Thursday, March 5, 2009

A Primer for Understanding Scams Targeting School and Public Construction Dollars



Update July, 2011:

The California Legislature was asked to pass a new competitive bidding law, AB 1342, attempting to stop the scam in State & School roofing projects.

One of their Committees had a meeting to consider the bill.  Their Chairperson, according to eyewitnesses, came in and prior to starting the meeting, stated they were not going to be supporting the bill.  It died in Committee.

The bill required the national standard of listing three products and the term "or equal" in bid specs.  Unfortunately, it had been complicated to more, without keeping it simple and straightforward.

We heard that Garland had not only flown in their President for the hearing, heavy lobbying was done to stop the bill.

California has nailed their own budgetary coffin.

You can see more at:
http://www.aroundthecapitol.com/Bills/AB_1342/20112012/

This bloggers' view on what the lack of competitive bidding does to poor (literally) California, at:
http://schoolroofingscam.blogspot.com/2011/06/california-hell-bent-on-suicide.html


Update Dec. 21, 2010:

Both of the houses of the California Legislature overwhelmingly passed a law, AB 635, attempting to stop the scam in State & School roofing projects.
They rammed it through in 25 days - not the usual 2 years - on August 30, 2010. California Governor Schwarzenegger signed the bill in September, sending a note back to the Committee responsible stating, "Do More."

What does the law do?

The law makes it a felony for design professionals and manufacturer's reps to have a financial stake in the products specified and used.

Both parties have to sign a statement declaring such.

Left out of the final bill was the application of the law to new construction or the application of the law to the most prevalent of those forcing the specs - with personal financial interests involved - government officials.

The Bill also did not address the mounting problem with Purchasing Agents buying roofing products and having them installed in broken-up contracts. They are practicing architecture and engineering with no regard to the health, safety and welfare of those buildings' occupants.


Who opposed the bill?

State Senator Leland Yee (D), former President of the San Francisco Unified School District Board, which board during his tenure and since has repeatedly approved Garland roofing on their school roofs. He was one of two in Committee to do so.

The State Senator also opposing the bill in Committee was Roderick Wright (D), who was indicted Sept. 17 for not living in his district in the Los Angeles area.

During the final voting, the Senate Minority Leader Bob Dutton (R) voted against the bill.

The bill had overwhelming support in both houses.
You can see the bill here: http://www.aroundthecapitol.com/billtrack/text.html?bvid=20090AB63594CHP

and you can see the bill history here: http://www.aroundthecapitol.com/Bills/AB_635/#


RESULT?

Despite the new bill, there is stiff opposition being encountered in the field and ramrodding of the same practices occurring.


Why was the Bill enacted?

Enraged Legislators had been briefed in a special, televised hearing on June 30th recounting the scam in detail, causing the Legislators to demand emergency legislation be passed to stop the scam.
Speaking were:
1. Legal Counsel for the California State Auditor. They recounted this blogger's case at the Univeristy of California, San Francisco in detail. The report was done by T.L. Smith, Roof Consultant in Chicago (also consultant for the New Jersey State Commission of Investigation Report, "Waste and Abuse in School Roofing Projects".)
2. Uninvolved Manufacturers, three of the four US major roofing manufacturers and one West Coast Roofing manufacturer - a First! - as follows:
Carlisle-Syntec, from Carlisle, Pennsylvania
Firestone, from Indianapolis, Indiana
GAF, from New Jersey
Malarkey Roofing, from Portland, Oregon


What happened?

The California State Assembly Committee on Accountability and Administrative Review had held a Hearing June 30, 2010 on the Public Works and School Roofing Scam in California.

Estimated losses in State of California funds - not including roofing purchased outright through "Purchasing Agencies" and roofing redone below the normal 20-30 year life - are $300 to $500 million a year...or more...to California.

You can see the hearing here: https://www.calchannel.com/channel/viewVideo/1571.

and a news report here:
http://cbs13.com/onthemoney/On.The.Money.2.1781953.html

_____________________________________________


Just what is this "scam"?A way of selling products that ensures high prices, repeated overworking of roofs to ensure ongoing work is done long before normally due, and which employs a "darker side" or "sides" of selling to ensure the scam continues.

