Blake Construction Co., one of the largest construction firms in the Washington area, has been ordered to pay the federal government $500,000 for allegedly improperly billing for its construction of the Walter Reed Army Medical Center.
Blake, which specializes in government construction, also has been ordered by U.S. District Court Judge Roszel C. Thomson in Baltimore to refrain from engaging in such billing practices in the future.
Blake consented to making the payment and ceasing the practices without admitting or denying the allegations.
Normally, construction firms engaged to build large projects receive interim payments each month for the amount of work they have completed up to that date. Blake, according to a complaint filed against the company in Baltimore by U.S. Attorney J. Frederick Motz and Assistant U.S. Attorney Elizabeth H. Trimble, submitted requests for payments each month beyond the amount of work actually done on the new medical facility.
"At the height of the scheme, Blake had requisitioned $43.8 million from the government , even though its costs . . . and allocable profit for the work performed amounted only to $28.8 million," the complaint said.
In reporting on this practice -- known in the construction industry as front-end loading -- The Washington Post in 1978 said that Blake, in the first few years of construction of the Walter Reed project, made itself an extra $1.4 million by investing excess funds paid each month by the Army Corps of Engineers. Construction of the new hospital began in 1972.
By 1980, Blake had obtained $4.1 million in investment income through the practice, the complaint filed in U.S. District Court says.
Completed in 1978, the hospital rises like the superstructure of a ship above the hospital it replaced at 16th Street and Alaska Avenue NW.
The early payments do not affect the total project cost, which was to be $112 million but rose to $145 million because of cost overruns.
Blake also has built the J. Edgar Hoover FBI building, the James Forrestal Building, the HEW South Portal Building, several National Institutes of Health buildings, and the U.S. Court of Claims and new Executive Office buildings.
Stanley Prill, president of Blake, did not return a reporter's calls yesterday.
Seymour Glanzer, attorney for Blake, which is owned by Stanley and Howard Bender, said, "We are delighted that this disagreement with the government has been amicably resolved. Furthermore, we know that the Army is immensely pleased with the hospital facility, and we are enormously proud of our complex and sophisticated engineering achievements on this project."