Mass. Awards Stimulus Funds To Dubious Contractors

BOSTON — Thanks to federal stimulus dollars, work crews have been repaving the highway that runs along the Cape Cod Canal.

New England Center For Investigative Reporting At Boston University

The contractor is P.A. Landers, which has received $4.4 million in stimulus contracts this year in Massachusetts alone.

The problem is, just two years ago, P.A. Landers and its president, Preston Landers, were convicted of defrauding the government of hundreds of thousands of dollars by over-billing for asphalt on several road projects.

“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,” said Massachusetts Inspector General Greg Sullivan.

But P.A. Landers is getting government contracts — and so is Aggregate Industries Northeast.

Aggregate’s history is no better than Landers’. Two years ago, Aggregate Northeast was convicted of defrauding taxpayers by supplying thousands of truckloads of substandard concrete to the big dig project. The firm agreed to pay $50 million in fines. This summer, six of the company’s former managers pleaded guilty or were convicted of defrauding the government in the same case.

Now Aggregate has two stimulus contracts totaling $8.9 million for road work in several Massachusetts towns.

Our investigation has found that this is a larger problem than just these two companies.

Out of the 21 road construction firms awarded stimulus contracts in Massachusetts by the end of September, 13 of them have a history of trouble. They include companies with a criminal record, such as Landers and Aggregate, others with a history of pollution violations, and several more — including Liddell Brothers, with a record of workplace safety violations.

And many of those companies have failed to disclose their records in an application the state uses to decide which companies are qualified to bid on contracts.

“The Massachusetts state government does not want to do business with contractors who cheat, who steal, who falsify, who don’t obey the law,” Sullivan said.

But it does for various reasons.

In the case of P.A. Landers, the administrator of the state highway division, Luisa Paiewonsky, says she wanted to permanently bar the company from doing business with the state.

“I wanted in the worst way to find the maximum punishment for them. I asked our general counsel and our lawyers, can we do that? The answer was no, we could not put them out of business,” Paiewonsky said.

Instead, the highway division banned both Landers and Aggregate from bidding on state contracts for a period of time — Aggregate for just less than four months, P.A. Landers for two-and-a-half years.

“When the length of the suspension was served, we had no other legal means of punishing them,” Paiewonsky said.

The state highway division’s lawyers decided permanently banning any company from state business would be unconstitutional, and so firms with a record of trouble can bid on the millions of dollars worth of stimulus contracts pouring into Massachusetts.

“I would certainly support a change in the law,” the state highway administrator said.

Another problem in the awarding of stimulus contracts: The state decides whether a firm is qualified to bid based on what’s called a pre-qualification application.

The form requires contractors to list any civil, criminal or administrative proceedings they have been involved in over the past three years. The state says that would include violations of workplace safety and environmental laws.

“Any violation of a law or state or regulation is something we would take seriously,” Paiewonsky said.

At least seven road construction companies with a history of polluting the environment have received stimulus contracts.

One of the companies is Aggregate Industries.

To find out if stimulus contractors are telling the truth about their records when they fill out the highway department’s application, we checked the Web sites of several federal and state agencies and poured through numerous government documents.

For Aggregate, we found that in April 2008, the company agreed to pay a $587,000 fine for air pollution at several of the company’s facilities around Massachusetts. In October 2006, a $13,000 fine for other air pollution violations.

Paiewonsky, the highway administrator, said Aggregate did not include that information on its most recent prequalification application.

“It does appear that they were not truthful and they signed this contract under pains and penalties of perjury,” she said.

Aggregate says it was confused about what it had to report.

Two other companies getting stimulus contracts also failed to tell the state about a total of $40,000 in pollution fines they paid.

“It does appear very troubling to me,” Paiewonsky said.

Another issue: It’s not just companies with pollution violations and criminal records that are getting stimulus dollars. At least 10 companies with a history of serious workplace safety problems have also been awarded lucrative contracts, among them, Liddell Brothers. It has a $2.6 million stimulus contract for sign and traffic signal replacement along a portion of Interstate 95.