It is normally couched to the gullible or to those who can be bought as "we will take care of everything for you."

The costs? Enormous - and to the taxpayers. For at least 40 years and possibly back to the time of the "New Deal."

For a more complete definition of the scam, go here:
http://schoolroofingscam.blogspot.com/2008/02/scam-easily-defined.html


What are the overcharges involved to the Taxpayer?
Try $176 to $201 per 75 to 100 sq. ft. roll of top cap sheet versus $25 to $40 per 100 sq. ft. roll of one of the four major US roofing manufacturers' products.

Update 10/23/09: In the San Francisco Bay Area, roofing contractors received pricing of $332 per 75 sq. ft. roll of top cap sheet - 43 times normal pricing of one of the four US major roofing manufacturers. The same pricing for the ply sheets was $314 per 100 sq. ft. , 21 times normal pricing of one of the four US major roofing manufacturers. See: http://schoolroofingscam.blogspot.com/2009/10/out-rage-ous-pricing.html

A very recent report from a large roofing concern on the East Coast shows that the difference is now up to at least $155 per square and $180 per square, average. That's about 3-4 times normal initial cost....and doesn't include the every 5-year tens of thousands "maintenance" cost for a "warranty."

They stated that:

"We almost passed out when they sent us the material price quotes for the Garland built up roof system……$245.00 PER ROLL for a 1 square [that's 100 square feet] of SBS Modified membrane. In our market, Performance/Derbigum is considered the “high end” material at a price of $90.00. Manville and TAMKO are competitive at $65.00."


One manufacturer is known for replacing their high-priced plies under their top cap sheet with product from one of the four major manufacturers, and pocket the difference charged the client.

Another manufacturer is known for kicking back money from school work to their "best" roofing contractor at the end of the year....but not to the taxpayer.

Former Field Reps and estimators and installers and competing replacement products (used to replace such) have repeatedly told of "shorting the asphalts" between the felts so as to make the roofs dry out quicker, and need replacing a lot faster. We heard that a very large international firm's Silicone Valley plant had such a roof fail, twice - destroying two Clean Rooms and well over a hundred million dollars' worth of chips.

And that manufacturer was also caught providing bad product to a roofing contractor, after falsely accusing the contractor of making their product bad as a reason to disqualify the contractor's half-price bid using a real competitive product with a real warranty - not maintenance agreement - on another project.

Initial installation costs are usually double.

At five years, a huge payment in the tens of thousands occur to "keep the warranty" - and about years 6-8, replacement could occur, sometimes from shorting the asphalts between the felts,
or providing diluted product.

The costs above normal low-slope roofing that lasts 20-30 years?

Lifetime cycle costs are
around six or more times normally competitively bid low-slope roofing products, installed and maintained under warranties.
See:
http://schoolroofingscam.blogspot.com/2008/02/comparable-costs-between-manufacturers.html
and
http://schoolroofingscam.blogspot.com/2008/02/cost-of-tremco-roofing-projects-at-ucsf.html

It's not just in roofing:
http://schoolroofingscam.blogspot.com/2008/06/its-not-just-going-on-in-roofing.html

California School and Public Work Involvement:
http://schoolroofingscam.blogspot.com/2008/07/california-school-and-public-work.html

________________________________________________

How are Manufacturer's reps trained to sell products?

One Manufacturer's UNBELIEVABLE Training Documents, headlined on page 6 of 9,
"CONTROLLING THE SCHOOL AND PUBLIC WORK":
http://schoolroofingscam.blogspot.com/2008/02/tremco-in-house-training-documents.html

Are Manufacturer's reps supposed to be involved in specifying construction products in the school and public work?

NO. Only duly licensed INDEPENDENT architects and engineers should be specifying products with the help of duly certified Registered Roof Consultants (from the Roof Consultants' Institute) dealing with life safety welfare issues... roofing has fire ratings and structural issues, among others, which non-licensed individuals should not be specifying - and not even School Board members or facility managers should be....

