See No Evil
On July 7, 1995, Gator Recycles International deposited $824 in the Rockets season-ticket account of Paul Gilmore, a senior inspector with the city's Public Works and Engineering Department. The transaction likely would have raised more than a few eyebrows, if any of Gilmore's superiors had known about it: Gator produced an asphalt additive used by the city in paving jobs, and Gilmore was largely responsible for determining if the material was worth buying.
A year later, contractor Anthony Karam bought a boat trailer hitch from Trailer Wheel and Frame Co. on his credit card. The $260 hitch didn't end up on any of Karam's vehicles, however -- it was tailored for Paul Gilmore's 1986 Ford Aerostar van. Karam had worked on projects supervised by Gilmore.
According to court records and an internal public works security report, the dealings remained secret until January 1997, when Karam complained about a $3,800 bribe he claimed Gilmore solicited to buy Gilmore's daughter a car.
"He was trying to squeeze me," Karam recalls. "I got pissed off."
The contractor told a public works investigator about the trailer hitch, which he now describes as a loan, not a gift. "He said he'll pay me back," says Karam. "He never paid me back."
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The matter was turned over to the Houston Police Department's Public Integrity Review Group (PIRG), which verified the hitch purchase and uncovered Gator Recycles' gift of Rockets tickets to Gilmore. In May, the police confronted Gilmore with the evidence. Within two months, the inspector had resigned from his job and pleaded guilty to one count of accepting an illegal gift, for the Rockets tickets. He received deferred adjudication, meaning his record will be clean at the end of a two-year probation period.
Prior to his departure, Gilmore had worked on a number of projects in the public works department's Street and Bridge Division, and at one time oversaw the multimillion-dollar overlay program that has been responsible for tons of fresh asphalt laid on Houston streets under Mayor Bob Lanier. Though hard evidence was lacking until Karam came forward, at least some of Gilmore's colleagues had long suspected him of improprieties. "He was a time bomb waiting to explode," says a city engineer.
Gilmore admits he took the two gifts but says the givers got nothing in return. And he denies that he accepted or solicited any other gratuities, including the $3,800 car payment alleged by Karam, though he can't say the same for his former colleagues. "I ain't the only person that took presents from contractors," Gilmore claims.
Karam and others agree, though no one is willing to name names. "Everybody in the city takes [gifts], to be honest with you, from the top to the bottom," Karam says.
Under the circumstances, public works managers might have been expected to review Gilmore's work for indications that his decisions had been influenced by something other than professional judgment. That never happened. "Maybe we should have," acknowledges deputy director Buddy Barnes, though he adds that it's never too late to check.
Maybe indeed. Four letters from testing laboratories obtained by the Press indicate that on several overlay projects, Gilmore was instrumental in keeping the labs from checking asphalt samples at job sites during construction. Those projects later failed post-construction tests, though the city never held the contractors accountable for substandard work. (Gilmore says he doesn't recall ordering the labs not to conduct the field tests.)
Not only did the public works department allow Gilmore to resign and quietly disappear, it never considered sanctions against the firms that illegally gave him gifts. Anthony Karam continues to do business with the city and currently works on two municipal projects. "The city's primary focus was on its employee," explains street and bridge chief John Hatch.
But it isn't like the department to worry too much about the past, what with more than $700 million to spend every year on new pavement, storm sewers and other projects. Close scrutiny of inspections or any other aspect of project design and construction might mean pesky delays or unpleasant confrontations with contractors or consultants over shoddy work. That seems especially low on the priority list of public works director Jimmie Schindewolf, a former paving contractor himself.
As reported earlier, the Press uncovered numerous instances where overlays and other paving projects collapsed within months of completion, at a cost to taxpayers of many millions of dollars. But with the exception of one ongoing lawsuit filed after a developer complained, the city has taken no action against those responsible.
In addition, the Press has uncovered a number of other problems with inspections that raise questions about the public works department's ability to maintain control of its projects:
*In a dozen cases reviewed by the Press, the results of tests performed during and just after construction indicated that the work or materials were substandard. But "final inspections" were later conducted for each project without any mention of any testing irregularities.
