Fraud Inquiries Focus on Public-Works Hiring in New York

Two of the nation’s major construction companies are suspected of evading the government’s hiring requirements for projects in New York.

Comments: 50

  1. The current President of the United States is African-American, who won his office with a substantial majority of the popular vote. The Governor of New York State is African American.

    Minority set-aside programs have outlived their usefulness, if ever there was one.

    Companies should not commit fraud. That said, in this case, it appears that the problem is with the set-aside programs and the perhaps onerous burden they place of companies trying to accomplish complex tasks.

  2. What really needs to be investigated, especially in places like Atlanta, in the Contrution industry how the employment of illegals has destroyed the market. I have a Master's degree in Construction Engineering. In Atlanta, in the Mid 1980's all the the big Contractors including Beers the predecessor to the mentioned contractor conspired to do away with Union contractors and opened up open shop firms. I even got pay checks working for one companies merit shop drawing on the union firm as a Project Manager.

    In Atlanta a Carpenter made about $15/hr in the mid 80's unless it was a Davis-Bacon project. Today, Contractors get away with in the Atlanta area of paying less than $8/hr for so called carpentry work to sub sub contractors who use illegals. The Generals insulate themselves by claiming that it was a Sub or a Sub Sub. Turner Construction, was nailed for using illegals under Zebra Masonry at the Marietta Court House Project in Cobb County, Ga.. They were also caught at a Court House in Jacksonville, Florida.

    The government needs to crack down on every single Contractor, sub contractor, sub sub contractor, using illegals. They all know they are doing it. Why are the labor costs less than mid 1980, and less than $15/hr and when you put the pencil to a paper. You don't have to have taught Construction Estimating and Scheduling like I did, to see that the pay and benefits and man hours don't equate to be paying for legal workers. They neend to be fined at least $50,000 per worker at each level, no excuses. The Republicans are the biggest violators.

    Then they wonder why the housing market fell apart. No one can buy the houses, if they are paid $8 and hour and no benefits for this dangerous work. They can only live 10 -12 to a slum rental house and send the money to another country. Construction use to be the biggest employer of middle class wages, not anymore.

  3. These set asides have always being dubious shell game exercises and they should be dumped. They are an invitation to corruption. The definition of minority on one form I looked at ran to a third of a page with a note saying if you are not on here but think you should be let us know.
    I used to have to bid for certain work against "minority" firms run by people who went to Berkley and MIT, hardly your starving masses.
    Construction is a notoriously tough game to get into. It is very much who you know and paying your dues. A contractor takes a lot of risk when they subcontract and forcing them to select people based on ownership and not performance is very unfair and leads to these shell games.
    There are a lot of things the agencies could do to encourage small firm participation such as reducing punitive insurance requirements and speeding payments.

  4. Did Mayor Bloomberg meet hiring requirements for the new school chancellor?

  5. Schiavone and Skanska are both foreign owned. Why do we have to out source these work? When will we do something about our economy?

  6. Hmmm. But we were told that Mayor Bloomburg ran such a tight, clean city?

  7. "...law enforcement officials...acknowledged that the goals for the participation of minority- and women-owned contractors and disadvantaged businesses often do not accurately reflect the universe of qualified companies."

    It's obvious the status quo has done everything it could to maintain the status quo.

  8. Democrats investigating democrats, what a country.

  9. Who are minorities? Based on 1968 or today? Minority in community, in a certain trade, and who sets the bar for "struggling" the government? Charlies Rangel? Yes, breaking dumb laws are still breaking the law, but that doesn't stop them from being dumb. We need to revise our view of quotas based on out-of-date constructs so we can focus on doing quality work on-the-job.

  10. What ever happened to that old saw, "may the best man (oops, person) win?"

  11. As an woman architect with 25 years of experience I can tell you that the minority rules are mostly disregarded. This means that the entrenched good old boys network maintains complete control of the very profitable construction industry. To say that there aren't qualified minority businesses after all the years these laws have been in effect just confirms that the minorities have not been given the jobs and have not been able to gain the necessary track record of experience to move up the ladder. Enforcement of our laws is the key. The construction industry enforcement record shamefully is on par with the SEC in the banking fiasco. We can and must do better!

