Monday, August 07, 2006

DEP's ILLEGAL CONTRACTS (Part 1: The Subcontractors)

In case you were wondering how it was possible that Connecticut taxpayers ended up spending over half a million dollars on PR subcontractors at Hamden's Big Dig, we have the answer:
It was done illegally.

That’s right. The entire pyramid of subcontractors that Loureiro Engineering Associates (LEA) built with our state bond money had no legal basis. In fact LEA, the DEP's lead Newhall contractor, did not have the legal authorization to hire any subcontractors at all.

As we embark on our foray into the netherworld of state contracts at the Newhall site, let’s start at the beginning, with the special contract that the DEP used to channel funds to LEA and all of its subcontractors...

The "Spills Contract"
LEA was hired on at the Newhall site under the Department’s contract for “Hazardous Spill Response, Recovery, Removal, and Disposal,” a now-infamous contract that has been the focus of an investigation of the DEP by a Grand Jury and the CT Attorney General's office. The “Spills Contract,” as it is known at the DEP, created a coterie of pre-approved contractors who could be assigned jobs by the DEP at any time without competitive bids.

Now don't get us wrong. We aren't obsessive about competitive contracting, and if used properly for its primary intended purpose there would not be a problem with the Spills Contract. If there is an overturned tanker on the highway, we understand that there is no time to hold a proper competition for contracts to clean up the spill.

Needless to say, however, it did not make sense to use this contract to select the State’s lead contractor for the largest residential remediation in Connecticut history, where the last “spills” occurred more than 50 years ago, were “discovered” in 1979, and where the investigation and remediation are slated to last at least a decade. There was plenty of time for normal, competitive contracting at Newhall. But let’s leave the discussion of the assignment, extension, and expansion of LEA’s own contract to a later posting and focus on the subcontractors.

The Spills Contract had several safeguards embedded in it to limit the obvious risk that it could be abused. One of those safeguards was an explicit prohibition against the hiring of subcontractors. According to Section 7.1.1 of the contract, “A contractor shall not employ the services of a subcontractor, or allow labor, equipment or materials to be provided on a subcontract basis, unless such use is authorized by the Commissioner of DEP in writing or is authorized pursuant to section 5.5.1 or 5.5.2 of this Bid and Contract [Sections 5.5.1 and 5.5.2 also require the explicit authorization of the Commissioner in his or her sole capacity.]”

But the Commissioner did not authorize LEA to employ the services of a subcontractor. She also didn’t delegate the authorities under Section 7.1.1 of the contract to Elsie Patton, who signed off on the contracts, or to anyone else at the DEP. Nonetheless, Patton and LEA just went ahead and created a massive pyramid of subcontractors (and subs of subs) without legal authorization.

Why would Connecticut taxpayers pay for all of this unauthorized work, especially since it was not done on our behalf? The good news is that we don’t have to. Because all of this bond money was allocated by DEP and LEA illegally, the citizens and our elected representatives have the right to take it back. The state is not responsible for the payment of its subcontractors, only Loureiro is…and rightly so. It is only fitting that a bunch of subcontractors who are in LEA’s pocket should be paid for out of LEA’s own pocket.