Laserfiche WebLink
<br />. <br /> <br />. <br /> <br />. <br /> <br />001155 <br /> <br />or $6.9 million. We have advanced funds pursuant to our contract from an <br />escrow account as requested, based on the BOR's invoices. <br /> <br />The SJWC was shocked and dismayed to learn of the Bureau's extreme <br />cost underestimate on July 31, 2003. We attempted to understand the basis for <br />our money advances and the cost of the construction contracts since <br />construction began, but we frankly had little success obtaining the information we <br />requested from the Bureau. Although apparently we were asking the right <br />questions at the right time, we did not anticipate the magnitude of the Bureau's <br />underestimate. <br /> <br /> <br />It appears that the old construction estimate, which formed the basis of <br />our contract and our $6.9 million payment, was incomplete. Apparently, the <br />estimate was not a construction-level estimate, but rather was based only on an <br />appraisal- or feasibilitYclevel study. Further, the Bureau made changes to the <br />Project that added significant costs. These two factors - an incomplete estimate <br />and design changes - significantly contributed to the great disparity between the <br />original cost estimate and the new cost estimate. The third significant factor <br />contributing to the disparity between the two cost estimates is the' use of the <br />Indian Self-Determination and Education Assistance Act (P.L. 93-638) (the "638 <br />process"), which the Bureau has interpreted to require the use of sole-source <br />contracting for the construction of the Project, as well as to require the training <br />and supervision of Indian contractors, often at significant expense. Additionally, <br />the BUfl:lau has maintained and increased its own non-contract staffing <br />inconsistent with the spirit of the 638 process. <br /> <br />The first information the Project sponsors received concerning increased <br />costs was the letter dated July 31, 2003, from Rick Gold, the Bureau's regional <br />director in Salt Lake City. This letter was released to the media the same day. <br />The July 31 letter shocked the SJWC, and it unfairly placed much of the blame <br />for the cost estimate differences on the Ute Mountain Ute Tribe ("UMUT"), which <br />is the primary 638 contractor and whose consultant developed the old cost <br />estimate. Although the letter threatened to split the sponsors, we agreed to <br />continue to work together and to support continued appropriations for the Project. <br /> <br />In response to this unexpected bombshell, the SJWC prepared a report <br />. about how and why the mistakes were made in preparing the original cost <br />estimate, which is attached. As we acknowledged in our report, the BOR must <br />make some significant changes in the way it does business in order to regain our <br />confidence and to maintain our support for the Project. Much to the credit of <br />John Keys, Bill Rinne and Rick Gold, some progress has been made since July <br />31, but more remains to be done. Following are the two areas in which changes <br />must still be made: the Bureau's operations and the SJWC's reimbursement <br />obligations. <br /> <br />SJWC Testimony <br /> <br />Page 2 of 5 <br />