*Though testing results are supposed to be widely distributed to public works administrators so that substandard work doesn't escape notice, the project files the city maintains often don't contain the reports. Several higher-ups with responsibility over pavement projects, including John Hatch, say they don't know about any failed tests.
*The department has an inadequate number of inspectors to cover the array of projects under construction at any given time, and those in the field are often poorly trained and lack the authority to challenge contractors when conflicts arise.
*Despite the fact that all projects are covered by a warranty period (usually one year) the department conducts no inspections near the end of the period to see if work is holding up -- despite widespread knowledge in the department of a number of projects that lasted less than a year before noticeably deteriorating.
Not only are inspections lacking, but the city has generally been distancing itself from oversight of public works projects since Lanier became mayor in 1992. Controller Lloyd Kelley abandoned the tough audits of the Greater Houston Wastewater Program and other projects that had irritated contractors and consultants and put his predecessor at odds with the Lanier administration. Under Schindewolf, internal department auditing of programs has stopped as well. And the increased use of consultants rather than city employees to manage the department's programs has created additional distance from scrutiny.
In fact, in the Street and Bridge and Water and Storm Sewer Construction divisions, the consultants are now providing their own inspectors for certain projects -- policing themselves, in other words -- and leaving the city almost entirely out of the oversight loop.
Without proper controls in place, of course, it's impossible to tell how much of the $4 billion spent on public works projects during Lanier's tenure has been thrown away. Since the mayor will yield his office in January, the amount of waste will likely remain buried in the files forever.
Deputy public works director Buddy Barnes, who heads the eight-division Engineering, Construction and Real Estate Group, acknowledges that the department could do a better job in overseeing public works and enforcing contracts. But rest assured, Barnes adds: He and his staff are working on it.
"We're trying on a daily basis to put in controls," says Barnes, "so we can make sure there's feedback on the proper accomplishment of what we've set out to do."
If an alert city worker hadn't happened to discover, months after the fact, that a water meter had been improperly installed with PVC pipe instead of a sturdier copper line, the missing sidewalks might never have come to light. But a spot check of the project -- a sidewalk construction job that included the relocation of water meters -- revealed several meters with the substandard pipe. Still other meters weren't replaced at all.
And in front of several schools where contractor Bert Harrop had contracted with the city to pour sidewalks, there was no pavement in sight.
In June 1995, the city launched what would be the first of three audits of Harrop and the 11 contracts he'd won for work in Lanier's Safe School Sidewalks program. The audits seemed to reveal a pattern of overcharges that totaled more than $220,000. Though the contracts had all been paid off, the city withheld more than $140,000 in payments due on three other projects Harrop was in the process of building. The two sides then sued each other for a bundle; Harrop claimed breach of contract, and the city wanted damages.
The suit was close to a settlement last week, though the city hadn't signed the tentative agreement. According to a source close to the decision, the city will get to keep about $85,000 of the withheld funds, cutting Harrop a check for the balance. Public works spokeswoman Marty Stein wouldn't confirm the details, though she says the city proved its case. "We're very happy with [the outcome]," Stein says.
Harrop attorney Bill Coats said his client wouldn't answer questions until the settlement was finalized. But he maintains that Harrop did absolutely nothing wrong, and that to insinuate otherwise would be a mistake. According to court documents, Harrop claimed that even though he may not have always put the sidewalks where the plans indicated, he did extra work that more than covered the difference.
The city may recover a chunk of its change, but at least one important question has yet to be resolved: Since the sidewalks weren't built as directed and the meters were installed with the wrong pipe, why did two city inspectors repeatedly sign off on the projects? On daily reports in the field, as well as on the final inspection form required before a close-out payment to a contractor can be made, inspector Janet Turner and her supervisor, Frank Ellis, verified that the work had been according to plan.
Neither Turner nor Ellis could be reached for comment. But in the city's eyes, at least, that question has been answered. In a deposition taken for the lawsuit last May, public works deputy director Richard Scott indicated that both Turner and Ellis were fired after the sidewalk problems were confirmed. He said he suspected that Harrop knew he was getting paid for work that wasn't done, and that the inspectors were in cahoots with the contractor, though he had no concrete evidence to back that speculation.
