More Trouble in New Canaan

You may recall a story last September about an asbestos lab, a contractor and an agricultural firm that were named defendants in a lawsuit filed by the New Canaan (Connecticut) Public Schools. The bone of contention was a renovation project of the local high school, the costs for which exceeded the initial budget by several million dollars.

Brooks Labs settled their part of the suit for a little under $2 million, which was covered by the company’s insurer, but would not admit to any wrongdoing. Meanwhile, more evidence of overcharges and what appears to be “double-dipping” (or at least careless bookkeeping) has surfaced. Back in the fall of 2007, the New Canaan Town Council hired an outside auditing firm to do an assessment of the construction costs, particularly related to $110,000 in asbestos abatement charges. The auditing firm, identified as Deloitte, discovered that the contractor, O&G Construction Management, had charged the town $20,000 in “management fees” that had been specifically prohibited under the terms of the contract. O&G has since credited the City of New Canaan $20,000, but Deloitte has found additional discrepancies, including $31,000 in asbestos abatement charges that appear to have been paid twice by the city, and nearly $60,000 in overcharges for small tools and labor.

According to the Deloitte report, one electrical contractor double-counted on benefits to the tune of $18,000, and some timecards were not signed by supervisors until one or even two weeks after the specified workday. O&G had no comment on the employee payroll discrepancies, and representatives of Deloitte acknowledged that there “could be an explanation.” However, O&G insists that the markup on equipment and small tools was reasonable and fair: “The abatement contractors, at times, will include their small tools as waste as the expense of cleaning such items is not cost effective.”

So…what’s going on here? Part of the problem is that the project came up rather suddenly and had to be completed under tight time constraints. In addition, much of the project required highly specialized work. All of this put the city at a disadvantage when it came to negotiating the contract, and may indeed have led to some careless record keeping on both sides. More on this as it develops…