  12. I agree wholeheartedly with Alex A. and Dennis. Minority quota "feel good" programs provide no tangible benefit. To the contrary, they drive up program costs to the detriment of taxpayers and create an environment that encourages creativity and inappropriate behavior by companies struggling to comply with burdonsome requirements. Do an audit and I guarantee you'll be shocked to learn how many of these disadvantaged firms are opportunistic storefronts of 1 or 2 individuals with little capacity and capability to deliver who hung out their shingle looking for a chance to hop on the bandwagon of this misguided program.

    While we're at it, we should also nix the prevailing wage laws. That's another entitlement program for a select few that's outlived its usefulness and taxpayers can no longer afford.

  13. I am happy to see the state enforcing the laws of the people. For too many years government has looked the other way regarding programs for disadvantaged businesses. They have let powerful companies grow rich at tax payer expense. The big contracting and construction companies siphon off money, taxes, jobs and skill devlopment that should help cities and their people. They are just big jobs programs for non-college suburdanites who's only qualification is a connection. Talk about the "real" affirmative action.

    As good paying jobs, that anyone can do, become scare, how will we allocate them in a "fair" way ? How much fairness do we want in society ?? Most people want fairness only when it helps them. Thank goodness wiser men and women make the laws for everyone. Now let's enforece those laws and punish the law breakers.

  14. I wonder how many contracts awarded to women and minority owned companies had to be completed by another firm because the "disadvantaged" companies did not have the capital or the expertise to complete the job? It does not seem reasonable that work has to be given to firms simply because they are minority owned or are otherwise "Disadvantaged." Common sense prevailing, a municipality would want the largest, most successful construction company they could get to build the loop around their town, not the smallest most obscure company. I am sure that there is something here I am simply not getting.

  15. There's only one minority population in construction that should be protected by set-asides: American citizens.

  16. I am confused as to why we need to force companies to hire "disadvantaged" or struggling companies. Wouldn't it make more sense just to hire who ever does the job best. I am confused.

  17. Nothing new there Construction Firms have found ways to exclude Blacks, Hispanics, and other ethnic groups since horses were the preferred mode of transportation .

  18. What a suprpise? Isn't the construction industry run by organized crime? Is anyone surprised by this news?

  19. Get rid of the set-asides.

  20. Fraud in a construction project in New York City, Who'd Believe it?

    Fraud in a Federally backed construction project in New York City, Who'd beleive it?

    Fraud by foreign owned contractors at a construction project in New York City, Who'd beleive it?

    Every one!

  21. I'd like to see how many city contracts are awarded to Eskimos, Pacific Islanders, or left handed midgets. This is sooooooo stupid. Political correctness run amok. The objective should be to get the best qualified company for the job, not to fulfill some bonehead liberal feelgood quota.

  22. Just another example of your gov't "fixing" things. The labor force is teaming with "minorities". Remove all the labels and let merit rule the day. The laws of economics are just as real as the laws of physics. I'm surprised that the gov't doesn't try to manipulate those.

  23. The entrenched good old boys network is the real problem and this network should be busted once and for all. Perhaps, we need opportunities where they are not even allowed to bid, then they might realize what it is like to be discriminated against for no other reason that your gender or color.

  24. I am shocked, shocked to learn that two of the crooked companies are from NJ. And they are involved with the Mob? What is the world coming to?

  25. Regulations--everyone evades them. That's the country we live in. Taxes, forgetaboutit! Sad to say, we're living in a dystopia.

  26. dear on line editor,one thing must be clear to all and that is that mist people are in the habit of fooling/cheatingothers and amassing illegal wealthThis is on count of inherent CHARACTER to avoid this the slection of people forjobs must be based on their known reputation of their public features/But modern methods are there to prevent any fraud.To avoid any fraud justadopt this suggestion after analyzing and if found beneficial (1)All tender befo,cost of material. man power rerqured and the time required plus the source and costrequired preparing an independant expert team with deep knowledge on the subject must prepare the project itdetailing material required man power required, time required gving location etc when such a way giving the firmat is supplied in the tender while executing they will have to follow this amd thus any fraid will be prevented.)2) An effectve montering team consisting of quality assurave experts must verify and vheck this construction at itervals which will ensure the schdule , quality etc along with workmanship .A way of avoiding built in fraud in any construction date November 24th 2010 time 0403HRS IST AM

