Airport Overrun Settlement OKd : Design Team Agrees to Accept $775,000 Less

The architects whose design led to a multimillion-dollar cost overrun on John Wayne Airport’s new passenger terminal have agreed to a settlement worth $775,000, Orange County officials said Wednesday.

The settlement with a design team headed by Leason Pomeroy Associates includes $425,000 in reduced fees and the firm’s agreement not to bill the county for $350,000 in redesign work required to bring down the terminal’s costs, which were $17 million over budget. The settlement proposal will be presented to the Board of Supervisors on Tuesday.

Leason Pomeroy released a statement saying the settlement agreement will help assure that the airport’s $300-million expansion project remains on schedule. The firm also said difficulties it experienced adhering to schedules and cost estimates were due to problems brought about by some of its consultants.

Meanwhile, files released by airport officials showed that a consortium of firms hired by the county to manage the massive airport expansion project has had a troubled relationship with the Leason Pomeroy team almost from the beginning.

The files contain letters and memos from the consortium, Costa Mesa-based HPV, criticizing the performance of the Leason Pomeroy team for a variety of alleged problems ranging from incomplete project drawings to poor management of its staff.

Leason Pomeroy’s final drawings submitted in February were reportedly so full of errors and omissions that a structural engineering firm hired to review the design told county officials it could not guarantee that the new terminal would meet structural requirements. “Based on these deficiencies, it was not possible to do a complete structural review of the terminal facility,” the report by Lake Forest-based Becker and Pritchett stated.

The terminal cost overrun controversy intensified last week after The Times reported that an independent analysis prepared for the county found that Leason Pomeroy and one of its consultants, Lee Saylor Inc., had made numerous errors in estimating the terminal building’s costs. That analysis was ordered by startled county officials after the lowest bid for the terminal came in at $58.9 million, far over the $42-million budgeted amount.

County officials awarded the construction contract to the low bidder to keep the project on schedule but have been scrambling to find ways to bring the cost down by at least $10 million.

An airport staff report released Wednesday on the proposed settlement suggested that Leason Pomeroy might be liable for even more damages. “Legal arguments can be made--although substantial counter-arguments would be anticipated--that the architect can be held responsible for part, or the entirety, of the cost of the terminal due to the faulty estimate,” the report says.

But it said that seeking more compensation would require complex litigation that could be expensive and take years to resolve.

“Staff believes this settlement to be a fair and equitable resolution of this dispute concerning the delay and extra work involved in the airport terminal project,” the report adds.

Supervisor Thomas F. Riley, whose district includes the airport, praised the settlement. “I think it’s a good deal for the county,” he said. “My concern has been that somehow we would get involved in litigation and the project would suffer. If we get into redoing everything . . . everybody’s got a lot to lose,” he said.

Riley said he has not spoken to other supervisors about the settlement, but he believes that they will support it. Other supervisors were not available for comment Wednesday.

The county’s contract with Leason Pomeroy includes a penalty provision that would assess the company $5,000 a day for any delay in delivering the designs for the terminal. Under that provision, the airport staff report said the county so far has withheld about $600,000 from the company because of a dispute over the allegedly delinquent design drawings.

In the tentative settlement, the county and Leason Pomeroy have agreed that the architects would pay for a delay of 49 days, or $245,000 in penalties. Without being specific, the airport staff report said some of the delay was due to developments beyond the architect’s control and some resulted from numerous changes in the design that were requested by the county while the design work was under way.

Under the proposed settlement, the $245,000 penalty will be taken from the $600,000 that the county has already withheld, according to Alan Murphy, the airport administration’s project director. Then, he said, the remainder--about $355,000--would be released to the company.

In addition, the county said it spent about $180,000 to redesign the building and reduce its cost.

The terms of the settlement call for Leason Pomeroy to reimburse the county for that $180,000 through reductions in future payments. And the firm has agreed to draw new construction designs that reflect the county’s changes at no cost. The settlement said that work--which is under way--is valued at $350,000.

Files released by airport officials show there has been a series of disputes with Leason Pomeroy. HPV, the county’s construction-management consortium, began criticizing Leason Pomeroy’s performance as early as June 30, 1987, shortly after Pomeroy’s group of airport designers had been selected. Based on an unannounced, surprise visit to the Leason Pomeroy office, a visiting HPV team concluded that the firm “is not in charge or control of the project team or properly managing the (airport) project. . . . A general opinion exists that (the Leason Pomeroy firm’s) management is inadequate.”

And in November, 1987, HPV again criticized Leason Pomeroy for not assigning enough people to the airport project. During the same month, HPV also complained that the firm had submitted cost estimates that had under-counted the steel needed by at least 900 tons, a multimillion-dollar mistake.

On May 10, 1988, the county’s construction management consortium complained about Cygna Consulting Engineers, the Irvine firm hired by Leason Pomeroy to do the structural engineering work. “We keep finding errors and conflicts within your drawings and with the architectural drawings,” HPV’s letter states. “The entire structure needs to be checked beam by beam, column by column, frame by frame, etc.”

And in July of this year, Airport Manager George A. Rebella wrote that Leason Pomeroy was responsible for an 85-day lag in the construction schedule. “These problems have been acknowledged by your firm and your previous structural engineering consultant (Cygna), whom you terminated due to that lack of performance.”

Despite the problems documented in the file, Murphy, the airport’s project supervisor, said Wednesday: “The bottom line is that we have worked everything out and the project will be built on time and on budget.”

Murphy said disputes such as those that have occurred between HPV and other firms working on the airport expansion “are not uncommon on projects of this magnitude.”

In a statement, Leason Pomeroy said the problems with the cost estimates and meeting schedules “centered largely on the performance” of Cygna.

A spokesman for Leason Pomeroy said Cygna officials had assured the firm that it had committed enough manpower to the project, but that “at each benchmark point where we would assess their performance, they failed to meet their commitments.” The spokesman said Leason Pomeroy fired Cygna in June.

An attorney for Cygna, Robert C. Schubert, said Wednesday that the prominent national engineering firm was “shocked” by Leason Pomeroy’s statements and that it was considering filing a libel suit against the architectural firm for making a “scapegoat” of Cygna. Schubert said the fault actually lies with the architects, the county and HPV, which Schubert said did not get the plans and specifications for the terminal to Cygna on time.

Cygna also has “absolutely no responsibility” for the faulty cost estimates, Schubert said.

It was true, he said, that Leason Pomeroy fired Cygna, but not because Cygna had failed to perform. Schubert said the company was fired because the relationship between the two companies was “less than satisfactory.”

Times staff writer Michael Flagg contributed to this story.

TENTATIVE AIRPORT SETTLEMENT

Here is a breakdown of a tentative settlement reached between Orange County officials and Leason Pomeroy Associates, the architect that prepared a tardy and overbudget design for John Wayne Airport’s new passenger terminal. Cash penalties will be taken out of $600,000 in payments the county withheld from the firm because of the problems. Additional reimbursements will be deducted from future payments. Funds to be withheld by county Penalties for late design: $245,000

Reimbursement of county’s cost to redesign project: $180,000

Services to be provided by architect

Design work to be done at no cost to county: $350,000

Total settlement: $775,000