Making It Go Away
Four years ago Shire Corporation sued the state, claiming the Rhode Island Department of Transportation was making a concerted effort to freeze the Cranston-based construction company out of state-awarded projects. Several months ago, the state quietly settled the suit - with taxpayers shelling out $2 million to make the litigation go away. This week Jim Hummel asks D.O.T. Director Michael Lewis: why?
Delays in the construction of the Barrington Bridge were the most public display of bad blood between the Rhode Island Department of Transportation and the contractor for the project, Shire Corporation of Cranston.
But that was only the tip of the iceberg, according to a lawsuit Shire filed against the state in 2009. The suit claimed D.O.T had an ongoing vendetta against Shire and had made a concerted effort to freeze the company out of future state projects - including a bid to replace of the Union Avenue Bridge back in 2005.
The lawsuit, in its fourth year, had already cost taxpayers at least a million and a half dollars in legal fees. So late last year, the state quietly settled - shelling out another $2 million in taxpayers dollars to make it all go away. When we asked about it more than a year ago, D.O.T.'s Michael Lewis declined to talk about the suit, the roots of which began long before he became director.
Last week, Lewis answered our questions.
Lewis: ``In any kind of litigation there's risk. We think the risk was low, but between the Department of Administration and the Department of Transportation Administration and legal offices determined that was in the state's best interests to settle that out - for the value that it was and put that chapter behind the state.''
For the better part of a decade, Shire Corporation had been the public punching bag for problems on the Barrington Bridge project, as higher-ups in the D.O.T. blamed the contractor for delays and cost overruns.
But we learned last year that a Department of Administration official, called in to referee, put the blame for delays squarely in D.O.T.'s lap - and ordered it to pay Shire $5.3 million in taxpayer money. D.O.T. did not admit liability - and Shire's president Tom Gammino, in an interview last year with The Hummel Report, said the order angered some of the higher-ups in DOT, prompting them to go on the warpath against Shire, which regularly bid on large state construction projects.
The heart of the 2009 lawsuit filed against D.O.T., and eight people in their state positions, says the state delayed awarding the Union Avenue project to Shire - because of the ongoing dispute between D.O.T and the company - even though Shire was the low bidder.
Hummel: ``It's taxpayer money and when you're crying poverty, then to have to pay a $2 million judgment, what do you say to the taxpayer about that?''
Lewis: ``It was a settlement position that was decided it was in the best economic interests of the state to do that. To stop paying legal fees, to remove any risk of any settlement adverse to the state. A decision was made, there were a lot of people involved.''
Hummel: ``No admission of responsibility in the suit, though?''
Lewis: ``No, no.''
Hummel: ``So it's $2 million to make this go away?''
Lewis: ``Again, it's - there is risk in any lawsuit and that was a judgment that was made by a number of people involved in the state to make that determination that was the right thing to do.''
Hummel: ``When somebody files a suit, if it's absolutely a frivolous suit with no merit at all, your lawyers are going to go in there and a judge...you're going to make a motion to have it dismissed based on a false set of facts or it's not holding up. So to me the fact that it moves forward, a judge says it moves forward and you ultimately decide to settle shows, whether you want to admit it or not, some type of liability or admission by the state, you know what? Maybe we did do it wrong. Do you not agree with that assessment?''
Lewis: ``There were a lot of parties involved, we did go for summary judgment on the case and the judge ruled in our favor in eight out of the 10 counts on summary judgment and there was appeal to that. We are going, depending on what happened, even if we were successful, and there's an appeal by the other side, we were going to continue to pay legal fees and these can become very high.''
Hummel: ``They'd already become very high.''
Lewis: ``And they were heading higher.''
What Lewis didn't say is that the remaining two counts were the heart of the case involving the Union Avenue Bridge, and an allegation the state and the Federal Highway Administration worked together to keep Shire from getting what eventually turned out to be an $8 million job - awarded to Aetna Bridge of Pawtucket.
Lewis: ``Even if you're completely on the side of the angels, and we were very close to being completely on the side of the angels, we're still going to incur costs defending the state against this litigation.''
Hummel: ``You believe that, in that suit, that the state was totally in the right. Not totally.''
Lewis: ``I said nearly on the side of the angles, yes.''
When you add up the Barrington Bridge project and the costs associated with the lawsuit and settlement , taxpayers have ponied up nearly $10 million for the state's disputes with Shire.
In the Barrington Bridge case, Shire had to submit repeated change orders because of faulty design plans given them by the state.
Hummel: ``What did you take out of that - were there any changes?''
Lewis: ``A lot of changes. One of the things - you look at the record of what the construction that RIDOT has been doing the last several years, the change order rates have dropped from a percentage of contract bid in the early part of the last decade - we were averaging 25 percent change orders against contract bid; we're now down below 5 percent, closer to 3 percent. These are institutional changes that we have implemented.''
But no admission in the Shire suit of liability by the state.
Hummel: ``Any discipline, any change of position, anybody lose their job, anybody lose a paycheck?''
Lewis: ``Jim, this is not what this interview was about, I go back and look at that at those issues. A lot of people that were involved in the work - including the Barrington Bridge - that led up to this lawsuit are no longer employed in the Department of Transportation.''
In Providence, Jim Hummel for The Hummel Report.