20020672 Ver 3_Attachment 26 - 01-03-14 To build MB, DOT staying with indicted paving company_20141126

To build Monroe Bypass, DOT staying with indicted
paving company, for now
46 people recommend this. Sign Up to see what your friends
recommend.
RecommendRecommend
By Steve Harrison
[e-mail]
Posted: Friday, Jan. 03, 2014
Last summer, Monroe-based Boggs Paving was indicted on several federal charges, including money laundering
and wire fraud, in what the FBI described as a 10-year “scheme” that involved more than $87 million in
government contracts.
But as Boggs Paving prepares for its fall 2014 trial, the company is being paid millions of dollars to prepare to
work on the Monroe Connector/Bypass, a 20-mile toll road that the state highway department isn’t certain can be
built.
Boggs Paving is part of a three-firm group, Monroe Bypass Constructors, that was awarded the $308.3 million
Monroe toll road contract in fall 2011.
Soon after, in May 2012, work on the project stopped after a federal appellate court ruled the N.C. Department of
Transportation had skirted a federally required environmental impact process.
But with Monroe Bypass Constructors already hired, the DOT has had to pay the firm at least $37 million as the
project remains in limbo.
The state hopes to restart work on the highway this year, and recently submitted a new Environmental Impact
Statement, which it hopes will result in a green light for the project.
At that point, it’s unclear whether the state will stick with Monroe Bypass Constructors and Boggs Paving. The
group’s other firms, United Infrastructure Group Inc. and Anderson Columbia Co. Inc., are not accused of any
wrongdoing.
Jen Thompson, a spokeswoman with the N.C. DOT, said the department “has not made a decision with Boggs
and this existing contract.”
She said Boggs has been suspended from bidding on federally funded projects.
She said “any contract can be terminated if the board determines that a termination ... is in the best public
interest.”
Federal indictment
A major part of the federal case is that the federal government claims Boggs essentially used a “pass through”
company, Styx Cuthbertson Trucking, as its minority contractor to meet federally mandated disadvantaged
business goals. The FBI claims that Boggs “took careful steps to conceal their fraud,” by placing magnetic decals
with the Styx Company logo over its own trucks to “create the appearance that Styx was the company performing
the work.”
Styx was going to be a minority contractor on the Monroe toll road, but has since been replaced, according to the
N.C. DOT.
Page 1 of 3To build Monroe Bypass, DOT staying with indicted paving company, for now | Charlotte...
1/6/2014http://www.charlotteobserver.com/2014/01/03/4586177/to-build-monroe-bypass-dot-staying...
Attachment 26
Monroe Bypass Constructors was the low bidder on the highway, at $32 million less costly than the next-lowest
bid.
With no ground broken for the highway, the DOT has already paid nearly $37 million to Monroe Bypass
Constructors. The DOT said the money is to compensate the firm for “design work, project management,
inspectors, material prepayment for aggregate base course, mobilization, and bonds/insurance.”
In addition to the $37 million, a consultant for Monroe Bypass Constructors told the N.C. DOT it would cost $38
million to terminate the contract, without litigation.
Thompson said the DOT “has not yet verified those costs.”
In an August email, a DOT official said the department’s chief financial officer, Mark Foster, was concerned the
claims were “fluffed up.”
On Oct. 29, James Triplett, the toll road’s project manager for Monroe Bypass Constructors, sent the DOT a letter
asking for an immediate payment of $9.2 million.
“While MBC remains committed to completing the project ... the financial burden of carrying the damages
incurred to date should not be borne by MBC alone,” Triplett wrote.
He also wrote: “... we seek funding from N.C. DOT now.”
Triplett couldn’t be reached by the Observer.
Pete Strom, an attorney in Columbia representing Boggs Paving, said the company still plans to work on the
bypass.
“They very much plan to move forward with the project,” Strom said. “What this indictment is about is
accounting issues with minority participation. There has been no allegation of sub-standard work. No problems
with timing (when projects were finished). All of that is A+.”
