PennDOT officials OK’d overbilling

(Pennsylvania) Consultants overbilled PennDOT hundreds of thousands of dollars with the approval of transportation agency managers who were their guests at expensive golf outings and sports events, according to court documents obtained by the Pittsburgh Tribune-Review. Two of the consulting companies employed the wives of two PennDOT managers who helped decide which consultants to hire. Some consultants even bought thousands of dollars worth of T-shirts from a firm owned by a high-ranking PennDOT manager who also helped select the consultants and oversaw their work. PennDOT records and sworn depositions from its managers are evidence in a whistleblower lawsuit nearing trial in federal court, Downtown. Retired PennDOT construction manager Bill Arnold, 61, of South Strabane in Washington County, filed the lawsuit in 2003, claiming the agency retaliated against him after he exposed to authorities in 2001 that PennDOT managers knowingly signed off on overpayments to consultants. The court records and testimony offer a glimpse into the workings at PennDOT’s District 11 office, which manages highway work in Allegheny, Beaver and Lawrence counties. The evidence tells of close relationships between consulting companies and PennDOT managers who put large sums of money into consultants’ pockets. Money wasted on the overbilling means fewer funds are available to fix roads or expand highways. It also is connected to how much people pay when they buy gas. PennDOT’s revenue comes from a 30 cents per gallon gasoline tax paid at the pump. Neither Arnold nor his legal team — West Mifflin attorney James Ashton and Downtown attorney Jon Pushinsky — would comment. The overpayments within PennDOT’s District 11 totaled at least $800,000 from March 2000 through June 2001, Arnold’s lawsuit alleges. PennDOT disputes the amount but would not discuss overbilling in District 11 or in the state’s other counties with the Tribune-Review. PennDOT also would not say whether overbilling occurred in other years. PennDOT Secretary Allen Biehler in June issued a stern warning to consulting companies. In an e-mail, Biehler ordered PennDOT consultants to stop taking agency employees to golf outings, sporting events and restaurants. Biehler became aware of the gifts from evidence generated by the Arnold lawsuit, PennDOT spokesman Rich Kirkpatrick said at the time. “This practice is unacceptable and must end,” Biehler wrote. Biehler, who lives in Crafton, became secretary in 2003. He replaced former Secretary Brad Mallory, who left in December 2002 and joined Michael Baker Corp. in March 2003. Mallory become president of the company’s engineering business segment in October 2003. A message left at Mallory’s office was returned by Michael Baker spokesman David Higie, who said Mallory declined to comment. PennDOT hires consulting companies to supply inspectors at highway construction sites to determine if work is being done correctly. Pay for inspectors and companies is paid based on the inspectors’ experience levels. Arnold was an assistant construction engineer and services engineer. He reviewed inspectors’ qualifications as part of his job. Arnold’s lawsuit said he discovered some inspectors had exaggerated or lied about their experience, triggering higher rates of pay. Those bills were approved by PennDOT managers who were in positions to benefit, according to the lawsuit. Two PennDOT managers — Ralph Beerbower, of West Newton, Westmoreland County, and John Martin, of Bethel Park — had wives working for the consultants. Another PennDOT manager, John “Jack” Sullivan, of Rochester, Beaver County, ran a side-business that sold clothing to the consulting firms. Arnold alerted local PennDOT supervisors, PennDOT’s central office, the state’s Inspector General’s Office and the U.S. Department of Justice in 2000, 2001 and 2002, according to the lawsuit. Arnold claims he was demoted in 2002 in retaliation for exposing the overbilling. He retired in 2004. PennDOT did not audit the consulting companies after Arnold alleged wrongdoing. Instead it asked consultants statewide to audit themselves and tell PennDOT whether they had done anything wrong, according to PennDOT records contained in the court file. Ultimately, seven companies working on jobs across the state admitted some of their inspectors had erred on resumes. The companies refunded PennDOT $217,013 this year. Kirkpatrick declined to comment on many allegations outlined in Arnold’s lawsuit because the case is still pending. He did say that the agency moved swiftly when alerted to problems. “We took immediate and appropriate action when allegations of problems with the consultant inspectors’ certifications were brought to our attention,” said Kirkpatrick. “We involved the Federal Highway Administration, our Office of Chief Counsel, and the Comptroller’s Office. Together, we did an exhaustive investigation and evaluation of the issue,” he said. “We believe our action obtaining refunds from the seven consultant