On the Web site of OSHA, the federal agency that monitors workplace safety, we found Liddell had paid about $47,000 in fines for several violations. OSHA cited the company for failing, four separate times, to provide cave-in protection for workers in trenches.

“The government ought not be contracting with companies who show a disregard for employee safety and health,” said Charles Jeffress, the former head of OSHA, the federal Occupational Safety and Health Administration.

In announcing one of Liddell’s fines, OSHA said, “The potential for death or serious injury … was real and present.”

Liddell did not report those OSHA violations to the state highway department.

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

Including deciding whether Liddell is qualified to bid on stimulus contracts. The state admits it rarely verifies the information submitted by contractors.

“If we don’t have enough staff doing it now, then we need to add staff to do it,” Paiewonsky said.

The state highway division has ordered each of the companies that failed to report their prior record of violations to submit a written explanation.

In the meantime, firms with a history of law breaking continue to get millions in stimulus contracts. And consider this irony: P.A. Landers and Aggregate Industries have been able to actually use the money they’ve made on their contracts — taxpayer dollars — to pay the millions in fines they have been assessed for essentially cheating taxpayers.

P.A. Landers still owes one million of its $3 million fine. Aggregate Industries Northeast owes $16 million of the $50 million it was fined. Landers’ former president, Preston Landers, remains behind bars, and the company has two former federal law enforcement officials monitoring its operations.

Aggregate Industries says it has new owners, new top management and a stringent compliance program.

P.A. Landers declined repeated requests for an interview.

The New England Center for Investigative Reporting (NECIR) at Boston University is an investigative reporting collaborative co-directed by Joe Bergantino and Maggie Mulvihill. Student contributors to this story include Sydney Lupkin, Ben Ezickson, Sarah Favot, Andrew McFarland and Jason Marder. Other NECIR media partners include The Boston Globe, New England Cable News, the Warren Group, New England Ethnic News and El Planeta.

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  • http://? Marilyn O’Connor

    Dear Joe Bergantino. Terrific report. Thank you. A related matter: Researchers in universities who spend 25K and over of federal funds in the purchase of goods must have the vendor sign a “Debarment” form in which the vendor asserts that it has not been found wanting or criminal in previous uses of federal funding. Does Mass. have a form like this? If so, the Mass agency awarding the contracts would not have such a difficult time in vetting finalists. The companies who have been proven to be significantly undesirable would be identified. It wouldn’t take that much staff to vet the finalists, would it? Hey, they can use Google!

  • Seth Karp

    Great report. Keep up the important work.

  • Frank Rich

    I’m curious…while it may be unconstitional to ban these companies from doing business in the state, why can’t they just not hire those companies to complete state jobs? There must be other companies out there that follow the rules and regulations. Why not use them?

  • Joe Beckmann

    It’s intriguing that the state doesn’t have enough staff to do what volunteer reports can do, and that unpaid fines neither contribute to nor detract from a contractor’s capacity to bid on future projects. And that fraudulent or incomplete reports on pending or past health and safety violations have no effect on contractual eligibility. Why bother collecting the data if they don’t have any impact? While it’s great that Bergantino’s crew gets the dirt, where are the law students from either Harvard, BU or Northeastern who could file the suits to freeze the contracts? Or is it only journalism that earns the tax deductibility of our University neighbors?

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  • michael ventura

    I am an employee of Pa Landers.I find it disturbing that everyone wants to disbar a company of over 300 people because of Skip and Gregs bad judgement.Pa Landers and its employees have paid the price.The majority of Landers employees are 100 percent honest.Think about whether you would like to lose your job over something your boss may have done.Pa landers main revenue source is MassDot contracts,without which the company cannot survive.Where would all the employees of landers get another job in this tough economic climate.Also,Pa Landers is a non union company in a union dominated market which would leave some of us really bad off because we would never be able to make the same living anywhere else [skip landers pays really well] .the massdot higher ups who said they want to disbar us are liars,because the more companies that bid on a project drives the project price down.there just posturing for their next political office.

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