  27. On the Croton Filter Plant, it was not a requirement, it was part of the facade to get the unnecessary project approved by the City Council. The City promised JOBS to the people in the Bronx. The unions stormed the meetings and forced the City Council and the Community Boards to give them the JOBS. Now here we are, and Unemployment is the highest in the Bronx, and the JOBS did not go to those promised. They should not punish/fine the contractor (it is sort of the price of doing business as the contracts exploded in cost three times), they should fill in the hole in Van Cortlandt Park and cancel all the contracts -- GIVE THE PEOPLE THEIR PARK BACK.

  28. Time to put away these things: "hire a certain percentage of subcontractors owned by minorities or women, or businesses certified by government agencies as disadvantaged. " That description has led to more theft of tax money than Charlie Rangel times a billion. Enough.

  29. Where's Andrew Cuomo's action on this?

  30. It's a good thing Schiavone and Skanska didn't steal a loaf of bread or they would be rotting in jail.

    A reminder that there are two kinds of justice in the USA: one for ordinary people and one for the rich and powerful.

  31. What a surprise!

  32. So what else is new in the NYC construction industry Besides this same old story !

  33. Yeah, long live public works projects! Let's have more Obamba stimulus money for shovel-ready corrupt union projects! Forget the New Jersey tunnel -- let's build a tunnel to the moon! Since Obamba doesn't want us to fly there anymore, we can all drive there in our sustainable electric cars! I sense another Paul Krugman editorial comin' down the chute...

  34. Interesting that the photo portrays the workers...as if they are the ones who perpetrate the fraud, as opposed to those they work for.

  35. If you think the current state of affairs with the State’s quota program for disadvantaged businesses is bad, you ain’t seen nothing yet. The outgoing Paterson administration has been diligently working behind the scenes through the Empire State Development Corporation’s Division of Minority and Women-Owned Business Development Office to implement even more onerous quotas (substantially higher MWBE participation levels) for State-sponsored projects. At a time when New York desperately needs less government and reduced burden on taxpayers, the outgoing “accidental administration” is intent on leaving a legacy of bureaucratic red tape, adding new administrative diversity compliance functions to agency payrolls as they cut essential public services, and further driving up the cost of government to taxpayers.

    The recent and controversial appointment of a high-paid NYS Diversity Officer was just the first step. (www.nj.com/hobokennow/index.ssf/2010/09/ny_gov_paterson_names_hoboken.html). If implemented, this quota program on steroids will require agencies to develop and submit compliance plans for approval by the lackluster and under-staffed Division of Minority and Women-Owned Business Development Office. Failure to provide plans that pass muster or to meet disadvantaged business participation quotas on a project-by-project basis can lead to sanctions tantamount to tossing a wrench into the wobbling wheels of an already out-of-control government that’s careening into the ditch. As for impact on the State’s business climate, the proposed program includes an “extortion” feature that gives non-disadvantaged companies credit toward meeting their quotas if they fund training and other development programs for disadvantaged businesses. This is nothing more than a regulated form of “pay-to-play”.

    Consider the double standard. The two inquiries that are the subject of this news piece focus on accusations that the contractors used front companies to evade requirements that they hire a certain percentage of subcontractors owned by minorities or women, or businesses certified by government agencies as disadvantaged. Yet, how many of the NYS-certified MWBE companies achieved disadvantaged business status simply by transferring company ownership on paper to a spouse or relative without increasing jobs, generating increased business activity or promoting the interests of the disadvantaged? How is this “front” different from what the construction companies have allegedly done?

    Check out the NYS Disparity Study at http://www.empire.state.ny.us... to get a glimpse at where this bureaucratic juggernaut is headed. Governor-elect Cuomo would do well to derail this train before it leaves the station.

  36. I keep telling the Chinese that they are not the only one's who have a dishonest construction industry. As far back as the beginning of the Interstate Highway build there is evidence of "problems" in contacting and actual quality of infrastructure. Now that it is crashing down around us, no one should be surprised by any of this.

