Public works contracts costly with overruns

Study by D'Adamo finds city paid $99 million extra over 5 years

May 27, 2000|By Gerard Shields | Gerard Shields,SUN STAFF

Extra payments in Baltimore public works department contracts over the last five years have reached at least $98.9 million, according to a review released yesterday by the chairman of the City Council Budget Committee.

Southeast Baltimore Councilman Nicholas C. D'Adamo Jr. said yesterday his review of an estimated 1,800 public works contracts with overruns showed that Baltimore taxpayers paid up to 10 times the original bid price, as much as $15 million on a $1.5 million contract.

About 25 city contractors repeatedly charged the city for contract excesses, D'Adamo said, with low bidders regularly exceeding the initial highest estimate.

"That's a lot of money," D'Adamo said. "That's a lot of taxpayer money."

D'Adamo said he intends to present the figures to Mayor Martin O'Malley during budget talks on Tuesday and urge the new administration to consider excluding contractors with repeated overruns.

The federal government considers 10 percent contract additions average. D'Adamo found that 146 of the city contracts -- all initiated in the final years of former Mayor Kurt L. Schmoke -- finished 20 percent higher than originally bid, with 87 costing taxpayers 50 percent extra.

D'Adamo could not identify those businesses yesterday, saying that department totals provided to him contained only city identification numbers for contractors. But the Highlandtown shop owner said he intends to follow through to identify the contractors that repeatedly exceed the agreed-upon cost, he said.

Schmoke, who stepped down in December to take a job with the law firm of Wilmer, Cutler and Pickering, challenged D'Adamo's findings yesterday, saying that all extra city work was heavily scrutinized.

Changes were studied by a committee before being sent to the city Board of Estimates for a final review, Schmoke said.

"I can't believe he would find that kind of overpayment that was not reviewed by the committee," Schmoke said.

Former Public Works Director George G. Balog could not be reached to comment yesterday. City Comptroller Joan M. Pratt, who sits on the Board of Estimates, declined to comment, saying she had not seen D'Adamo's review.

This month, the Board of Estimates approved the last part of a $1 million contract increase for the demolition of a Little Italy warehouse where the city built a parking lot.

O'Malley and City Council President Sheila Dixon asked Pratt's office to audit the demolition project, the cost of which is now three times its initial estimate.

Likewise, the construction cost of the city's new police headquarters is now $12.3 million over the initial $27 million contract estimate.

Public works, the city's largest department with 5,600 employees and a $417 million budget, is responsible for 10 major city services ranging from trash collection to parking. Every city contract over $5,000 must be competitively bid. Businesses offer a price for which they believe they can do the job. Usually, the lowest bidder wins the contract.

Balog's successor, George Winfield, cautioned D'Adamo about the overrun figures, saying that most public works contracts run over bid.

"You have to look at each individual contract to see what created the extra," Winfield said. "Ninety-nine percent of the time, it will be something unknown or unforeseen."

City Councilman Robert Curran of Northwest Baltimore also sounded skeptical of D'Adamo's findings. "It sounds extraordinary. Did that money include the blizzard of 1996 or the sinkhole? I don't know. If you told me that city cost overruns were for planting petunias, then I have a problem."

D'Adamo said his review was partially prompted by O'Malley's recent call to close seven city fire stations to save $6 million. The city is projecting a $140 million budget deficit over the next three years.

"We've got to get a handle on it," Dixon said of D'Adamo's findings. "Here we are strapped for money, talking about closing fire stations."

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