety would be a priority at the airport.

“Safety is a very high concern for us, and that’s why we have such a good record” at the airport, Walker told commissioners.

McCarran spokesman Chris Jones said airport officials thought Perini’s work would be done safely because the company’s previous contracts at the airport have been executed safely. Plus, the nature of the airport job is different from Strip construction, Jones said. Work would not go on around the clock and the site would be much less congested.

The county’s Aviation Department and the site’s project manager, Bechtel Corp., closely monitor safety among contractors at the airport, Jones said.

Despite that, some commissioners said they would have preferred to have safety factored into their decision. But they said they thought that by law they were restricted from doing so because it was not part of the bid process.

“I think Perini has had some problems” with safety, Giunchigliani said in an interview after the hearing. “I would have liked to have had a legal justification to not have approved that contract. I would have liked to have reopened the bid. Legally, there just wasn’t a case to be made.”

Giunchigliani said she plans to work to change state and local regulations to make safety a clear priority in the bidding process for public projects.

Some public agencies in other states do take safety into account, including provisions that review a company’s loss of work time due to injuries, its record of safety violations, its workers’ compensation safety ratings, its fatality record and other factors.

Perini did not respond to requests for interviews for this story.

In June, after workers shut down CityCenter by walking out in protest of unsafe conditions, Perini said in a written statement that safety is the company’s highest priority and called the fatalities in Las Vegas a “major concern.”

Construction analysts say Perini has a reputation at or near the top of a very short list of contractors that produce exceptionally large construction projects for less money and finish them on schedule and on budget. That reputation has helped it maintain strong relations with developers, analysts say.

In fact, publicity about the deaths on the Strip, citations from the state’s Occupational Safety and Health Administration, and safety concerns expressed recently by workers and union heads in Las Vegas show no sign of directly affecting the company’s revenue or its ability to get new work, industry watchers say.

That’s in part because state safety regulators have not found evidence of “gross negligence” by the company and in part because, as of last year, the company maintained a slightly better-than-average workers’ compensation safety rating.

“When it comes to public and private projects, the bottom line is that safety does not play a factor as long as they can bond the projects and have workers’ compensation cover them,” said an analyst who was not authorized to speak on record.

Perini has suffered in the stock market this year because of concern that some of the projects it has touted may be delayed in the economic downturn. Still, it appears poised to win more contracts as they arise.

The company told investors this year it expects to win a large percentage of the construction work still to be done on the Strip. It also expects to receive a portion of a contract to oversee construction at MGM Grand Atlantic City, an MGM Mirage project that the company used to refer to as “CityCenter East.”

MGM Mirage spokesman Yvette Monet said the casino company is taking safety into consideration in awarding the contract. She declined to elaborate.