"I have found that to happen before in the city," Scott testified.
Whatever the case, Turner and Ellis were never prosecuted, because the police were unable to establish that cash or other gifts had changed hands.
According to Scott's deposition for the Harrop lawsuit, Turner offered the excuse that she had too many jobs to inspect and simply couldn't be in several places at once to monitor the projects on a daily basis. Instead, she relied on the contractor's word that the work had been performed.
That doesn't explain why she and Ellis signed the final inspection documents. But Turner had a point. Ever since Lanier jacked his public works programs into overdrive, the department has suffered from a chronic shortage of inspectors. "No [division] has enough," says an engineer who's been with the city for more than ten years. With several projects to inspect on a daily basis, the engineer says, "It's physically impossible for the inspector to do his job."
In a November 1996 report, the consulting firm Lockwood Andrews & Newnam identified a shortage of senior inspectors in the Water and Storm Sewer Construction Division. "We have determined that there have been few to no construction progress meetings with the contractors," the consultant reported, noting that responsibility for conducting the meetings belongs to the senior inspectors. "Meetings must be held, at a minimum, every two weeks in order to ensure the orderly conduct of the construction management."
"The reason for no meetings," the report continued, "is that nobody is available to prepare for meetings, conduct the meetings, prepare the minutes and then take action on the items that surface at the meetings."
Lack of oversight has been the norm on city sidewalk projects. Each project had multiple job sites, and with some inspectors carrying a load of five projects at a time, just getting to the sites once a day was tough enough. To do a thorough job, however, an inspector must be present at crucial times -- such as when the concrete is poured -- to ensure that the work is done right. "The sidewalk jobs are really bad about that," says one of many engineers who have left the city in the past few years. "It's difficult to keep tabs on what the contractors are doing."
And while the average contractor probably wouldn't take advantage of an opportunity to cut corners and save money, others would. "Some of them are very diligent and conscientious," says the engineer, who knows most of the paving contractors in Houston. "But just like with everything else, some are not."
The shortage of manpower is only one impediment to the inspectors, who serve as the city's primary defense against abuses by contractors. Training for new inspectors has been minimal, according to sources in several public works divisions, meaning that they're not in a position to question contractors about matters that are often highly technical. And those who have concerns lack the authority to do anything but report to their superiors. "I have not empowered them to take on issues with the contractor," says deputy director Barnes. "I would rather have them report and have the city take on the contractor."
But that method hasn't been yielding results, because the inspectors haven't been reporting, and the managers haven't been acting. "I don't know that we have that [system] totally in place at this time," Barnes says by way of explanation.
Without adequate inspections, the city can't know if its billions have been well spent. Anecdotal evidence suggests that many millions have been wasted or will have to be respent in relatively short order, as a number of street overlays and other paving projects have cracked or collapsed within several months of completion. An overlay job is supposed to last seven to nine years.
But the system is getting better every day, street and bridge chief John Hatch insists. He says he's reduced the number of jobs an individual inspector must police at any given time. He's also implemented a more thorough training program for newcomers. And he's thinking about conducting inspections of projects as they near the end of their warranty period to see if they've held up. "I'm reviewing it now," says Hatch. "It makes sense."
There's still room for improvement. When a contractor laid asphalt up to a curb line in the Oak Forest area last June instead of milling down the old pavement first, the inspector somehow didn't notice. Instead, it took angry neighbors whose yards flooded at the first rain to get the city to fix the problem. "He screwed up," says Hatch of the inspector. "He should have been watching, but [he] wasn't watching."
The city has several checks and balances besides inspections to ensure that contractors live up to their obligations. Unfortunately, as with the inspection process, their flaws seriously limit their effectiveness.
For most public works construction projects, testing labs are hired to measure materials and conditions in order to guarantee they're up to standard. To ensure that concrete meets the standards for maximum strength, for example, it must be properly mixed and heated to a certain temperature before it's poured. Labs check core samples of pavement, take soil samples and perform any number of technical tasks. If problems arise, they can be quickly corrected, thus avoiding the need to redo work.
