Many awarded US funds without full disclosure

Mass. seeks explanation on failure to report violations

By Maggie Mulvihill, Joe Bergantino, and Sydney Lupkin
New England Center For Investigative Reporting / December 3, 2009

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New England construction companies that have received millions of dollars in federal stimulus contracts failed to disclose to Massachusetts officials, as the state requires, serious pollution or workplace safety penalties levied against them in recent years, a review by the New England Center for Investigative Reporting at Boston University has found.

Massachusetts Highway Division officials, presented with the lack of disclosure, are now demanding written explanations from at least seven of the 21 companies awarded contracts through Sept. 30 as to why they did not reveal the violations on forms they submitted to obtain bidding approval on state projects.

Notably, the prior workplace and pollution violations do not disqualify the construction firms from winning stimulus-based contracts, a fact that several safety and environmental advocates said should be addressed. Rather, the past violations can factor into the firm’s ability to be approved to bid on the type and size of roadway projects.

“They are part of a larger picture that the contractor is showing to us,’’ said Highway Division Administrator Luisa Paiewonsky.

Thirteen companies that have been awarded nearly $54 million in contracts this year have a history of environmental or workplace safety penalties, state and federal records show. Nine of those companies did not disclose those violations as required, Paiewonsky said.

“We need to have that information when we are making our decisions,’’ Paiewonsky said.

Monica Conyngham, general counsel for the Highway Division, has threatened, in letters sent to contractors on Nov. 16, to refer them to the state attorney general’s office for making false claims to the state on their “prequalification applications.’’

One company that was issued a letter, Aggregate Industries Northeast Inc., failed to disclose more than $606,300 in pollution and workplace safety fines levied against it since 2006, state and federal records show.

In 2007, Aggregate pleaded guilty to conspiring to steal from taxpayers by providing inferior concrete to the Central Artery/Tunnel Project and agreed to pay $50 million dollars in civil and criminal penalties.

The Saugus-based firm has two stimulus contracts worth $8.8 million for resurfacing on roadways in Harvard, Littleton, Avon and Stoughton, Highway Division records show.

“It does appear that they were not truthful, and they signed this contract under the pains and penalty of perjury,’’ Paiewonsky said.

In a statement issued in response to questions from the New England Center for Investigative Reporting, the company said there was confusion about what had to be disclosed to the state and has resubmitted its form. Aggregate also has “new owners, new top management, and a stringent compliance program’’ the statement said.

The key question on the seven-page form asks contractors to report “any civil, criminal, or administrative proceedings involving public contracts, safety, environmental laws, or regulations’’ for the three years prior to the application date.

Unlike Aggregate, another contractor convicted of criminal fraud was not confused by the question. P.A. Landers Inc. of Hanover reported more than $42,000 in fines levied against it by the state Department of Environmental Protection since 2008, Paeiwonsky said.

In 2007, P.A. Landers and two of its top officers, including company president Preston A. Landers, were convicted of defrauding the government of $332,686 by over-billing for asphalt the company supplied on several road projects. Landers officials have declined several requests for comment.

State Inspector General Gregory Sullivan said companies convicted of defrauding taxpayers like Landers and Aggregate should not be allowed to bid on any state contracts.

“If it were up to me, if a company is caught red-handed with their hands in the till, ripping off taxpayers. I wouldn’t let them do business again,’’ Sullivan said.

Aggregate and Landers were both banned from bidding for a time: Landers for 2 1/2 years, Aggregate for just under four months, state records show.

Paiewonsky said she wanted to permanently bar both firms from doing business with the state, but state Highway Division attorneys decided that such a move would be unconstitutional.

The attorneys told her the state debarment law was not meant to punish, but rather to weed out companies unable to complete contracted work.

“I wanted in the worst way to find the maximum punishment for them, not only to send a message to them, but to the entire construction industry,’’ said Paiewonsky.

Like Aggregate, other stimulus contractors failing to disclose environmental fines to the state include P.J. Keating Inc. of Lunenburg, which didn’t report $22,750 in fines levied by the state since February 2007 for air and water pollution violations, highway officials said.

Keating has $11.8 million in stimulus contracts for resurfacing in Westport, Lincoln, and Fitchburg. A company official said it did not know it had to report the information.

D&R General Contracting of Stoneham, with $3.4 million in stimulus contacts, did not report an April 2008 fine of $17,500 for waste-site cleanup violations, highway officials said. The company said its failure to report was an honest mistake.

“They are making legal statements there, and we can take legal action, but it does not appear that has been enough of a deterrent for some contractors,’’ Paiewonsky said.

An attorney with the environmental advocacy group, the Conservation Law Foundation, said state agencies, in awarding stimulus dollars, should give preference to companies with impeccable environmental records.

“We believe that stimulus funds can be a powerful motivational tool that can reward companies with extraordinary environmental records and who are going beyond compliance,’’ attorney Cynthia Liebman said.

Paiewonsky said she will determine what, if any, action to take against the contractors who failed to disclose their violations when she reviews their written explanations.

At least 10 companies with a prior record of workplace safety violations have also received stimulus contracts, the review found.

Among the firms failing to tell the state of those violations is Liddell Brothers Inc. of Halifax, Mass. It has a $2.6 million stimulus contract. The US Occupational Safety & Health Administration has cited the company four separate times since 2007 for failing to provide cave-in protection for workers in trenches. Liddell has paid $46,580 fines for those and other OSHA violations, federal records show.

In a statement announcing one of the fines, OSHA area director Brenda Gordon said: “The potential for death or serious injury at this jobsite was real and present.’’

Liddell officials declined comment.

Former OSHA commissioner Charles Jeffress said companies with repeat or willful safety violations should not get state contracts. In 2007, Liddell was issued a willful violation, defined by OSHA as one in which the employer shows “plain indifference to or intentional disregard’’ for employee safety or health.

“There is no excuse whatsoever for not protecting an employee in a trench,’’ he said. “It is 100 percent preventable.’’

Liddell attorney Robert V. Lizza said in e-mail that because Liddell immediately abated the safety hazards, paid its fines, and the issue did not progress to a formal proceeding, as stated in the preapplication form, Liddell did not disclose the violations.

Paiewonsky said the division does not verify the accuracy of the information provided by contractors. “If we don’t have enough staff doing it now, then we need to add staff to do it, because the integrity of the construction process is paramount to us,’’ she said.

The New England Center for Investigative Reporting at Boston University is an investigative reporting collaborative codirected by Joe Bergantino and Maggie Mulvihill. Student contributors to this story include Ben Ezickson, Sarah Favot, Andrew McFarland, and Jason Marder. Other partners include: WBUR, New England Cable News, the Warren Group, New England Ethnic News and El Planeta. TV and radio versions of this report are on