See the Graphic Charts that show:http://schoolroofingscam.blogspot.com/2008/02/roles-responsibilities-of-facility.html

1. How the relationships between School/Public Works Owners and Contractors are supposed to happen in order to achieve competitive bidding
, at:
http://3.bp.blogspot.com/_krYYHG-aFUg/R6abv3GDiCI/AAAAAAAAAB8/xUa2z8SkxQU/s1600-h/How+the+Public+Bidding+Process+Should+Work+0208+001.jpg

2. How those relationships are abrogated to the harm of the taxpayers in construction contract bidding processes, at:
http://3.bp.blogspot.com/_krYYHG-aFUg/R6abx3GDiDI/AAAAAAAAACE/vD6i7-f1698/s1600-h/How+Manufacturers+Control+Public+Bidding+Processes+0208+001.jpg

and
3. How another more hidden method of abrogating proper procedures is occurring, using Educational Purchasing Agencies, at:
http://4.bp.blogspot.com/_krYYHG-aFUg/R6abyHGDiEI/AAAAAAAAACM/mouFIwYbkEk/s1600-h/How+a+Roofing+Manufacturer+Became+the+AEPA+Roofing+Supplier+0208.jpg

The Manufacturer involved with said Educational Purchasing Agency (AEPA)?

Tremco.

A variant on the theme of using an Educational Purchasing Agency to buy products at high prices is to have the School District or Facilities Department use an "Annualized" Purchase Order Contract - buying sometimes in the hundreds of thousands annually - and then "breaking up" normally bid construction projects into other Purchase Order(s), installing product the District already has. Building Codes, Licensing Laws and Public Contracting Codes are violated in the process, creating possible safety hazards for those inside the structures roofed in this manner.

The Manufacturer involved with "annualizing" Purchase Orders?

Garland (as reported so far out of Ohio and California).
________________________________________________

What laws are potentially being violated?





  • Antitrust
  • Bid Rigging
  • Public Contracting Codes
  • Racketeering
  • Licensing Laws
  • Building Codes
  • Et. al.

________________________________________________

Are kickbacks involved and is that why I keep getting ignored, yelled down, run around in contracting by the use of restrictive proprietary specs (non-competitive), told to "do it [or else]!!!" when it comes to doing specifications - and/or run out with bogus "charges" in my job?

YES - they can be.

Don't rule it out.

Some of the "nicest" people on the job or board are involved....you can't trust your normal instincts. And it's usually the higher-ups, as in the head guy, like a Director, then a Building Manager, then a "Design Engineer" on staff ordered to stamp off on the specs....or similar personnel...rife through the whole chain of command.

Don't believe it?

Try getting told by a former President of a major city's School District's Board and head of their Facilities Committee (2003) that "Everybody Does It!" with regards to being questioned about kickbacks by a Grand Jury in another case...their Facilities department head caught stealing millions. Their School District did all Garland roofing.

That same former School Board President took me to see the (now former) Mayor of said town. He expressed EXTREME displeasure and then later, after seeing the Tremco In-House Training Documents, sent a message back that he "supported ____ (the former School Board President)." (2004)

Or try being told by a retired Contracts Manager in your 800-person Facilities Department [the workplace you were fired from for reporting kickbacks to the FBI over illegally sole-sourced Tremco specs in roofing] four years after telling the FBI Agents there were no kickbacks that "EVERYBODY [in the dept.] was doing it! EVERYBODY!" - laughing - and began enumerating types and who got what. (2001)

You'd believe it, too.

Look here:
http://diana-vice.blogspot.com/2009/01/tremcos-motivational-gift-offer-raises.html
and the list of heard-about kickbacks at the end of this document, last two pages:
http://schoolroofingscam.blogspot.com/2008/02/anatomy-of-billion-dollar-scam.html

The "Anatomy of a Billion-Dollar Scam" list came from those who admitted involvement, that "Everybody does it!" in an 800-person Facilities Department at the University of California, San Francisco (admitted by the Manager of all the Building Managers for 110 buildings, including numerous hospitals, and a retired Contracts Manager) - to former West Coast salesmen for the companies involved to "clean" manufacturer's reps and more....