In February 1995, the consulting firm HBC Engineering issued a report for the Greater Houston Wastewater Project on estimating the cost of testing services. The report pointed out inconsistencies between the money budgeted for testing and the amount actually spent. But truly alarming was another of HBC's findings: In a number of cases reviewed by the consultant, the testing wasn't being performed. "It is apparent that for several reasons the city has not been receiving the level of testing services that have been contracted for," HBC vice president Daniel Hanna wrote to John Hatch, who at the time was a project manager in the Wastewater Division.
Among the reasons HBC identified for the omission: The labs didn't stay on top of the projects and press the inspector or contractor to let them do their jobs. And sometimes those overseeing the construction were at fault: "The inspector didn't insist that testing be accomplished and therefore, the contractor didn't call the lab out," HBC reported.
In addition, the consultant noted, "There is no central location where project records regarding testing services are maintained. Data available is incomplete and subject to interpretation. Records available do not indicate why testing was not obtained at contract levels."
If Hatch learned anything from the report, he forgot about it once he moved from the wastewater program to head the public works department's Street and Bridge Division. For the past 18 months, Hatch says, he's been implementing a new centralized file system so that every shred of paper on every project is located in one place. But of more than two dozen master files on projects reviewed by the Press, only a few included testing reports. No one seemed to know who had the reports, even though city policy requires that the lab distribute five copies to the city and contractor when tests are completed.
When the Press persisted, Hatch was able to produce test reports, but they varied wildly in terms of the type and frequency of tests conducted, and there was nothing to explain why some tests were done for one project but not another.
They varied wildly in results as well. While about half the projects passed their tests with flying colors, the rest had high failure rates. Overlay projects seemed especially weak, often falling well short of their required density. In five of those projects reviewed by the Press, more than 60 percent of the core samples flunked the density test. Yet apparently no action was taken to deal with the problem, even though the city has several options at its disposal, including reducing the contractor's payment or making the contractor do the work over again.
When a testing lab reported in September 1995 that the concrete used to rebuild several intersections in southwest Houston was badly failing important durability tests, project manager Joanne Oropeza was alarmed enough to circle the numbers and scribble a warning on the reports. "Too low!" Oropeza wrote. "Comment?"
The files contain no further comment or indication that the matter was resolved. Oropeza says that the issue was discussed internally, and that she decided not to pursue it with the contractor. For one thing, she says, the tests were invalid (though no additional testing was ordered). In the end, Oropeza says, the standards aren't intended to be hard and fast, and they allow for some flexibility. "We felt like if we got close enough with the loose interpretation [of the standards], that we would count it as good," she explains.
Sometimes it's easier to avoid the whole problem of defending bad test results. Starting in February 1993, just as the public works department was handing out construction contracts left and right for the expanding overlay program, inspector Paul Gilmore and his boss gave testing labs a new directive: Instead of testing the asphalt on the job site, as was the custom, the labs should limit their activities to the "batch plant," the place where the asphalt was produced.
This departure from standard procedure spurred several of the labs to write the city with their concerns. "We have been instructed not to perform field inspections at the site," wrote Kurt Leus of Terra-Mar Inc. "It is our opinion that some field inspection could be helpful in assuring the project is completed as best it can to serve the city of Houston."
Still, Gilmore and his boss, Street and Bridge Division chief Philip Barnard, opted for the minimal testing. It didn't take long for the consequences to hit home. After seeing failed density tests on a number of overlay projects, Moh'd Warrad, a public works quality-control engineer, wrote his superior a letter and included test results from a project in the Pinecrest area. The HTS Inc. lab took 39 core samples from the project, and all fell far short of the density standard.
"Even though neither one of us nor any of the testing laboratories were impressed with the idea [of stopping field testing], the attached test results explain why," Warrad wrote. "Research has shown that pavements with low in-place density will experience early aging and oxidation which will lead to early cracks and, eventually, disintegration."
A public works employee pulls his city-issue vehicle up to a pump at 801 Gillette. Ten gallons of unleaded later, he's ready to roll again. But instead of paying an attendant, he fills in several blanks on a log. No one asks questions, because there's no one to be seen other than the employee. "You see?" he says to the reporter accompanying him. "I could put down anything I want."
