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Fluor Unit Ordered to Pay $6.1 Million in Overbilling Case : Courts: Irvine firm's South Carolina subsidiary, earlier found guilty of charging too much to repair naval bases, will appeal award to federal government and 2 former workers.

October 12, 1994|JOHN O'DELL | TIMES STAFF WRITER

A unit of construction and engineering giant Fluor Corp. must pay the federal government and two former employees more than $6.1 million for submitting heavily padded repair bills for cleaning up Navy bases after Hurricane Hugo tore through South Carolina in 1989.

FD Services, a Greenville, S.C., subsidiary of Irvine-based Fluor, was found guilty by a federal jury in Charleston, S.C., in May of overbilling the government at least $2 million for cleaning up Charleston-area Navy bases after the hurricane.

More than 4,700 housing units and 800 other buildings on the bases that dot the coastal area were damaged in the storm.

Fluor spokeswoman Deborah Land said that FD Services denies any wrongdoing and will appeal the award by U.S. District Judge David Norton. The company's attorneys began preparing the appeal in May when the jury decision was announced in what began as a federal whistle-blower suit in 1992 by two fired FD Services managers.

"We believed then and we believe now that there was no wrongdoing, and we will vigorously defend our position," Land said Tuesday.

Norton's decision, entered Oct. 5 and received by both sides in the case Monday, apparently triples the damages that the jury determined--a punitive award permitted under federal law when a company is found to have fired workers for informing the government of overbilling or other problems connected with federal contracts.

The plaintiffs in the case, James Ferguson, a contract administrator, and George Pitt, a service manager, were FD Services employees who complained to government officials that the company had overcharged for Hurricane Hugo cleanup work.

They later were terminated and subsequently filed a wrongful termination suit against FD Services, contending they were fired for blowing the whistle on the company.

Ferguson, who was awarded $171,000 for wrongful firing, could not be reached for comment Tuesday but was quoted in a Charleston newspaper as saying that the decision "is a victory for the American people and the American taxpayers."

The government will get about $4.3 million of the award; the rest goes to Ferguson, Pitt and their lawyers.

FD Services' repair work became one of the most expensive federal public works project that followed the storm.

According to testimony in the trial, costs rose out of control. Confidential FD Services memos showed that company managers acknowledged the project's problems.

FD Services' lawyers admitted that company officials mismanaged the Hugo repairs but blamed some of the troubles on Pitt and Ferguson. "The attorneys were saying that there were things that could have been handled better," Land said, "but this was a crisis situation."

Some witnesses also blamed Navy officials and labyrinthine Navy rules and regulations for the high repair costs.

FD Services contracts to provide a variety of facility maintenance and construction work. The company was created after the 1986 merger of Fluor and Daniel International Corp. of Greenville.

It originally had a mix of government and commercial clients but in the past 18 months has shifted its focus completely to commercial work and no longer has government contracts, Land said.

For a significant federal government contractor, Fluor has been relatively unscathed by contract fraud. Currently the company has more than $2 billion in government work.

In addition to the FD Services case, the only other active contract fraud matter against the company involves a so-called whistle-blower suit recently filed against Fluor's Ohio subsidiary, Fermco. The suit alleges that Fermco is mismanaging its contract to clean up the closed federal uranium processing facility in Fernald, Ohio.

In 1986, a former Fluor contract administrator was sentenced to four years in federal prison for accepting $1.4 million in bribes from subcontractors building a petrochemical plant in Saudi Arabia. Fluor itself was not implicated in the case, but the company was required to refund $2.7 million to the joint venture corporation it formed with the Saudi government to build the $5-billion facility.

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