More SHA contracts fall under suspicion

Legislative audit reveals $190,000 in unwritten pacts awarded by shop manager

December 11, 2004|By Michael Dresser | Michael Dresser,SUN STAFF

For the second time in two months, legislative auditors have uncovered evidence of favoritism in the awarding of state highway contracts and have referred the matter for criminal investigation.

In a report released yesterday, the Office of Legislative Audits said an unnamed manager at an unidentified State Highway Administration maintenance shop had awarded $190,000 in projects to a single contractor in 2003 without written contracts. Such an award would violate state procurement law.

Auditors said they launched an investigation after receiving a tip on a fraud hot line.

A similar call led to an earlier audit, released in October, that found another SHA manager was involved in the awarding of $750,000 in state contracts to a firm where the state employee's spouse was working. In that case, as in the more recent one, the auditors recommended that the agency take up the matter with law-enforcement officials.

Neil J. Pedersen, the state highway administrator, said he could not identify the individual, maintenance shop or contractor involved because the matter is under state criminal investigation.

State Prosecutor Robert A. Rohrbaugh said his office had received a copy of the audit report but would not comment on whether he had opened an investigation. He said such matters are normally handled by either his office or the attorney general's office.

Pedersen said his agency is working at developing tighter controls over procurement. He said that given the "tens of thousands" of state contracts awarded by the SHA, he couldn't guarantee that no additional questionable procurements would surface, but he denied any widespread pattern of impropriety in the agency.

"I would seriously take exception to there being a cultural problem," he said. "I would not want that black mark against the 99 percent of employees who follow the rules."

In the recent audit, investigators identified a series of "serious discrepancies and questionable transactions" at the maintenance shop:

Shop managers could produce no records of bidding for 13 of 15 projects, even though SHA rules require at least two bids.

Shop management characterized the projects as emergency repairs even though records did not support the claim and some of the work did not appear to be urgent.

For one contract worth $87,000, records indicated that competing bids were sought but that other contractors were not interested. Auditors said they contacted listed contractors and found the statement wasn't true. They said the contract should have been reported to the Board of Public Works and advertised in the Maryland Contract Weekly but was not.

Another contract was awarded to the favored contractor even though its bid was twice as high as the low bidder's offer.

Several projects were artificially split into smaller jobs so they would fall under the limit for competitive bidding.

Three maintenance employees who should have filed financial disclosure statements with the State Ethics Commission had not done so. Similar violations were found in the October audit.

The favored contractor failed to file state income tax returns from 2001 through 2003. Contractors who are delinquent in their state taxes are not normally eligible for state contracts.

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