Strom added: “They are continuing to do work all through the southeast. They continue to interact daily with
South Carolina and N.C. DOT. It’s business as usual with this company.”
The total cost of the bypass is $725 million.
Environmental lawsuit
The Monroe Connector/Bypass has been touted by the DOT and local business leaders as a critical highway for
the Charlotte region.
But the Southern Environmental Law Center in Chapel Hill sued to stop the highway’s construction. The SELC
has said the highway will lead to unnecessary sprawl, and that the state could make improvements on U.S. 74 that
would do more to relieve congestion.
The law center questioned whether the state had fully complied with the National Environmental Policy Act,
which requires the state to model the impacts of the highway on the environment. The state was to conduct what’s
known as a “build vs. no build” study, to see what would happen if the highway were built against a future
scenario without it.
The crux of the law center’s case was that the DOT and the N.C. Turnpike Authority included the highway in its
“no build” forecast. Instead of a “build vs. no build” study, the law center argued highway officials did what
resembled a “build vs. build study.”
In fall 2011, a District Court judge ruled in favor of the DOT, dismissing the law center’s suit. The SELC said it
would appeal.
Page 2 of 3To build Monroe Bypass, DOT staying with indicted paving company, for now | Charlotte...
1/6/2014http://www.charlotteobserver.com/2014/01/03/4586177/to-build-monroe-bypass-dot-staying...
The DOT, however, signed a contract with Monroe Bypass Contractors that fall. That locked the state into paying
the firm, regardless of how the law center’s appeal fared.
In May 2012, the Fourth Circuit Court of Appeals in Richmond, Va., sided with law center – putting the highway
on hold until a new environmental impact study could be completed. That Environmental Impact Statement was
released in early December.
Kym Hunter, an attorney with the law center, said she’s concerned about the millions of dollars paid to Monroe
Bypass Constructors because she believes it “locks in” the DOT to building the bypass.
She said the law center asked in the fall of 2011 for the state and federal government to agree to expedite
arguments in its appeal – but they declined.
Hunter said the SELC hasn’t decided if it will challenge the new environmental document. Before the bypass can
be built, the DOT needs federal and state water quality and endangered species permits.
The DOT held public hearings on the bypass in early December. The highway still has strong support from the
Union County business community, but some are second-guessing the project.
The municipalities of Marvin, Mineral Springs, Hemby Bridge and Weddington have passed resolutions asking
the state to look at alternatives to improve traffic flow on U.S. 74 instead of building the bypass.
DOT upset
The N.C. DOT is frustrated by the law center’s efforts to stop the Monroe Bypass, as well as other projects. In
early December, the DOT closed the Bonner Bridge on the Outer Banks because of what it said were safety
concerns; a new bridge has been delayed by law center litigation (the bridge has since re-opened).
In a news conference in early December, DOT Transportation Secretary Tony Tata blasted the SELC, calling its
members “ivory tower elitists” who “file these lawsuits from their air-conditioned offices in Chapel Hill or
Charlottesville or wherever ... (while drinking) lattes.”
Ned Curran of the Bissell Companies is chairman of the N.C. DOT board, which makes policy transportation
decisions.
Curran said it’s in the “best interest of the state to incur delay costs” for the bypass, which he said is “necessitated
by the SELC’s persistent efforts” to stop the project.
Curran was asked what he believes the state should do if Boggs Paving is found guilty.
He said the board might have to make a decision on that issue and said he would decline to answer. However,
Curran said the board’s decision would be made based on a number of factors, including what the contractor was
found guilty of.
“The Monroe Bypass project is one that we think is extraordinarily worthwhile and we obviously would like to
see it completed promptly,” Curran said.
Harrison: 704-358-5160
Page 3 of 3To build Monroe Bypass, DOT staying with indicted paving company, for now | Charlotte...
1/6/2014http://www.charlotteobserver.com/2014/01/03/4586177/to-build-monroe-bypass-dot-staying...