Thanks to federal stimulus dollars, work crews have been repaving the highway that runs along the Cape Cod Canal.
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.
This program aired on December 3, 2009.