Aug. 17, 2001 – A team of government officials is investigating reports that several construction contractors may have overbilled the government by nearly $1.2 million for summer repair work at several schools on St. Thomas and St. John in 2000.
Attorney General Iver Stridiron said Wednesday that he expects results of the investigation to be presented to him within the next two weeks. Then, he said, he will decide whether the matter should be handed over to the Public Corruption Task Force.
Alternatively, he said, the government could pay the bills for the repair work if it appears that there was no wrongdoing, or it could negotiate with the contractors to work out payments appropriate for the work completed.
There already have been negotiations between several of the contractors and a team of officials from the Property and Procurement, Justice and Education Departments, according to documents relating to the investigation that have been obtained by the Source.
The documents indicate that some of the contractors have retained legal counsel, and that many of them have said they can document the basis for the bills they submitted for their repair work.
Government House Chief of Staff Juel Molloy said Wednesday that she had recommended that no payments be made on the contracts in question until an investigation was completed. Like Stridiron, she indicated that she expected the results within a few weeks.
Payment to at least four of the building contractors has been withheld since an audit was conducted last year under the auspices of the Contracts Review Committee of the Education Department's Emergency Task Force. The audit found that the costs for the work may have been vastly inflated, Stridiron confirmed.
On Friday, one of the contractors whose bills are in question told the Source that he stands by the amount he billed the government. He said the audit of the work done at the school did not factor in much of the work his crews did.
He said his crews and those of his subcontractors were in the middle of their repair work in the summer of 2000 when Education officials started changing the scope of the work they wanted done. Some of the discrepancies in the billing may have come about because of the scramble and confusion as workers tried to complete the work before classes resumed in the fall, he said.
The territory's public schools had been scheduled to reopen on Aug. 28 last year, but because of uncompleted repair work, the opening was delayed two weeks, to Sept. 11. It was then further delayed to Sept. 25 for the Lockhart and Peace Corps Elementary Schools and Charlotte Amalie High School.
Memorandum cites conflicting figures
In a memorandum dated Jan. 29, 2001, to Education Commissioner Ruby Simmonds, Chief Deputy Attorney General Alva Swan wrote that the audit conducted on several of the contracts for repair work indicated that some contractors' bills were more than three times higher than the audit's valuation of the work done at the schools.
Swan wrote that one contract for repair work at Joseph Gomez Elementary School on St. Thomas was for $847,401, but the audit found that the work completed was worth an estimated $252,507. That would mean a $621,894 overbilling, Swan wrote.
"This excess is unconscionable and no reasonable person could find such an excess percentage within the range where reasonable men would or could differ," Swan wrote to Simmonds.
Documents relating to that contract show the contractor billed the government for replacing 125 doors at a cost of $1,026 per door, and for replacing 177 windows at $716 per window.
The audit found a similar level of overbilling on a contract for work at Guy Benjamin Elementary School on St. John, as well as overbilling on a $230,000 contract for work at J. Antonio Jarvis Elementary School on St. Thomas. The "amount in excess" billed on the Jarvis school work was $138,739, Swan said.
"The other contractors, in my estimation, are no less egregious or culpable in their overcharges," he wrote in the memorandum.
Swan added that the audit found that two contractors who did repair work, including $238,084 worth of work completed at E. Benjamin Oliver Elementary School on St. Thomas, either undercharged the government or were within an acceptable level of about a 10 percent difference.
Stridiron has indicated that payment on the bills for those contracts has been approved.
The contractor who spoke to the Source on Friday said the contracts for repair work went through a competitive bidding process, but changes could have been made under "exigency" provisions, whereby Education Department officials could bypass some of the bureaucratic process as they tried to hurry repair work to completion.
The contractor said when he first heard the questions raised about his bills early this year, he took his documentation of costs to Justice Department and other government officials and went over them item by item. He said he was then told that he would be paid for the work, but he has not seen any money yet. He added that he nevertheless agreed to do more school repair work this summer.
Further, the contractor told the Source, if, in fact, some contractors were overbilling the government, that did not mean all of them were.
Study used national estimates, locally adjusted
The Education audit compared the amounts of the awarded contracts with an independent study of what the work involved should reasonably cost. The independent study was based on the "1999 National Construction Estimator," a publication that lists labor and material costs, location cost adjustments and other variables used in commercial contracting, according to a Sept. 12, 2000, memo to Property and Procurement Commissioner Marc Biggs.
The study also was adjusted for material costs in the Virgin Islands and allowed for reasonable profits and overhead costs, the memo states.
Reviewers then went to five schools on St. Thomas and St. John to calculate the value of the work they saw had been completed, or that was expected to be completed. The reviewers called this the "value analyzed."
The audit covered repair work at Joseph Gomez, Guy Benjamin, E. Benjamin Oliver, Julius Sprauve and Ivanna Eudora Kean Schools. In total, the awarded contracts came to $2,139,797. The independent study's "value analyzed" figure for the work was $945,538. That is a difference — a possible overbilling — of $1,194,259.
The study also examined the difference between contracts awarded and estimates for work done at four other schools in the district and found similar evidence of possible overbilling.
Based on that study, the Contracts Review Committee recommended last September that a team be formed to meet with each contractor to go over their bills and to negotiate an appropriate payment for the work completed.
The committee also recommended that its findings be passed along to the Public Corruption Task Force, and that similar studies be carried out on St. Croix.
Since then, the team of officials from the Property and Procurement, Justice and Education Departments have met with many of the contractors, most of whom have retained counsel and indicated they have documentation that supports the bills they submitted.
