Will Granite Construction Crumble under investigation?

Someone sent me this recent article from the San Diego Union regarding Granite Construction, the company that is pushing for the massive new Liberty Quarry near Temecula. I think in order to be fair to all parties, a few points need to be raised. I don't know which violations Granite was allegedly responsible for as opposed to A.J. Diani since I have not personally seen Aguirre's report. It also needs to be noted that the backdrop or narrative to the understory is a continual pissing match between Mayor Saunders and the publicity loving, self serving Michael Aguirre that has existed for years. I rarely support anything Aguirre comes up with and would definitely endorse his Republican opponent Jan Goldsmith in the upcoming election. That being said, Saunders may be trying to sweep this Granite investigation under the rug like business as usual. Sort of like KBR in Iraq - so we lost a few billion dollars in shady deals, cost of doing business. Having been a construction project manager and contractor, I know how these extra billings work and its like watching sausage being made, not pretty.

Fire debris removers targeted in city suit

$2 million sought from contractors

By Brooke Williams
STAFF WRITER

October 18, 2008

City Attorney Michael Aguirre sued contractors yesterday that the city hired to clear fire-ravaged homesites in Rancho Bernardo, alleging they falsified records, knowingly overcharged and owe the city more than $2 million.

“The disaster of last year's wildfires has been compounded by a scam perpetrated upon the citizens of San Diego,” Aguirre said. “The overcharges come at a time when the city is struggling with a budget deficit and slashed services. We can't afford these rip-offs.”
Aguirre's office opened an investigation and Mayor Jerry Sanders ordered an audit of the debris removal program in August, after a report in The San Diego Union-Tribune raised questions about the work of A.J. Diani Construction Co. of Santa Maria and Granite Construction Co. of Watsonville.

The newspaper examined invoices, copies of weight tickets from landfills, private bills and other materials and found the city-hired companies charged more and removed more debris than privately hired companies did from comparable lots. The report also pointed out discrepancies between bills and the dump tickets submitted to support them.

Results of the audit are expected to be released late this month or early next month.

In a written statement, Jacque Fourchy, spokeswoman for Granite, said the company “is very disappointed” that Aguirre filed a lawsuit “prior to the completion of the independent audit commissioned by the Mayor's Office.” She said Aguirre's nine-page complaint lacked facts to support the allegations.

“It is our belief that the audit will clearly establish our billings to the City were appropriate, entirely consistent with our contract, and fully documented,” Fourchy said.

Background: The city of San Diego hired private contractors to help fire victims in Rancho Bernardo clear debris and contaminants from their lots. The city attorney and city auditor are separately investigating the program's $9.4 million cost.

What's happening: City Attorney Michael Aguirre filed a false-claims lawsuit against the two contractors yesterday, alleging overcharges. He said they owe more than $2 million.

A spokesman for Diani didn't return phone calls for comment.

In the days after wildfires tore across the county last October, San Diego officials rushed to hire contractors to help residents remove toxic ash and debris from their properties.

Diani and Granite cleared 112 of the 365 homes that burned in Rancho Bernardo and charged the city $9.4 million. The city expects state and federal taxpayer reimbursements for much of the cost, but inconsistencies between what was removed and what was billed could threaten that plan.

Kevin Christensen, a city attorney investigator, said the suit is based on an extensive examination of records, such as work plans, invoices, debris hauling logs, weight receipts from the dump, daily reports from city inspectors, as well as information city officials provided to the Governor's Office of Emergency Services and the Federal Emergency Management Agency.

Filed in San Diego Superior Court, the lawsuit alleges the companies violated the California False Claims Act by inflating the cost of materials, as well as the quantities and types of debris they removed.

For instance, Diani charged $312 and $225 per ton for debris labeled on invoices as “Mixed Construction & Demolition.” The two rates applied to different areas of Rancho Bernardo. However, Christensen said, Diani trucking logs and dump records did not separate that type of debris from ash, for which the company charged $238 and $180 a ton to remove.

“If you're going to charge more for one than the other, there has to be some sort of back-up (documentation),” he said.

A Union-Tribune analysis showed that if Diani hadn't charged more for “Mixed Concrete & Demolition,” the city could have saved $64,502.

Granite charged the same per ton for both types of debris.

Aguirre's lawsuit also alleges the companies inflated the quantities of debris they hauled away.

To estimate the rubble that would remain from houses and lots of certain sizes, Christensen said, investigators compared the amount of debris the companies reported removing to formulas accepted in the industry.

Finally, the suit alleges that bills for supplies “were based on falsified records of the quantity purchased and/or the reasonable cost per unit.”

In particular, Christensen said, city attorney investigators focused on the $32 per foot that Granite charged to install fiber rolls, which control erosion.

He said they determined fiber rolls cost 90 cents per foot at a warehouse and that $5.50 per foot, which Diani charged, was a reasonable price to cover manpower and prevailing wages.

When investigators told erosion experts about Granite's price of $32 per foot, Christensen said, “their reactions ranged from 'that's outrageous' to 'that's criminal.' ”

In its contract bid, Granite estimated spending $5,120 on fiber rolls for 160 properties. It ended up billing the city $445,600 for fiber rolls to cover 44 lots.

A spokesman for the mayor, Darren Pudgil, agreed with Granite that Aguirre's lawsuit is premature.

“We believe the responsible thing to do is to wait for the audit, review its findings and then take whatever action might be necessary,” he said.

Staff data specialist Danielle Cervantes contributed to this report.

Brooke Williams: (619) 293-1228; brooke.williams@uniontrib.com