________________________________________________

Who can I trust at my job, or in the business?Your colleagues, nervous for their own pensions, won't help - generally. Unless about ready to retire, and even then....

Local roofing contractors generally will not.

Local Union guys, although helpful, are trapped by upper level guys involved - and in California, tied directly into the State Attorney General's Offices.

In-house Lawyers are careful for their jobs above doing the right thing, just like other employees...

In California, the State Auditor is not allowed to audit the books of schools. Even if they were, they are controlled by what they can look into by politicians - a Joint Legislative Audit Committee, where we found "political consultants" from the involved (in the Roofer's Union and Roofing Contracting) State Attorney General's offices himself....count yourself lucky if you are in a state that has ethics, and does not interfere with the duties of a State Auditor.

So you are nailed, unless your State Auditor is truly independent. Unless you are offered kickbacks or had someone tell you what they got, in which case call the FBI.


________________________________________________

Who has been caught involved in the scams, and properly prosecuted?

So far - NO ONE.
(except a few politicians....)
Only Garland has been caught, but got a slap on the hand.
See the Garland Consent Order with Gil Garcetti, DA in Los Angeles, from 1997, here:
http://roofingscam.blogspot.com/2009_04_19_archive.html#7929549341180344241
and explanation here:
http://schoolroofingscam.blogspot.com/2009/04/garland-roofing-caught-bid-rigging-in.html

________________________________________________

How did it all happen?

A History of the three known roofing manufacturers named in the New Jersey report:
http://schoolroofingscam.blogspot.com/2008/02/anatomy-of-billion-dollar-scam.html

An Industrial Psychologists' report from 1941 describing requirements to be a rep for one of the companies....and the proposition of the "Darker Side of Sales" turning off potential sales reps:See: http://schoolroofingscam.blogspot.com/2009/01/darker-side-of-tremco-sales-reps-job.html


________________________________________________

Why hasn't more been done if it has been going on so long?
What happens to Architects and Facilities Personnel who stand up to the Scam:
Harrassment out of their jobs, at the least. Day after day.
For a Case Study on who stopped investigations in California:
http://schoolroofingscam.blogspot.com/2008/02/in-california-who-is-stopping.html
And there is more info to come....

How the California State Auditor was stopped from doing a Major Statewide Audit:
http://schoolroofingscam.blogspot.com/2008/02/request-for-major-statewide-audit-in-ca.html

Which roofing manufacturers would have been looked at?
Tremco, Garland, and W. P. Hickman (out of Ohio).

How former Manufacturer's Reps are pursued in courts to stop practicing the same methodology for selling products privately, or being involved in the industry:
See a listing of cases, at: http://schoolroofingscam.blogspot.com/2008/02/where-there-is-whole-lot-of-smoke-there.html

Who is the roofing manufacturer involved?

Tremco.

How Roofing Contractors are targeted if they dare to bid another product:The involved manufacturer's rep bring in their small, round-robin "approved" "pool" of three or more roofing contractors to "bid" on the project. If a contractor steps outside and bids another product, a roofing manufacturer has asked the Federal Attorney General's Offices that criminal charges be brought against the contractor for diluting their product and applying it - on two other roofs at an Air Force Base, one roof the contractor had not done. Suspicious, the roofing contractor had a testing agency take a sampling of the hundreds of over-supplied product the manufacturer's rep would not take back on other projects, and the testing agency found that the manufacturer was supplying bad product to the contractors. The case was the largest ever in Idaho, and the roofing contractor was himself the Director of the Western States Roofing Contractor's Association and on the Board of Directors of the National Roofing Contractor's Association.
See: (coming soon)

Who was the roofing manufacturer involved?

Tremco.