To keep its huge fleet of cars and trucks running, the city maintains 15 gas depots, all managed by the public works department. The depot at 801 Gillette is the largest, pumping almost a million gallons a year. Over the course of a given day, dozens of city employees fill up their tanks at the depot's 16 pumps. After refueling, they fill out a log with spaces for their name, department, employee and vehicle identification numbers, odometer reading and the amount of gas they pumped.
The honor system is convenient, but it may not be cost-effective. The employee who demonstrated the system says that although he always fills in the log correctly, many city workers don't, using phony information while regularly filling up their personal vehicles at 801 Gillette -- a violation of the rules. In addition, he says, a small group of employees supplement their incomes by several thousand dollars a month, filling up several times a day and then siphoning and selling the gas.
The existence of a bootleg gas operation could not be verified, but an hour of observation at 801 Gillette and a cursory review of computer records do give pause. In that hour, the drivers of two vehicles without any noticeable identification pulled in, filled up the tanks, and left. The attendant on duty, who was often holed up in an outbuilding, paid little attention to the comings and goings.
And the fuel logs, which are meticulously entered point by point into a massive database, reveal a number of inconsistencies and omissions that could easily translate into petty fraud: A Ford Taurus that was filled up 16 times in a month and averaged, according to the odometer readings, a paltry 10.8 miles per gallon; another Taurus whose driver somehow squeezed 26 gallons into its economy-size tank; numerous vehicles whose drivers pumped lots of gas but never reported any changes in odometer readings; and numerous entries where the driver neglected to write down the vehicle ID number or other required information.
The inconsistencies might be explained away by user carelessness or data-entry errors. But it might also make sense for the public works department to audit the depots or otherwise perform spot checks to ensure that no abuses are occurring. But as long as the money is flowing freely through the public works department, careful analysis of programs and systems is deemed more of a nuisance than a necessity.
Besides, managers themselves apparently feel free to stretch the rules as it suits them, so why spoil a good thing? A number of sources complain that the department routinely violates its own policy by allowing favored workers to take their city vehicles home, which is permissible only in limited circumstances. Joanne Oropeza, for example, who spends almost all her time at the department's headquarters at 1801 Main, commutes to and from work in her city car. "She's one of my key people," explains John Hatch.
But being a "key" employee is not reason enough, at least according to department policy, for taking home a city vehicle. Hatch himself doesn't meet the guidelines, for that matter. He commutes in his city vehicle, even though the distance exceeds the 30-mile maximum allowed under the policy. When an administrator in public works director Jimmie Schindewolf's office questioned the exception, Hatch's boss, Buddy Barnes, interceded. Barnes also lives outside the 30-mile commute limit.
In that environment, it's not surprising that the department has steadily distanced itself from careful oversight of its programs. In addition to the weakness in testing and inspections, this distance inevitably yields more sweeping oversight gaps. Record-keeping remains spotty at best: Testimony in the missing sidewalks lawsuit against Harrop Construction revealed that the three audits of the projects conducted by the city yielded startlingly different results each time, a fact that deputy director Richard Scott was at a loss to explain. Files examined by the Press were often incomplete beyond the absence of test results, and it took days to track down basic information that should have been readily available. "The centralized filing system isn't working as well as it should," says Hatch.
The importation of outside consultants to manage public works programs provides yet another layer of insulation from bad news. That practice has recently taken a new twist: In addition to providing the usual design and construction services, the consultants are now using their own inspectors to make sure the work passes muster, creating a clear conflict of interest. Notes a city engineer sarcastically, "You can just bet the consultant's inspectors are gonna be knocking down the doors to report fuck-ups by their superiors."
On September 3, John Hatch ordered NBG Constructors to stop work on the Franklin Street Bridge downtown. The project had already been delayed when a pile driver encountered an unexpected layer of sand that couldn't be penetrated. After a few shattered piles, some tests and many hours of discussion between the city project manager, the design engineer and NBG, a solution was agreed upon: A path would be cleared through the sand by "jetting," a common process that uses a high-pressure stream of water to move the sand out of the way as the pile is being driven.
