DOT blind to Grace Indust. project billing scam: Hevesi

By Cynthia Koons

Grace Industries' attorney, Richard Gold, said the company was still owed “a substantial payment” from the state and said he believes the situation will be resolved. He said he could not comment further until he finished reviewing the audit. The main office of the company, which is more than 50 years old, is at 151-21 6th Rd. in Whitestone. It also has operations in Fresh Meadows and Corona. Hevesi said Monday the state DOT should have noticed the high rates Grace Industries was charging for unemployment insurance and workers' compensation. According to Hevesi's report, the company charged three times the normal rate for unemployment insurance and nine times the going rate for worker's compensation, unnecessarily costing the state $1.5 million.Jennifer Post, a spokeswoman for the state DOT, said the agency was changing its worker's compensation and unemployment insurance billing policies as a result of this audit. Also wrapped into the $3.3 million in billing overages were $725,000 for inappropriate overhead, $540,000 in equipment costs above agreed contractual estimates and $529,5000 in unsubstantiated materials and services, according to Hevesi's audit.”It is particularly disturbing that we found serious problems on both sides of this important project. It was not administered properly by the state Department of Transportation and that allowed Grace Industries to overbill for more than $3 million. That amount of overbilling certainly appears intentional,” Hevesi said. “New York already has far too much debt and many vital needs for additional capital spending. We cannot allow any of our precious capital dollars to be wasted or stolen.”Grace Industries is a roadwork, construction and paving company that was commissioned to complete the $53 million job of reconstructing the West Side Highway from 25th to 40th streets in the spring of 1998. Six months into the job, the company delayed the project because the contractors found a sewer pipe beneath the ground that was not in the original sketches, the audit said. An amended contract was created, adding $6.7 million to the total cost of the project because of extensive scheduling delays.The state DOT agreed to investigate Hevesi's charges and determine what action to take.”This is a billing issue not a payment issue,” Post said. “This contract has yet to be closed out and we are confident that we can offset any overcharges that have occurred.”She added that there will be a fixed rate for workers' compensation and unemployment insurance instead of a specified rate per contract.According to the audit, the DOT's chief engineer on the project prepared false certification and payment requests that would have resulted in $1.1 million in improper payments, but changes in the contract prevented those checks from being processed. That $1.1 million was not included in Hevesi's $3.3 million worth of overbilling allegations.Grace Industries owns an asphalt plant in Willets Point, where the city Department of Transportation buys its cement for the region. Last year the city delayed plans to build its own asphalt plant across the street from the Grace facility in order to determine what effects a DOT plant would have on surrounding businesses.Reach reporter Cynthia Koons by e-mail at news@timesledger.com or call 718-229-0300, Ext. 141.

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