How School District Personnel who stand up to the scam are targeted:
Besides the repeated hazing by upper level managers involved, one manufacturer falsely accused a School District Official of allowing another product in a bid and asked for criminal charges to be brought by the State Attorney General's Offices in Missouri.
See: (coming soon)

Who was the roofing manufacturer the School District Official stood up to?

Tremco.

How Roofing Manufacturers are targeted:
Political pressure is brought to bear, including criminal charges - over the manufacturer, instead of using a gun to protect himself when locals threatened him with MOB-like hits, tape recorded them. Funny thing; one of the laws in New Hampshire, where he is located, allows him to do so. But the Justices, once again, perverted justice, even attempting to have him committed. They at one point threw the case out with prejudice, and then took it back. Can you do that? Apparently, when fraud is involved and with buddies of buddies, you can in this country.
Jefferson and Washington have to be turning in their graves.

The roofing manufacturer was found guilty of a misdemeanor for taping the local prosecutor threatening his life and more, and as of the first week of March, 2009, was jailed for having a gun in his briefcase when he attempted to go to court for a hearing. He didn't know where it came from. He sits in jail, a place they want him - convenient.

The roofing manufacturer he was standing up to - all alone?

Garland.

A summary is located here:
http://schoolroofingscam.blogspot.com/2009/04/new-hampshire-officials-declare-war-on.htmll

The tapes on the site will have to be put back up...it's just unreal - but very real:
http://www.bluestonepremiumroofingsystemsinc.com/2008-02-04%20-%20REVOKED%20-%20No%20trial%20by%20a%20jury%20of%20my%20peers.htm
How Taxpayer Advocates are targeted:
A secretary of an Indiana Taxpayer Group was sued by one of the manufacturers in the New Jersey report over a Press Release - which was supposedly protected by SLAPP Suits until a biased Judge was forced to recuse himself...it's not over yet. The Secretary? A housewife and a grandmother! She has now caught through Public Records requests kickbacks and lobbyists from the manufacturer in at the State Attorney General's offices and State Legislature, doing what they do best: nail the taxpayers and pervert our system of governance -all checks and balances gone to hell in a handbasket.
See: http://www.blogger.com/www.diana-vice.blogspot.com

The roofing manufacturer she was standing up to?

Tremco.

________________________________________________

Who's interested and able to do something about the scams, if state agencies can't or won't?
ONLY the FBI. Anyone corruptible by political contributions or controlled by those who are elected can be involved.
See the FBI webpage dedicated to corruption in schools at:
http://schoolroofingscam.blogspot.com/2008/11/corruption-matters.html
or
http://www.fbi.gov/page2/aug06/corruption82306.htm

________________________________________________

Who sees the problem and has issued orders and completed investigations, attempting to solve the problem?

1. Purchasing Agencies used for Construction "Competitive Bidding" contracts ruled illegal by the Indiana State Attorney General in Construction Products such as roofing:
http://schoolroofingscam.blogspot.com/2008/11/indiana-state-attorney-general-rules.html
Manufacturer Involved? Tremco

2. Massachusetts Inspector General's Offices rules against "tight" or "restrictive proprietary" specs:
http://www.mass.gov/ig/publ/proprpt.pdf
Manufacturer(s) Involved? Unknown.
3. New Jersey State Commission of Investigation Report, 2000, "Waste and Abuse in School Roofing Projects":
http://www.state.nj.us/sci/school.shtm
Manufacturers Involved? Tremco, Garland and W.P. Hickman (all from the Cleveland, Ohio area).

