The Denver Auditor recently found significant oversight and contracting problems with the $175.6 million 16th Street Improvement Project, including an $18 million contract increase and a nearly one-year extension that bypassed City Council review.

The report also found that inadequate planning for historic brick sewers contributed to the overruns, even after one of the three qualified contractors withdrew from bidding because of utility risks. The city proceeded without fully investigating those risks, which later contributed to the $18 million increase and nearly yearlong delay.

“Because the city did not consider the sewer while planning the 16^th Street Improvement Project, businesses on 16^th Street had construction lingering outside their doors for nearly a year longer than expected,” Auditor Timothy O’Brien said in a news release.

The Denver City Council approved $149 million in 16^th Street renovation costs in 2021 and the brick sewer was discovered the following year, which halted construction. PCL Construction was tabbed as the lead contractor.

A brick sewer is an underground drainage or wastewater conduit built with specialized bricks, commonly dating back to the early 19th and 20th centuries. Officials do not know the location of every brick sewer in Denver.

Brick sewers typically sit beneath streets and other infrastructure, limiting access. Their age, deterioration and irregular shapes can complicate repairs and upgrades.

Denver’s Department of Transportation & Infrastructure agreed with most but not all of the auditor’s 10 recommendations but pushed back on the delays.

“Note that the cost increase of the 16^th Street project was related to the extensive coordination and re-sequencing of work that was required as we consulted with the State Historic Preservation Office (SHPO) and other Consulting Parties on the brick storm sewer connection,” according to a statement sent to The Denver Gazette.

Officials let PCL slide on more than $1 million in fines.

“Contract terms were not always followed,” according to the news release. “Department leaders said they waived damages for missed completion due dates to support the city’s relationship with PCL. This meant the city did not collect $1.03 million in damages for delays.”

DOTI “disagreed with our recommendation to strengthen its documentation ability to trace quality oversight processes and ensure contract compliance.”

Among the audit findings:

• DOTI did not ensure a transparent competitive bidding process.
• DOTI provided little oversight of PCL’s subcontractors because it assumed the lump-sum contract prevented the city from reviewing subcontracting records, leaving the department with little documentation to verify how subcontractors were selected and managed.
• The contract terms were not always followed.

With a “construction-focused scope,” the audit did not include a review of the economic impact on businesses along 16^th Street.

DOTI agreed with the following recommendations and has since implemented them: update general contract guidance, use a formal project delivery selection methodology and strengthen the department’s internally developed project delivery selection methodology.

“The 16th Street project was extremely complex and dynamic and DOTI is proud of the outcome and our performance managing the delivery of this project for Denver, which has received multiple awards from leading organizations that promote the highest level of city-building,” according to the statement. “DOTI followed all contract terms and current city policies in the delivery of the 16th Street project.”

The $175 million project overhauling Denver’s main corridor wrapped in October, with the official reopening exactly 43 years after its inauguration in 1982.

The project, which began in 2022 and was expected to be completed by late 2024, was to address the deteriorating infrastructure, particularly drainage problems.

More than 200 trees were planted to provide a larger canopy for visitors to escape from the intense Colorado sun and included new art installations and children’s play areas.

Denver Gazette reporters Bernadette Berdychowski and Stephen Barr contributed to this report.