The DeKalb County school system, which has spent millions of taxpayer dollars in a court battle against a company that handled school construction, has hired a successor with its own history of being sued.
The five-year legal battle over DeKalb’s termination of Heery International Inc. has cost taxpayers more than $19 million so far and could cost more, especially if the system loses.
Yet while deep into that case, school system administrators selected a successor that has paid millions to settle allegations of fraudulent billing and negligence without admitting liability or fault.
Lawsuits are common in the construction industry, but school officials didn't vet the full litigation history of San Francisco-based URS Corp. before asking the school board to hire the company for up to $11.5 million to be paid over six years or so . The contract, which must be renewed annually, is for management of a half-billion dollars in construction projects funded by a five-year sales tax.
URS carefully worded the information that it provided about litigation in the school district’s application form. In a space labeled “litigation,” the company stated that given its size, “various legal proceedings are likely pending for or against” the company or its subsidiaries, but explained that the proceedings did not have an adverse effect on its operations. It then confined the rest of its response to the history of its Atlanta office, according to a copy of the document The Atlanta Journal-Constitution obtained using the Georgia Open Records Act. By doing so, it did not list several lawsuits involving other offices, including cases stemming from a fatal bridge collapse in Minneapolis.
URS, a Fortune 500 company, is a leading federal contractor with 57,000 employees and offices in nearly 50 countries, according to the company's website. When asked why URS' litigation statement to DeKalb schools was limited to Atlanta, company spokesman James Tully said the Atlanta office would be doing the work. He also touted the performance of the corporation as a whole: "URS is one of the top program and construction management and engineering firms in the nation," he said, noting URS has more than 90 years of experience working with schools nationwide.
Tully said URS wasn't involved in the design or building of the I-35 bridge in Minneapolis, nor the later modifications and resurfacing work blamed in its 2007 collapse. URS was hired to assess the structural integrity of the aging bridge and was sued for negligence when it fell, killing 13 people. Three years later, URS agreed to pay Minnesota $5 million and survivors and victims' families $52 million. The company did not admit liability or fault.
DeKalb school board members had little time to prepare for the Aug. 31 vote on URS. Superintendent Cheryl Atkinson called for the meeting the day before to deal with the proposed contract and two other comparatively minor items. A regular meeting was less than two weeks away.
When asked why the need for a special meeting on such short notice, Atkinson told the AJC that a company that had been helping with construction oversight was about to leave. She said she trusted her chief operations officer, Stephen Wilkins, to properly vet the newcomer.
Wilkins said “detailed vetting” did occur as part of an “extensive and exhaustive” selection process. He acknowledged, though, that he and his staff didn’t know about URS’ legal history beyond Georgia when he sought board approval. “Big firms are going to have lawsuits. We know that,” he said. “But does that mean you don’t do business with them?”
The Project on Government Oversight, a nonprofit government watchdog in Washington, D.C., has cataloged several incidents that led to court cases involving URS.
Neil Gordon, an investigator with the organization, didn’t want to judge whether URS had too many such cases, but he did say this: “A Fortune 500 company is going to have a lot of legal actions filed against them, meritorious or not. So you have to take that into consideration.”
Herb Garrett, executive director of the Georgia School Superintendents Association, said administrators should have comprehensive knowledge of contractors’ legal backgrounds before asking school boards to give them taxpayer dollars. When he was a superintendent in the 1990s, he made contractors fill out a form during the bidding process. “It asked them to list the projects they’d done and the litigation they’d been involved with, regardless of whether it was in Georgia,” he said.
DeKalb accuses former construction program manager Heery of billing fraud and mismanagement, claiming the company shorted taxpayers over $100 million with shoddy work. Heery denies this, saying it completed its projects on time and under budget. It claims its termination was without cause and related to a criminal conspiracy in the school system. The case is scheduled for trial next year.
School board members were named as defendants in Heery’s lawsuit. Mindful of that, school board member Nancy Jester said the board shouldn’t have been rushed into hiring URS. The board voted 7-1 in favor, with Jester, a resident of Dunwoody, voting no. (One of the nine board members was absent.)
Jester brought a tablet computer to the Aug. 31 meeting, did a Google search of URS and found lawsuits that disturbed her. The board had been given a report by the selection committee that ranked the bidders by various attributes but lacked details such as legal histories. When Jester questioned the wisdom of hiring URS, Wilkins expressed confidence in the selection.
School board chairman Eugene Walker later told the AJC that he would have liked more information about URS’ legal history before the vote. But he said he assumed school system lawyers had signed off on the corporation.
Last week, more than a month after the board’s vote, Wilkins told school board members that he held off on signing a contract with URS until he’d called all the company’s references and checked its legal history in connection with school projects. He said he found nothing troubling.
In addition to the fatal Minneapolis bridge collapse, a Google search beyond URS’ Atlanta office reveals that:
- In January, URS agreed to pay $2.3 million (plus $1 million prior to the lawsuit) to resolve allegations that it submitted hundreds of inflated invoices to the Massachusetts Port Authority during a renovation at Logan International Airport. The project manager was imprisoned after pleading guilty to larceny and procurement fraud.
- In 2009, EG&G Technical Services, a URS subsidiary, agreed to pay $1.7 million to settle allegations that it defrauded the U.S. Air Force after an employee was convicted in a scheme involving fraudulent bills, according to the U.S. attorney's office in Los Angeles.
Tully, the URS spokesman, said the company “did the right thing” at Logan, identifying the billing issue, reporting it to state prosecutors, firing the employee and reimbursing the two affected clients. He wouldn’t comment on the Air Force case.
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