Morgan State University asked a construction firm to include a $3.1 million allowance in its bid for a 2005 contract, then used $2.6 million of those surplus funds to pay the company for cost overruns on other campus projects without getting state approval, records indicate.
At the recommendation of the state Office of Legislative Audits, the school asked the Board of Public Works this month to reapprove the five affected contracts - worth a total of more than $16 million. The Board of Public Works was to hear the items at its meeting today, but the university has been asked to withdraw the contracts from the agenda until a legislative audit is publicly released.
"Obviously, staff members on the Board of Public Works and the governor have some concerns, which is why the items were pulled," said Rick Abbruzzese, a spokesman for Gov. Martin O'Malley. "Once we get the audit back ... we'll take additional steps."
University officials did not respond yesterday to repeated requests for comment. But in a written statement to the Board of Public Works, the school said: "The university has implemented policies and procedures to minimize future occurrences of this nature."
Morgan State, a historically black campus that has received an infusion of building funds in recent years under a federal civil rights agreement, has been rebuked in the past for "improper transactions" and for circumventing the Board of Public Works' authority.
In 2004, Treasurer Nancy K. Kopp - who sits on the public works board along with the governor and the state comptroller - wrote a letter to Morgan President Earl S. Richardson sharply criticizing his administration for spending $6 million in operating funds to buy the nearby Northwood Shopping Center. Only after buying the land did Morgan seek reimbursement from the state.
Under state law, Morgan and other public colleges are required to receive board approval for all capital improvement and service projects worth more than $500,000.
"This practice must cease!" Kopp wrote to Richardson in a 2004 letter obtained yesterday by The Sun. "Earl, you and I cannot tolerate improper transactions." Failure to abide by regulations could threaten the tax-exempt status of the bonds often used to finance public projects, she warned.
Last November, Richardson told his college's governing board that the ongoing audit had uncovered "potential problems" in the campus' financial administration, said Martin R. Resnick, vice chairman of the university's Board of Regents.
"He was extremely concerned, as was the chief financial officer, because someone was doing something they were not aware of," said Resnick, who has not seen the fiscal audit. "I truly believe that whatever happened was certainly an aberration ... and I'm sure the president will be able to rectify it."
Morgan is not part of the University System of Maryland, which oversees most of the other public colleges in the state.
The fiscal audit that uncovered these irregularities was recently completed and will be made public as soon as Morgan formally responds to the findings, said Bruce A. Myers, the chief legislative auditor.
Auditors are able to suggest remedies for procurement problems, but in some cases, they refer their findings to the state prosecutor's office.
Myers declined to detail the audit's findings before it is publicly released, but some information was disclosed this week by Morgan when it appealed to the public works board to reauthorize the contracts in question.
In August 2005, the Board of Public Works approved a $4.3 million contract between Morgan and the Whiting Turner Contracting Co. to relocate a telecommunications hub on the Northeast Baltimore campus.
"The university did not disclose to the board that the award amount contained an allowance of $3.1 million which the university has instructed all bidders to include in their bids," Morgan officials wrote in a document provided to the public works board. "Ultimately ... the university used some of the allowance to fund various other campus infrastructure projects performed by the same contractor."
Whiting Turner officials did not return calls seeking comment yesterday. The 99-year-old Baltimore-based firm specializes in education, cultural and performing arts projects and has constructed and renovated major buildings across the country.
Among the Whiting Turner contracts supplemented at Morgan State out of the telecommunications project allowance was $465,000 to renovate track and field facilities at the university stadium. The entirely $945,000 paid to Whiting Turner for the stadium upgrade was made without the public works board's approval, Morgan officials now acknowledge.
In November 2005, the Board of Public Works approved a $2.8 million contract to construct an underground utility tunnel on Morgan's campus. The university subsequently authorized a $1.3 million increase to the project and paid for it out of the telecommunications hub allowance, officials said.
In all, Morgan has spent $2,612,200 of the $3.1 million allowance on four other Whiting Turner projects, the university told the board.
"The comptroller is quite concerned," said Joseph Shapiro, a spokesman for Comptroller Peter Franchot.
Kopp spokesman Howard S. Freedlander said the treasurer believes "it wouldn't be fair to express an opinion without seeing" the complete legislative audit.