National Western subcontractors receiving significantly late payments

National Western subcontractors receiving significantly late payments

Published on September 22, 2025

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DENVER - The City and County of Denver may not have the backs of subcontractors who work on certain National Western Complex projects when it comes to late payments. This is just one issue among many we found in a new audit of the Phase 1 design and construction of the National Western Complex, according to Denver Auditor Timothy M. O'Brien, CPA. The city blames a lack of oversight authority over subcontractors for why subcontractors received significantly delayed payments from the city's hired prime contractor.

"Supporting small businesses supports our communities. The city is responsible for making sure publicly funded projects pay those companies on time. When payments are delayed, small businesses are at greater financial risk and the city's reputation suffers," Auditor O'Brien said.

We audited the Mayor's Office of the National Western Center's governance of design activity at the National Western Complex. We assessed whether risks associated with a $13.73 million design project at the Livestock Center and adjoining Main Campus Plaza were effectively managed.

While we found the city received what it contracted for, the audit determined the office had inadequate governance and oversight over its contractors. Contractors include subconsultants. The office also delayed the audit by two months with its reluctance to turn over documentation.

We made nine recommendations, and disappointingly, the office disagreed with nearly all of them. Its responses to this audit included claims that are not supported by our audit findings.

Invoice delays

The Mayor's Office of the National Western Center is not consistently ensuring Populous, the prime contractor for the project, is processing subconsultant invoices promptly. During our audit period of January 2020 through September 2024, 228 of 567 invoices, or 40%, took more than 91 days to process. We also found 72 subcontractor invoices with overdue amounts totaling about $956,000. These invoices had an average age of 174 days from when the subcontractor billed Populous and when the city accepted the invoice for payment.

In October 2022, the office contacted Populous about these payment delays. Populous asked to submit a large "catch-up" invoice, which the city approved in March 2023. Populous billed the city around $1,000 to fly and lodge an accountant in Denver to correct its own invoicing backlog. Despite this, processing delays continued to occur and affect subconsultants.

"It is audacious for a prime contractor to bill the city for its own mismanagement and delays of payments to subconsultants," said Auditor O'Brien. "It may not be a large amount of money, but it is still remarkable that a prime contractor would ask for the city to cover additional expenses for their inability to pay on time."

Populous staff said the delays occurred due to the COVID-19 pandemic, staff turnover, and poor-quality invoices subconsultants submitted.

We found the Mayor's Office of the National Western Center did not have strong contractual authority or clear resources to enforce invoice timelines. The office only had indirect control of subconsultants through Populous, saying they lacked "a contractual obligation into Populous' contractual relationship with their sub-consultants."

The office is responsible for taking monthly invoice packets from Populous and uploading them to Workday, the city's system of record. We found that 2,843, or 68%, of 4,153 invoice packet supporting document pages were missing from Workday. The office provided us with all the other missing documents, which were saved elsewhere. They believed their responsibility for invoice documentation ended once invoice packets were submitted to the Department of Transportation & Infrastructure. This practice of storing documentation outside of Workday does not meet city requirements and increases the risk of overlooking or losing important financial records.

Risks of overpayment

The office depends on Populous to provide financial and activity reports to track project spending. When we reviewed certifications of payments Populous prepared, we found recurring errors where the costs to date were consistently under reported by $68,110 from 2022 through 2024. Populous identified and corrected these errors in early 2025 with no explanation for what caused them. Office leaders said it was Populous' responsibility to check the forms for accuracy.

"It's a mystery why this error existed. The lack of an explanation is unacceptable when people deserve transparency involving public dollars," Auditor O'Brien said. "I also wonder why the office showed indifference to the error and passed off responsibility when we brought it to their attention."

Even after the error was addressed, the office continued to rely on Populous' documentation - without independent verification or procedures to prevent such issues.

Hiring an independent cost estimator to check a contractor's prices can help ensure an entity pays a fair price. The office did not use an independent estimator. Instead, Populous provided estimates from its own subconsultant. Without an independent check, there is a risk that Populous' prices, and those of its subconsultant, were not competitive, which could mean the city overpaid.

Reduced transparency

The Mayor's Office of the National Western Center did not follow all expected leading practices for transparency in the design phase.

A selection committee was responsible for selecting the prime contractor and project designer. But office leaders did not keep certain records from that selection process, as the city's retention policy requires, meaning the city cannot confirm whether either company was the best choice or whether the selections were made fairly.

The office did not review or approve the subconsultants Populous proposed and contracted with for the project. Therefore, the city cannot be certain that subconsultants were selected fairly, competitively, or in line with city requirements. As a result, the city could be overpaying or receiving lower-quality work.

The office did not use a formal process to support its decision to use the construction manager/general contractor delivery method for the project. Office leaders said the existence of its own 2018 "Procurement Plan," which describes the pros and cons of four delivery methods, justified using construction manager/general contractor and believed it met expectations for documenting the decision. Although the office said the method was "most advantageous," it is not a substitute for a transparent, criteria-based process. There is no proof this method was the best fit for the project.

The "Procurement Plan" also does not provide detailed guidance for managing a construction manager/general contractor project from start to finish[FW-A.1.2.2, pdf; FW-A.1.3, analysis tab, column E & conclusion; FW-A-1.2.4, p.2, 1st and 2nd bullet point]. The office could not clearly show how it managed Populous and its subconsultants during the design phase - including written procedures or evidence showing what it did.

"The office justifies its decisions by relying on its own professional judgment rather than adhering to leading practices and city requirements. That's not how things should be done in Denver," Auditor O'Brien said.

Software risks

The office inadequately uses a software service called Procore as its main day-to-day project management tool. We found the number of dormant accounts increased every year for four years. Leaving dormant user accounts active creates a security risk because bad actors can use those valid credentials to gain unauthorized access. The office could not explain why dormant accounts have increased[FW-F.3, P.2, R2-R3; SU-7, P.3-4, lns 109-121; SU-8, P.2, lns 84-87; SU-9, P.2, lns 56-68; R-9.05, P.3, R3].

We were able to download files from Procure without proper credentials. Users without authorized accounts should not have access to download those files.

Delays in providing documentation

As described in the audit's appendix, we requested documentation from the Mayor's Office of the National Western Center, but the office was slow to provide information, creating several audit delays. Gaps in responses and delivery of documentation limited transparency, reduced accountability, and increased the risk of unnecessary costs and unmanaged risks for this project.

Since the office disagreed with seven of nine recommendations, we will be unable to ensure the office takes meaningful action to address most of the issues we have uncovered. Our follow up report will assess whether the two other recommendations are implemented.

"I am disappointed the office missed multiple deadlines involving our routine requests for documentation and rejected our recommendations based in leading practices and city requirements," Auditor O'Brien said. "Since this is a major $1.6 billion renovation project, residents can be rest assured we will be conducting further audits of the National Western Complex and will continue to stress the importance of transparency and accountability."

AUDITOR TIMOTHY O'BRIEN, CPA
Denver Auditor

Denver Auditor's Office

201 W. Colfax Ave. #705 Denver, CO 80202 Email: [email protected] Call: 720-913-5000 Follow us on Facebook Connect with us on Twitter

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