inspection companies resolved the issue. We continue to monitor and evaluate these credential issues.” Six companies that repaid PennDOT declined to comment when contacted by the Trib. The other, M.A. Beech Corp. of Carnegie, repaid $23,289 even though it disputed PennDOT’s order to refund money. “We provided appropriate documentation to justify all the billings to the department for work performed by our company,” said Sharmon Winters, the company’s general manager. “And, companies have to make appropriate and cost-conscious business decisions to mitigate disagreements when they occur with any client.” PennDOT demanded refunds only on jobs paid in part by Federal Highway Administration dollars. Arnold maintains that companies doing state-paid jobs overbilled PennDOT as well. Records show the agency didn’t seek refunds on those projects. Roughly two-thirds of PennDOT work statewide is paid entirely with state money. One-third uses some federal money. Arnold said consultants overbilled on other jobs financed in part with federal dollars, yet PennDOT didn’t pursue them, court records show. Arnold reported that SAI Consulting Engineers Inc. of the Strip District overbilled for work at construction sites, including one on Route 18. He also told his supervisors that Michael Baker Corp. of Moon overbilled for work on Route 65 and Route 28. The jobs involved federal highway money, but PennDOT did not order them to make repayments. PennDOT would not say why. A woman answering the phone at SAI said the company had not been notified about PennDOT refunds or audits. She and executives there declined to answer more questions, but a letter sent by SAI President Victor E. Bertolina reiterated that the company was not asked to pay back any money. Michael Baker spokesman David Higie declined comment, saying it was a “matter of potential litigation.” An affidavit Arnold submitted in February to federal court alleges that a Michael Baker employee took a van with at least seven District 11 employees who oversee construction contracts to a PNC Park corporate box for an afternoon Pirates game in 2002. U.S. District Judge Joy Flowers Conti ordered Michael Baker Corp. to disclose to Arnold and his attorneys instances where the engineering company entertained PennDOT employees. Conti allowed Michael Baker’s response to be kept confidential. Arnold also claims consulting companies paid for PennDOT employees to attend golf outings at unnamed courses. State Auditor General Jack Wagner’s office said in August it plans to review the evidence to determine whether it warrants an investigation. A Washington, D.C., watchdog group has asked the Inspector General’s Office for the U.S. Department of Transportation to investigate. “It certainly seems like the inspector general should be doing an audit of what happened with the money,” said Beth Daley, spokeswoman for the nonprofit Project on Government Oversight. “Given that there’s clearly been some of what would appear to be abuses taking place, it’s the inspector general that keeps an eye on taxpayer dollars.” PennDOT has not barred any of the seven companies from future work
, nor has it recommended criminal charges to the state’s attorney general. In fact, PennDOT allowed at least two of the companies — M.A. Beech, and Construction Methods and Coordination Inc. (CMC Engineering) of Kimberton, Chester County — to repay lesser amounts of money than the companies were found to have overbilled. M.A. Beech overbilled $41,772, but through a settlement agreement repaid only $23,289, according to PennDOT. CMC Engineering overcharged by $67,849, but the agency agreed to settle for only $61,064, according to PennDOT. David Cough, director of operations at the Federal Highway Administration’s Harrisburg office, referred questions about overbilling to the Inspector General’s Office for the U.S. Department of Transportation. David Barnes, a spokesman with the inspector general, said he could neither confirm nor deny whether the office was investigating. “You really need to have some independent agency that has the ability to look into these things without being quashed,” said Daley, from the Project on Government Oversight, who urged the federal Inspector General’s Office to investigate. Jim Ritchie can be reached at or (412) 320-7933. PennDOT facts:History: Created in 1970 Budget: $5.1 billion — about $4.1 billion spent on highways and bridges. Functions: Maintains 40,000 miles of highway and 25,000 bridges; administers 10 million vehicle registrations and licenses 8 million drivers; oversees the state’s vehicle inspection program. Employees: Roughly 12,000 Location: Headquarters in Harrisburg, with 11 district offices. District 11 office is along Thoms Run Road in Collier near the Kirwan Heights exit. Management: Headed by Transportation Secretary Allen Biehler of Crafton, a former Port Authority of Allegheny County executive. Dan Cessna, of Forest Hills, runs the District 11 office. Source: PennDOT

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