Web of contacts emerges in Port case
Published by Florida Times-Union on September 14, 2008.
Four months ago, the FBI subpoenaed the Jacksonville Port Authority, requesting documents related to board vice chairman Tony Nelson and a handful of other companies and people.
The authority reported that it had no paperwork involving the final name on the subpoena: Felix Associates.
But Felix did have a connection to Nelson through contracts for Better Jacksonville Plan roadwork. Not only did Nelson's company, Muirfield Partners, receive work from Felix this year, but -- on the same project, at the same time -- Muirfield was part of the team overseeing Felix's work.
Felix Associates has two Better Jacksonville Plan projects: the expansion of Cahoon Road, for which it will earn $4.9 million, and the improvements of Hodges Boulevard and Sandalwood Canal, a $21 million job.
The bigger project is being overseen by River City Management, a joint venture that includes Nelson's Muirfield Partners.
While working on the Hodges project, Felix hired a Muirfield engineer for design work after arguing with one of the city's design engineers of record about how part of the project should be done.
In addition to design issues, Felix argued with the city about keeping a subcontractor on the Cahoon job after the sub complained to the city about Felix's business practices. The city sided with the subcontractor.
City Public Works Director Joey Duncan said the city can't prohibit Muirfield from doing work for Felix, but he didn't know about it until the Times-Union asked last week. He said if he had known, he would have discouraged it because of the appearance of a conflict of interest.
The FBI wouldn't comment about its investigation or about its Felix inquiries. No charges have been filed against Nelson, and the FBI has not revealed what prompted its investigation.
Felix did not return messages left throughout the week at its offices in Jacksonville and New York. Nelson has not commented publicly since the investigation was announced in April.
New York-based Felix Associates has had large projects in South Florida since at least the mid-1990s, but the company was a relative unknown in Jacksonville when, in 2007, it won the two Better Jacksonville jobs.
That February, Felix was selected to manage construction on the Cahoon Road project after it submitted the low bid. In June, it was selected as the low bidder for the Hodges/Sandalwood Canal project.
River City Management Group, a quarter of which Nelson's company owns, had to make sure Felix's bid met requirements, which it said it did.
It is unclear if Felix had any prior connection with Nelson. However, one of Nelson's attorneys, Hank Coxe, said Friday that Nelson met the company at some sort of business get-together, such as a Chamber of Commerce event. He was not sure when.
Felix has crossed paths with two other companies on the subpoena. Port contractor Rham Construction, which got its start with help from Nelson, hired engineer Sheldon Gibbs for oversight work on a terminal construction project after Gibbs worked with Felix on the Hodges project. And, in 2005, Felix bid and lost on a job won by Subaqueous Services, a dredging company whose offices, like Rham's, were raided by the FBI in April.
River City Management is a joint venture half-owned by Parsons Transportation Group, with the remainder split between Muirfield and Brindley Pieters & Associates. The joint venture is in charge of managing all of the Better Jacksonville work done south and east of the St. Johns River, contracted to "oversee the study, design, right-of-way acquisition and relocations, and construction of the road-widening projects" in its area.
A few months after Felix was hired to handle the Hodges/Sandalwood project, it had a disagreement with the city's designer of record about how work should be done on Sandalwood Canal. The city required Felix to hire, at its own cost, a design engineer to draw up plans, city project manager Robert Dyr said. Felix hired Dan Maxey, who at the time worked for Nelson's Muirfield Partners.
River City Management project manager Neil Aikenhead referred Maxey to Felix, according to an e-mail provided to the Times-Union as part of a public records request.
At the same time, the city was paying River City Management to inspect the work being done on the same project.
Maxey, who no longer works for Muirfield, declined to comment.
Patrick Victor, principal of Camp Dresser & McKee Inc., the city's design engineer for the Sandalwood project, was adamant that Felix's method wasn't a good one. It "may jeopardize the completed project and its longevity, " Victor wrote.
In response to Victor's letter, Aikenhead sent an e-mail to River City's Project Director George McGregor defending Maxey.
Victor told the Times-Union last week that a difference between engineers is not uncommon. He said he still disagrees with the method Felix used.
In the earliest version of River City's contract in 2001, there were limits placed on what it could do, including that it could "perform no design services on any facility, but will oversee, monitor, direct, check, review and comment on design work performed by others."
Duncan said the contract didn't allow the city to hire River City Management as both the designer and program manager. But he said there's nothing in it to prohibit a private contractor from hiring one of River City Management's partners.
Still, Duncan said, "I would highly discourage it."
He said that after questions were raised by the Times-Union, River City Management also sees that in hindsight it shouldn't have allowed it.
SHOPPING FOR BIDS
The Cahoon Road project, completed this year, was not without its own difficulties.
In May 2007, about a month after it won the Cahoon Road work, Felix was summoned by the city ombudsman to discuss a dispute with a subcontractor the company was trying to fire.
The sub, Jacksonville-based Donna J. Hamilton Inc., told the city before the bid was awarded that Felix said pipe and related supplies would cost about $9,000 more than Hamilton had quoted them. Felix said more material was required for the project.
Then, after Felix won the bid, Hamilton said the firm told her she would need to go with a different supplier, cutting the price by several thousand dollars. This savings would not be passed on to the city, she said Felix told her.
Contractors are typically barred from accepting a supplier's bid and then asking another supplier to beat it, a practice known as bid shopping. Doing so is an "abhorrent business practices that threaten the integrity of the competitive bidding system, " according to a joint statement by the Associated General Contractors of America, the American Subcontractors Association, and the Associated Specialty Contractors.
Those, and other disagreements, led Felix to ask the city in writing if it could remove Hamilton from the project. The city's ombudsman refused and said that doing so "could be perceived by some that the city of Jacksonville is condoning bid shopping."
"While we are not accusing you of bid shopping, the perception of bid shopping that does exist does not allow us to grant this request, " Dinah Mason wrote in her recommendation.
Working on the job following that meeting was tense, Hamilton said: "They'll probably never work with me again."
Felix, however, will continue working with the city. Its contract for the Hodges project is expected to run until 2009.
Before winning Better Jacksonville projects starting in 2007, Felix Associates mainly split its time between New York and South Florida. The company, whose lineage dates back to at least the 1970s, handled projects such as new road construction in Port St. Lucie and the installation of a potable water system in a development in Palm Beach County.
Felix's roots are in Mamaroneck, N.Y., where Felix M. Petrillo formed Felix Industries Inc. A related company, Felix Equities, was in charge of one of the area's largest projects, the installation of a water and sewer system across Port St. Lucie. In 2000, Felix Industries was sold to a now-defunct publicly traded firm known as Linc.net, according to filings with the Securities and Exchange Commission.
Former associates of the company, including two of Petrillo's sons, reformed the firm as Felix Associates after Linc.net went bust in 2003, according to legal documents.
The Petrillo family has other interests in Florida as well, such as the Petro Real Estate Development Corp., also based in Mamaroneck, but handling projects like The Legends at St. Johns Condominium Complex in St. Augustine.
The company did not respond to requests for comments left at its offices in New York and Jacksonville.
— Mary Kelli Palka and Timothy J. Gibbons