Baltimore's Public Works Department failed to properly supervise a Little Italy demolition contract that cost city taxpayers an extra $1 million, according to a newly completed audit.
City Comptroller Joan M. Pratt's audit, obtained by The Sun, lends credence to criticism that former city Department of Public Works leaders permitted millions of dollars in contract overruns.
In 1998, Phipps Construction Contractors Inc. outbid three other companies to demolish the former Montebello Brand Inc. distillery at 400 S. Central Ave. and 1205 Bank St. to build a city parking garage.
Phipps bid $427,025, about $300,000 lower than the city estimate. By the time contractors completed the garage this year, the Phipps bill rose to $1.4 million, causing Mayor Martin O'Malley and City Council President Sheila Dixon last May to request Pratt's audit.
The additional $1 million - approved by the Board of Estimates during Mayor Kurt L. Schmoke's administration - included bills for removing extra concrete, disposing of contaminated soil and replacing the original fill because a broken city water main ruined the dirt, according to Phipps.
Auditors, however, said they were unable to conclude whether Phipps properly prepared the site. The Public Works Department failed to require Phipps to hire independent inspectors to monitor the work as the contract stated, the audit said.
In addition, auditors were unable to find daily inspections reports that were supposed to be kept by the Public Works Department.
"We could not determine ... whether Phipps was paid additional monies to correct substandard work," auditors said.
Randall C. Phipps, the owner of the business, and his attorney, C. Edward Hitchcock, could not be reached for comment yesterday.
During his last appearance before the city estimates board in May, Phipps defended his work. "Everything I did was approved by Public Works," he said.
The project was done under previous Public Works Director George G. Balog. Current city Public Works Director George L. Winfield said yesterday that he has turned the Phipps matter over to the city Law Department. "This administration is determined to closely monitor our contracts," Winfield said. "We've asked the law department to monitor problems with this particular contract."
From the outset, the parking garage builder, James W. Ancel Inc. of Towson, raised concerns with city officials about the Phipps work. Ancel found excessive moisture on the property and inadequate excavation where he was to place the garage foundations, auditors said.
The city paid Phipps an additional $319,714 to remove and refill the site after the complaints. The city, however, failed to enforce a contract provision requiring Phipps to protect the site from water damage, auditors said.
Replacing the dirt resulted in the city's having to pay Ancel an additional $177,300 for delays. Ancel has declined to comment.
The contract also required Phipps to remove 650 cubic yards of concrete from the site at $25 per cubic yard. Once the site was excavated, Phipps said it found 4,900 additional yards of concrete and billed the city $109 per cubic yard to remove it, raising the contract price by $534,100, auditors said.
An engineer hired by the city agreed the $109 price was reasonable, auditors said. But auditors found the city overpaid Phipps on the initial concrete removal by $70,850 by mistakenly paying him $109 per yard for that work instead of the agreed-upon $25.
Most of the changes in the Phipps project were to have been screened twice: once by a special Change Order Review Committee, made up of officials from the city, public works and comptroller's offices; and finally by the five-member Board of Estimates.
"It would be unusual to pay this kind of an overrun if it wasn't approved by the committee," Schmoke said yesterday.
Little Italy community activist Roberto Marsili first brought concerns about the project to the Board of Estimates a year ago after watching contractors and alerting public works officials. "It was puddling and real soft," said Marsili, president of the Little Italy Community Organization. "The dirt they put in there wasn't any good; it was the wrong kind of fill."
In May, Southeast Baltimore City Councilman Nicholas C. D'Adamo Jr. released a report showing overruns in the city Public Works Department over the last five years had reached $98.9 million.
"I was uneasy with the whole project," said D'Adamo, whose council district includes Little Italy. "When we're asking city employees to sacrifice a pay raise and the city has a large deficit, to me a penny over the cost is way too much."