4. For California State Auditor Report (limited to one set of specifications on over 20 years' worth found for a 110-building campus, the University of California San Francisco):
http://schoolroofingscam.blogspot.com/2008/02/california-state-auditor-report-re.html
or
http://www.bsa.ca.gov/pdfs/reports/I2003-2.pdf and read Chapter 5, four short pages. It's blistering....
Manufacturer Involved? Tremco

5. Albuquerque Task Force impacted the Albuquerque School Board's competitive bidding procedures:
http://ww2.aps.edu/cgi/displaypress2.cgi?136
Manufacturer Involved? Garland

6. Los Angeles' District Attorney's Offices issued a Consent Order - an Injunction - against Garland for:
Bid Rigging
Vertical Price Fixing
Horizontal Price Fixing
Unlawful, Unfair or Fraudulent Business Practices
Unfair, Deceptive, Untrue or Misleading Advertising
Commercial Bribery

See:
http://schoolroofingscam.blogspot.com/2009/04/garland-roofing-caught
and the actual Consent Order:http://roofingscam.blogspot.com/2009_04_19_archive.html#7929549341180344241
(first Post)
Manufacturer Involved? Garland

7. The Pennsylvania Dept. of Education has ruled that a School District has to obtain their own roofing, not through a manufacturer and the purchasing agencies organization.
See:
http://www.zwire.com/site/index.cfm?newsid=19431938&BRD=2724&PAG=461&dept_id=563781&rfi=8
Manufacturer Involved? Tremco
________________________________________________

A list of just some of many articles and four+TV articles on the scam:(See also http://www.blogger.com/www.roofingscam.blogspot.com )

Newspaper Articles:
Published in SF Weekly, San Francisco, California, cover story, “The Fix Is In”, Feb. 26, 2003 (distribution over 600,000). Located here: http://www.sfweekly.com/2003-02-26/news/the-fix-is-in/

Published in The Valley Advocate, Massachusetts, “ Through the Roof”, Dec. 12, 2002. Located here: http://old.valleyadvocate.com/articles/throughtheroof.html

Published in the Dayton, Ohio Daily News, “Ohio Companies Figure in NJ Bid Probe”, Sunday Front Page, Oct. 22, 2000,: First national link in story on the roofing scam targeting schools. Story was on the New York Times Newswire for 17 months. Located here:
http://nl.newsbank.com/nl-search/we/Archives?p_action=doc&p_docid=0F51F469C6E54365&p_docnum=1

Published in the Albuquerque Journal, "APS Roofing Costs Sky High", January 19, 2003.
Located here:
http://www.stopthewarmachine.org/events/jan18pdf.pdf (front page only)
or go to:
http://www.blogger.com/www.abqjournal.com and search for the story - paid subscriiption or per piece.


Trade Magazine Articles:
Published in the Roofing Contractor Magazine, “Shut Out: New Jersey Strikes Down Suspicious Bidding". Located here: http://www.roofingcontractor.com/Articles/Feature_Article/fbe40cf520c58010VgnVCM100000f932a8c0____

Multiple Articles in the Midwest Roofer, magazine of the Midwest Roofing Contractor's Association, seen here: http://www.blogger.com/www.roofingscam.blogspot.com


Television News Stories:

MARYLAND:
Baltimore County Schools over spent $30 million on roofs using the AEPA Purchasing Agency subsidiary in Pennsylvania to buy Tremco Products, 2006-2011
http://www.wbaltv.com/video/28678491/detail.html

NEW MEXICO:
Albuquerque Task Force Recommended using more suppliers than Garland:
http:/www.kobtv.com/archive/2001/may/23/4wtk-roofing.htm

NEW YORK CITY - RE: NEW JERSEY:
Eleven Public Officials caught taking bribes for roofing contracts in Public Works Contracts:
http://www.nysun.com/national/legislators-mayors-arrested-in-new-jersey-bribery/62077/
http://www.nj.com/news/index.ssf/2007/09/11_nj_officials_arrested_on_br.html
http://abclocal.go.com/wabc/story?section=nj&id=5640158

OHIO:
On NBC Network News Hidden Camera, WLWT NBC TV, Cincinnati, Ohio, May 21, 2001 and February 27, 2003 in two stories on the roofing scam in Cincinnati Public Schools. Located herein:

"Roofers May Cash In at Local Schools: Schools Spend Millions on New Roofs", at: http://www.wlwt.com/news/790350/detail.html

and "Ohio School Projects Not Competitively Bid", at: http://www.wlwt.com/news/2010987/detail.html