  37. I hope this investigation also uncovers why transit projects in NYC cost 4-8 times more than equivalent projects in Paris, Tokyo, and other dense metropolitan centers. That's the real crime no one is talking about.

  38. Why always look after the fact happend? To look good on TV and show how serious you are about people's interests....
    How about getting rid of all the minorities and other nonsense and have the best and price to quality relation best, get the job?
    Your article sounds like a report from Sicily or from a Banana Republic at best.

  39. No mention is made of the political contributions solicited from the MBE/WBE/DBE firms (and the consultants that help them get Certified) by the politicians claiming that they got the firms to the table.

  40. Anyone working in construction in NYC could have told you that Schiavone was full of shady characters. It seems everyone looks the other way when there is money to be made, thats how corruption thrives.

  41. This is exactly why (US) cONSTRUCTION WORKERS LOSE HOUSES, CARS & can't make ends meat.. These multi million dollar companIES are scandelous. They prefer hiring non- citizens to do half the proper work and pocket the extra money.. NOw LOOK- Its crazy how everthing comes to light when the country is broke ,Now everyone involved wants to blame others.... RACE has nothing to do with it... ITS CALLED EVIL GREED- the poison this country has been addicted to for years!!!!!!

  42. Having direct experience with Skanska I can tell you that they are bad news. Worst construction manager I have ever worked with. Go look at the job they are doing at the UN renovations- IF they let you.

  43. I am glad the picture showed white men working in the trade. Even if you are in the union except for the electrians, women have a tough time getting hired.
    As for Cuomo, his office has received several complains and has done nothing. The governor has received complains and did nothing.
    what the article did not say is what remdies and compensation will the companies and workers receive for being harmed by the fraud. $20 Million that goes to the federal pocket book does not help the disadvantaged.

  44. It's a shame that these companies seem to have been skirting minority hiring requirements. Those rules are in place to help break up the 'old boy' system that so many here complain about. Hopefully these companies will be punished accordingly for breaking the law. Multi-billion dollar companies like these should have the books thrown at them. We need to send a message to the entrenched (no pun intended) construction industry. Support fairness in infrastructure hiring. Visit www.transportationequity.org and find a TEN affiliate in your area.

  45. It's not just new york. big chicago contractors have long used black fronts to evade affirmative action. It's undoubtedly true elsehere as well.

  46. skanska and frank gehry were sued by MIT over the meshuggina Stata Center project. When they settled, nobody was talking, and, according to the MIT newspaper, they were pretty much unreachable. Not surprising for gehry, known for way-over-budget extravagent projects that are just crazy to build. Maybe skanskka should have known better, but this article seems to portray it as all-too-streetwise to be fooled even by gehry's scribbles.

  47. How about this? Instead of hiring people based on their minority status, companies hire people on their qualifications? you know, like they used to do with the fire department and police department. do we have to dumb down the construction force too? i dont know, but i would rather drive over a bridge or through a tunnel built by people who know what they're doing, compared to someone who was hired for where they're from or what color skin they have. just sayin

  48. It is absurd to think that minority owned and disadvantaged companies are able to bond the construction or competitively bid jobs of this magnitude. These two companies named are major international firms. The government is forcing contractors who want the work and are able to do the job to find ways around the regulations or give up the most lucrative jobs. Change the laws to reflect some real help for the small companies who need it.

  49. Tip of the iceberg.

    You can't blame a Scandinavian company for what Americans do. You can however blame NYC developers, management trustee's and union trustee's for the same thing we all blame Wall Street for: tipping the system in their favor. There are all kinds of scams besides what the story mentions that get the wink and a smile as long as the job gets done and only the average worker gets scammed. That is NYC way. It is accepted by all because the pay rates are higher in NYC than anywhere in the country and a union hierarchy is based on family last names. Until the retirement age gets raised for union members and they get angry, nothing will be done about the trade offs which are well known by union and company alike.

  50. I am absolutely shocked :)

    Companies using loopholes to evade stupid government regulations.

    don't law enforcement officials have real criminals to go after