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January 28, 2010



DiNapoli: $27 Million Stimulus-Funded Contract Rejected

Comptroller Revokes DOT Contracting Privileges

New York State Comptroller Thomas P. DiNapoli today rejected a $27 million federal stimulus contract between the state Department of Transportation (DOT) and Hicksville-based L&L Painting Co. Inc. because of unanswered questions related to the company’s role in a federal investigation and other problems. The contract was for painting the Bruckner Expressway Viaduct and ramps on I-278.

In a letter to DOT today, DiNapoli also revoked some of DOT’s contracting privileges and imposed more stringent contracting requirements on DOT. DiNapoli said the changes were implemented because questions have arisen in recent months about whether DOT has been thoroughly investigating issues related to vendors.

“DOT is putting federal stimulus money at risk,” DiNapoli said. “There’s pressure to spend stimulus money quickly, but quickly doesn’t mean state agencies should be cutting corners. DOT has a responsibility to thoroughly investigate businesses with problems in their past. Every stimulus dime counts, and DOT has to do a better job of safeguarding stimulus funds.

Following an extensive, but expedited review of materials by DiNapoli’s staff, several serious concerns about L&L Painting were identified including:

  • The company’s involvement with a business named Rose Contracting, owned by a relative of the principals of L&L Painting, which was investigated by the United States Attorney, the FBI, the federal Department of Transportation and others for misrepresenting itself as a disadvantaged business in order to get special federal contracting privileges. This investigation resulted in a deferred prosecution agreement for Rose Contracting and a $350,000 fine;
  • A disqualification by the New York City School Construction Authority;
  • 16 serious OSHA violations totaling $33,500 related to lead paint removal on a George Washington Bridge project;
  • An Independent Private Sector Inspector General agreement and monitoring agreement for work with the Port Authority of New York/New Jersey.

DiNapoli’s staff made three separate requests to DOT for further clarification on L&L Painting’s self-reported problems. However, DOT did not provide any independent agency assessment of the issues reported by the company or any independent verification of the company’s resolution of these issues. Concerned that DOT may be jeopardizing federal stimulus money because of its inadequate due diligence, DiNapoli will now require DOT to provide more detailed information on vendor responsibility issues for all new contracts that are more than $100,000.

In August, DiNapoli rejected a $7 million federal stimulus contract that DOT attempted to award to Bronx-based Steed General Contractors, Inc. for painting bridges in Putnam, Orange and Dutchess counties. In early January, Steed was debarred by the state Department of Labor from bidding on state contracts.

State agencies and public authorities are required by law to determine that vendors selected for state construction contracts are the lowest responsible bidders. Contracts submitted to the Comptroller’s Office for approval must include an affirmative declaration by the state entity that the vendor has been determined to be responsible, which the Comptroller’s Office reviews. State agency contracts valued above certain cost thresholds are submitted to the Comptroller’s Office for approval.

DiNapoli is posting information about the state’s use of federal stimulus funds on his Open Book New York Web site (www.openbooknewyork.com). DiNapoli has also designated staff to conduct in-depth, expedited reviews of contracts involving federal stimulus money. His staff is examining all contracts looking for companies who may be pricing goods or services higher than what is reasonable to ensure federal funds are used efficiently. The federal government requires that New York spend this money quickly or forfeit its share. DiNapoli’s staff has been approving stimulus-related contracts in an average of 3.5 days.

Click here to view the letter to DOT.

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