OKLAHOMA CITY – A contractor accused of defrauding the federal government on repairs to a dam at Fort Sill paid $3 million to settle a civil complaint alleging breach of contract.
LaForge & Budd Construction Co. of Parsons, Kan., was accused of cutting corners and submitting false invoices on work it performed to rehabilitate the Lake George dam and raise the height of the structure. The company’s settlement payment exceeded the amount it received from the contract by a quarter of a million dollars. And how the alleged fraud was detected remains a mystery. Federal regulations required the Lake George dam to pass 100% of a “probable maximum flood” (PMF) without failure. However, in 2009 the U.S. Army Corps of Engineers determined that the dam could pass only 17% of the PMF.
The Corps of Engineers awarded a $2,742,385 contract on the dam rehabilitation project to LaForge & Budd in 2010. The scope of work included fill placement on the embankment of the dam, excavation of an uncontrolled spillway, placement of stone riprap, grouting the outlet conduit, and granular filter diaphragm placement (to control seepage through the embankment dam), the civil complaint relates. “More specifically,” the complaint continues, the contract required LaForge & Budd to raise the elevation of the embankment of the dam by 12 feet. Lake George is located on Fort Sill’s east range and was created in 1950 by an impoundment in the Wrattan Creek Basin. The dam is approximately 25 feet tall and 1,030 feet long, and has a maximum storage capacity of about 1,340 acre-feet (436 million gallons) of water, according to a Fort Sill Land Use Study prepared in 2018 by the Association of South Central Oklahoma Governments. In the dam rehab contract, LaForge & Budd pledged that its work “would conform to the contract requirements.” Also, the contract required the company to transport any material considered unsuitable for fill to the Fort Sill landfill, the complaint reads. The contract defined unsatisfactory materials to include “man-made fills, trash, refuse, backfills from previous construction, and material … which contains root and other organic matter or frozen material.”
EMBANKMENT FILL INCLUDED RUBBISH
Contrary to the contract requirements, the complaint alleges, LaForge & Budd “knowingly placed unsatisfactory materials within the embankment of the dam,” such as pieces of concrete, metal rebar and concrete rubble. The federal government alleged multiple violations of the False Claims Act, including submitting false/fraudulent claims, making or using false records/statements, breach of contract, unjust enrichment, and payments made by the United States “under the mistaken belief” that LaForge & Budd “had complied with the terms of the contract…” The federal government filed suit against the contractor on April 12, 2019, in the Western District federal court in Oklahoma City. The government asserted in its complaint that it didn’t know debris had been dumped into the embankment of the dam when it paid the defendant’s invoices. None of the publicly available documents in the case explains how or when rubbish used in the Lake George dam rehab project was discovered. A spokesman for the U.S. Attorney’s Office in Oklahoma City declined to comment beyond the few details contained in a Dec. 30 press release issued by U.S. Attorney Tim Downing. In its answer to the federal complaint, the company denied “knowingly making any false representations” and said it completed the work “in substantial compliance with the contract plans and specifications”. And in a Joint Status Report dated Sept. 25, 2019, the company claimed its management was unaware that any improper materials were used when it submitted invoices for payment, and said that if any “inappropriate materials” were mixed into the dam fill, “it was to a minimal extent”. In fact, the company maintained that if the 69-year old dam does not “perform as desired” by the federal government, “it is due to a design or other issues unrelated to the performance of the contract…” The Lake George dam “recently had a failure and caused flooding” in Lawton, south of the dam, the 2018 Fort Sill Land Use Study reported.
INVESTIGATION ONGOING?
A settlement agreement signed by both parties on Dec. 19, 2019, required LaForge & Budd to pay the federal government $3 million, of which $1.5 million was restitution, to resolve the dispute. The agreement “is neither an admission of liability by LaForge nor a concession by the United States that its claims are not well-founded,” the document states. Instead, the agreement “allows the parties to avoid the delay, expense, inconvenience, and uncertainty involved in litigating the case,” Downing said in his press release. Also, LaForge “agrees to cooperate fully and truthfully with the United States’ investigation of individuals and entities” not covered by the settlement.