Report: State didn't thoroughly vet RREM contractors

TRENTON – At least 12 companies with dubious histories, including allegations of bribery, negligence and fraud, have performed work as part of New Jersey's primary superstorm Sandy rebuilding program, according to a new monitoring report.

The findings by Chicago-based Navigant Consulting were a follow up to previously noted concerns that New Jersey Department of Community Affairs, distributor of most of the federal disaster aid, was not thoroughly vetting contractors involved in the the Reconstruction, Rehabilitation, Elevation, and Mitigation (RREM) program.

Navigant looked at 74 contractors and subcontractors and found red flags in the pasts of 12. One company was involved, but not charged, in a a criminal bribery scheme in another state, the report says. Others were defendants in civil cases dismissed on technicalities where allegations included negligence, fraud, fabricated environmental testing records, inadequate building inspections, violations of labor law and failure to pay Workers' Compensation insurance premiums. Some owed the government money.

The report concludes that because there was no determination of guilt or liability and no proof the firms have been abusing the New Jersey program, none of the contractors should be disqualified. However, the report adds, the claims "should have been identified and evaluated before these companies were engaged to work on these important programs."

Adam Gordon, a staff attorney with the Fair Share Housing Center, said the report is particularly troubling given that the issues are associated with RREM Pathway C, which was the option homeowners could select if they wanted to be hands-off and let the state direct the rebuilding of their home. The center has been critical of how the RREM program has been handled.

"(The state) was saying that this set of contractors has been approved by us and has been vetted by us," he said. "There (are) a lot of cases of the state putting its seal on wrongly qualified contractors."

The names of the companies are not identified in the report, and the DCA did not immediately respond to questions from the Asbury Park Press.

Gov. Chris Christie signed a law in March 2013 requiring integrity monitors to be hired on all projects worth $5 million or more, to ensure money is being spent both efficiently and in accordance with regulations. This is the third set of quarterly reports that are required by that law.

The DCA report examines more than $256.5 million worth of contracts to seven vendors, two of which the state has cut ties with. Navigant charged $277,417 for the report.

Some other findings from the report:

• Navigant suggested, and the DCA adopted, several changes regarding RREM Pathway B, where homeowners choose their own contractors, concluding the risk of misuse was ostensibly higher. These changes include making mandatory a contract addendum that spells out numerous technical requirements for the rebuild, changing the points and manner in which portions of the grant award are released and eliminating a contigency fund and replacing it with a system built on change orders.

• The DCA had determined that the data maintenance system provided by fired contractor Hammerman and Gainer was not functional or robust enough to track RREM applications and their supporting documents. Navigant agreed.

• Neither the DCA nor CohnReznick, the consultancy the DCA is paying nearly $10 million to serve as its internal monitor, has adequate audit procedures to identify duplicate or erroneous billing, such as two subcontractors filing invoices for the same work done on the same home.

Gordon said the combination of suspect contractors and a system that can't be relied on to catch double billing raises big-picture questions on how Sandy aid is being spent.

"At the end of the day, there is a lot of money being spent on these contracts, hundreds of millions of dollars, and the state is saying we don't have enough money to provide something like temporary housing in the (Sandy Homeowner and Renter Assistance Program)," he said.

Other projects being monitored include the Atlantic Highlands Municipal Harbor, a $20 million project that was mostly completed in the summer though some work was done in October. KPMG, the integrity monitor, said the borough "made significant efforts to comply." The monitor said its sole recommendation was for the town to maintain better labor records to ensure prevailing wages were being paid.

The Bayshore Regional Sewage Authority in Union Beach will also have additional oversight, but that project was delayed and hasn't yet been awarded so no report exists.

Russ Zimmer: 732-557-5748, razimmer@app.com