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Expo Line bidders under new scrutiny in fraud and construction problems

Probe comes after an initial review disclosed federal investigations, alleged evasion of hiring requirements and other problems.

January 08, 2011|By Dan Weikel, Los Angeles Times

Builders of the Expo light-rail line in Los Angeles on Thursday sought to reevaluate two bidders on the project after an initial review uncovered a trail of federal investigations, allegations of fraud, past construction problems and payouts of millions of dollars in damages.

The Exposition Metro Line Construction Authority ordered a more in-depth performance analysis of the Skanska/Rados and the URS/Shimmick joint ventures — two prospective finalists competing for a contract to build the $1.5-billion second phase of the light-rail system from Culver City to Santa Monica.

"This is important and indicative of a new level of awareness by the board that we should be proactive," said Los Angeles County Supervisor Mark Ridley-Thomas, who is a member of the Expo board and requested the initial review of the two bidders.

The inspector general's office of the Los Angeles County Metropolitan Transportation Authority will handle the more detailed analysis, which includes contacting previous clients to assess each company's performance and responsibility on other construction projects.

Ridley-Thomas requested the first evaluation by the inspector general in early December after reading a news account of a federal investigation in New York that targeted Skanska USA Civil Northwest, a subsidiary of Skanska USA.

Authorities are looking into whether the subsidiary used front companies to evade requirements that it hire a certain number of subcontractors owned by women, minorities or businesses that have been officially designated as disadvantaged.

Skanska USA, a major construction company, also is the parent company of Skanska USA Civil West, which is interested in participating in the Expo project. Its partner in the joint venture is Steve P. Rados Inc., based in Santa Ana.

The inspector general's initial review did not find anything questionable about Rados' past performance on contracts, but it discovered four other matters related to Skanska operations, including the New York investigation.

The others involve the construction of a water filtration plant that more than doubled in price from $1.3 billion to $2.8 billion, the death of a worker for a subcontractor that resulted in occupational health and safety charges, and news accounts indicating that Skanska contributed to a secret blacklist that targeted union officials in the United Kingdom.

Skanska executives could not be reached for comment, but Steve S. Rados, co-president of Rados Inc., defended Skanska USA Civil West as a "first-rate outfit" that he had no reason to doubt. He added that he has no problem with the new performance review.

Among other things, the inspector general found that URS Corp. agreed to pay $5 million in damages to the state of Minnesota and $52 million to the victims of the Interstate 35 bridge collapse in Minneapolis three year ago. The report stated that the company was hired to analyze the integrity of the bridge and failed to discover structural defects.

In addition, URS has been sued by the Massachusetts attorney general's office, which alleges that the company defrauded the Massachusetts Port Authority. The report also stated that a URS-owned company caused uncontrolled radiation contamination at a nuclear facility and that a URS subsidiary agreed to pay the U.S. Air Force $1.7 million to resolve allegations of overbilling.

Jamie Tully, a spokesman for URS, said company representatives could not comment because they have not seen the inspector general's findings. Tully defended the firm, saying it is "one of the country's leading providers of engineering design and construction services for light-rail projects."

According to the inspector general, URS' partner in the joint venture, Shimmick Construction, based in Oakland, was involved in a dispute with Bay Area Rapid Transit over whether a pedestrian bridge was improperly welded. A Shimmick spokesman said the issue has been resolved without a finding of fault on the part of the company.

dan.weikel@latimes.com

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