But Hatch, who fancies himself something of an expert on pile-driving, wasn't satisfied. Without consulting project manager Juan Rendon, he called a halt to the pile operation and engaged Geotest Engineering for a second opinion.
That burned Rendon, who couldn't understand why the jetting, which had been tested successfully, had been rejected. And he was further miffed that he hadn't been consulted before the action. "I told [chief engineer] Sheri [Holloway] that I did not agree with Mr. Hatch's decision to stop the project, since I had worked so hard to solve the pile problems," Rendon wrote in a memo. "I also told Sheri that it was going to cost the city a lot of money in downtime."
A few weeks later, Geotest came back with a new solution: Drive the piles into the sand and leave them. But design engineer Charles Tamborello found the idea unacceptable and told Hatch he wouldn't participate if the city tried to use the alternate pile plan. Eventually, Hatch cleared NBG to proceed with the original design, using jetting.
NBG, which had to keep its construction crew on standby while the issue percolated, has billed the city $277,000 for the delay.
Hatch says he asked Geotech to study the matter on a recommendation from Holloway. The chief engineer, in turn, says she suggested Geotech because of the firm's expertise in pile-driving. It had nothing to do, Holloway insists, with the fact that her stepdaughter worked for Geotech at the time. To pay the firm its fee of more than $7,000, Hatch billed the work to another city contract Geotech held, though he doesn't know exactly which one. "I was told they had a contract they could do it under," Hatch says. "This is [Geotech] telling me."
Hatch can't say why he left project manager Juan Rendon out of the initial decision to hire a consultant. But he defends his decision to stop the project, even though it might cost taxpayers more than a quarter of a million dollars.
Others familiar with the project disagree. "It was a total waste of money, because the guy in charge [Hatch] had no idea what he was doing," says one engineer.
Hatch probably doesn't have to worry, because odds are the city will just pay the bill and let the matter drop. In the big public works scheme of things, $284,000 is chicken feed. When the contract increase goes before City Council for approval, public works deputy director and spinmaster Dan Jones will run interference for the measure, and the vote will likely be unanimous. It's not as if the city is in any position to challenge NGB.
Under Bob Lanier and Jimmie Schindewolf, the public works department has rebuilt the city's infrastructure at a pace not seen in decades. The image of Lanier as chief architect of the countless new roads, storm sewers, traffic lights, bridges and other basic bedrock features of the urban landscape has been polished to a fine gloss by endless ribbon-cuttings, press conferences and back-pattings at Council meetings. Schindewolf, who has long harbored political ambitions, might one day try to cash in on the popularity of Neighborhoods to Standard and other public works programs with a mayoral run of his own.
Last week, the Council was presented with a motion authorizing the latest expenditure for the renovated police headquarters at 1200 Travis. Though construction has come in at almost 9 percent over budget, no new appropriation was necessary, since the initial appropriation had a 10-percent contingency figure. The item was passed without discussion.
No one mentioned the $227,000 that had been taken from an account set up to accumulate rent money paid to the city by two restaurants and a parking garage located in the building. The money was used to pay the contractor, Constructors Inc., for asbestos removal and other work that would ordinarily have had to go before Council as a change in the Constructors contract.
But there was no intent to deceive, says assistant public works director Jerry Dinkins, who oversaw the project. The items weren't really part of Constructors' contract, even though the firm did the work, he says. They were actually part of the building management contract with another firm, which had the freedom to spend the cash from the lease account on the building's monthly operating costs. The Council didn't need to know about the $225,000 because it was all part of the plan. "We're saying that the [Constructors] contract came in under budget," Dinkins insists.
It's the less visible parts of Lanier's public works legacy that may ultimately be the longest lasting: the cracked and broken pavement from botched design and construction jobs, the list of dedicated city employees who left or were pushed out and replaced by cronies or consulting firms with little accountability, the enormous hole in the budget where millions in wasted funds should have been.
Don't expect any serious evaluation of the department any time soon. With Lanier on the way out of City Hall, the clock is ticking. And there's still a batch of projects to manage and contracts to award before the deadline.
And the deadline will be met.
"We do enforce schedule," says Buddy Barnes, "and we reinforce schedule.
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