Nov. 17, 1998 -- The federal government and two whistleblowers are suing a California company for millions of dollars for allegedly using inferior concrete to pave the runways at airports in Orange County, California, and Denver.
The government filed a complaint today indicating that it has joined a False Claims Act lawsuit brought by the whistleblowers alleging that Ball, Ball & Brosamer Inc. (BBB) used concrete that was watered down to reduce its costs and boost its profits. The "qui tam" case was filed under seal in 1995 in federal district court in San Francisco but was just made public today.
The runways at Denver International Airport and John Wayne Airport in Santa Ana, Calif., that were paved by BBB don't meet contract specifications and could cost taxpayers tens of millions to fix, according to the lawsuit.
The John Wayne Airport already needs extensive repairs of work done only nine years ago.
"The federal government has both the right and the responsibility to go after contractors who do shoddy construction work, particularly on major projects such as airports," said Stephen Meagher, a San Francisco attorney with Phillips & Cohen, which is representing the whistleblowers. "Inferior concrete means the runways and taxiways will need extensive repairs and will have to be removed and replaced years sooner than they otherwise would."
BBB had contracts with Denver totaling $138 million to pave runways, concourses and taxiways. The federal government withheld reimbursement for BBB's work at Denver on the basis of the whistleblowers' allegations. It did, however, pay millions for the Orange County project.
Under the False Claims Act, the government can recover from a liable company as much as three times its losses plus $5,000 to $10,000 for each false claim. In this case, damages and penalties for the false claims could add up to millions. The law provides that when the government joins a qui tam case, the whistleblowers are entitled to 15 percent to 25 percent of whatever the government recovers as a result of their lawsuit.
The lawsuit was filed by Steven Chaves, of Westminster, Colo., and Douglas Ruder, of Denver.
Chaves was the owner and president of CSI Trucking Inc., which was a subcontractor of BBB on the Denver airport project. Ruder was the vice president. They began to investigate BBB's practices after BBB refused to pay money owed to CSI, causing CSI to go bankrupt, the lawsuit says.
"Ruder and Chaves' diligent detective work uncovered BBB's scheme at the Denver and Orange County airports," said Peter W. Chatfield, a Washington, D.C. attorney with Phillips & Cohen. The two men analyzed inspection reports and other documents, sampled concrete and tracked down former BBB employees and subcontractors. The two have worked with the FBI in its investigation of the Denver project since June 1993.
Concrete is made by blending cement, fly ash, "aggregate" (sand and pebbles), water and certain chemicals. Design engineers determine the exact blend based on how strong and flexible the concrete should be and that blend is specified in contracts. The amount of cement determines how strong the concrete will be. Cement also is the most expensive ingredient.
The whistleblowers' complaint lays out how the company allegedly committed the fraud. It charges that BBB took extraordinary steps to hide its practices, including programming computers with false information, miscalibrating scales and "sweetening" (i.e., adding more cement) to supposedly "random" samples that quality control inspectors tested.
The records that Ruder reviewed from the John Wayne airport show that in some instances, BBB cut the amount of cement that was required by as much as 50 percent.
For more information about this case, see the following news stories:
- "DIA concrete diluted, suit says," Kevin Flynn, Rocky Mountain News, 11/26/98.
- "Airport contractor is sued; concrete provider at DIA accused of diluting product," Mike McPhee, Denver Post, 11/26/98.
- "U.S. joins lawsuit over John Wayne Airport taxiways," Jeff Gottleib, Los Angeles Times, 11/26/98.
- "U.S. joins suit over concrete at JWA," John McDonald, The Orange County Register, 11/26/98.