Companies accused of misrepresenting their work on the metro area's first light-rail line are now at work on the second one.
The accusations illustrate how the Metropolitan Council, which has overseen both projects, can be more lenient than federal officials in enforcing rules intended to give work to firms owned by minorities and women.
The federal government recently identified C.S. McCrossan, a prime contractor on the Central Corridor light-rail project, as having been a partner in a joint venture that broke rules on using so-called disadvantaged firms when building the Hiawatha Line.
The joint venture claimed credit for giving work to firms headed by minorities or women, but the work really went to other companies, the government said.
Two of the disadvantaged firms involved in the alleged abuse on Hiawatha are now working on the Central Corridor with a new venture involving C.S. McCrossan.
The conduct of the three companies comes to light as the Met Council is again pursuing an ambitious goal of awarding 15 percent of the construction dollars for the $957 million Central Corridor project to firms owned by minorities or women deemed Disadvantaged Business Enterprises (DBE).
Nationwide, the federal government wants at least 10 percent of construction contract dollars going to disadvantaged firms.
Met Council member Steve Elkins said last week that he and others would push for proof that disadvantaged firms "are actually the ones doing the work" they're supposed to do.
Wanda Kirkpatrick, the Met Council's director of diversity and equal opportunity, said the agency is taking steps to do so on the Central Corridor running between Minneapolis and St. Paul.
"We have people who go out on the site to ensure that what they [disadvantaged firms] are supposed to be doing they are doing," she said. "We look at all of their documents."
The Hiawatha line between the Mall of America in Bloomington and downtown Minneapolis, which opened in 2004, relied on federal money to pay most of its $715 million cost.
Feds say others did the work
A 2005 report by the inspector general for the U.S. Department of Transportation on minority contracting in the Hiawatha project led to a broader federal investigation. It found that the earlier joint venture, Minnesota Transit Constructors, subcontracted with firms headed by minorities or women "to make it appear as if they were truly involved" in the project. In reality, the government said, some of the work was done by companies that were not disadvantaged.
Two of the firms certified as disadvantaged -- B&L Supply of St. Paul and Lanier Steel of Commerce, Ga. -- merely passed off work to other companies during the Hiawatha project, the government said.
B&L, run by an African-American, and Lanier, run by a woman, are now working for the new joint venture and for other prime contractors on the Central Corridor. McCrossan and the other contractors told the Met Council they intend to give $11.8 million of Central Corridor work to B&L and $547,347 to Lanier.
In the Hiawatha project, the contractors in the joint venture called the government's accusations baseless, but they and other contractors agreed last month to pay $4.6 million as part of a settlement in which the government agreed to drop the matter. The deal does not bar C.S. McCrossan or the disadvantaged firms from working on other federally funded projects.
Met Council rules are looser
The federal inspector general's report said two-thirds of DBE payments for the Hiawatha Line -- including $10.6 million for Lanier and B&L -- shouldn't have been counted toward meeting goals for contracting with disadvantaged firms because the firms didn't do the work.
The Met Council took a more lenient view. Using a different standard than the feds, it concluded that two-thirds of the DBE payments for Hiawatha -- including the $10.6 million -- should count as work done by disadvantaged firms.
"They were doing the job they were supposed to be doing," Kirkpatrick said.
The contractors for the Hiawatha joint venture also contend that they did what the Met Council wanted when it asked them to give 15 percent of the contracts to disadvantaged firms.
"These goals for DBE participation are very aggressive and very high," said Dean Thomson, a lawyer for the venture. "This means contractors are effectively told, 'Go out and find as much participation as you possibly can.'"
Assistant U.S. Attorney Ann Bildtsen, who led the investigation in Minnesota, said that abuse in the Hiawatha project "really was quite clear."
The investigation found that B&L "did not stock in their warehouse the type of electrical equipment that was being contracted for on the project," she said. "We do not think they did legitimate work."
Clifton Boyd Jr., head of B&L, said he followed standard industry practice by having another company ship equipment directly to the work site. "I don't have the heavy machinery to move a 10,000-pound reel," Boyd said.
Lanier President Rhonda Gillespie bristled at the government's claim that the Hiawatha joint venture used her firm to "pass-through" work to other companies.
"I wasn't used," Gillespie said. "I invited the U.S. attorney to get his butt down here and look at my files, which is about four bankers boxes ... full of what I did in this project."
Regarding the Central Corridor project, she said, "We are supplying railroad track material that has been designed by Lanier Steel Products and can only be purchased through Lanier Steel Products."
Pat Doyle 612-673-4504