The Washington Suburban Sanitary Commission backed away from the only investigation it has ever initiated of its construction contractors' high prices, according to WSSC General Manager Robert S. McGarry.
McGarry revealed that an investigation was halted shortly after it began in 1978 after 10 contractors stoutly rebuffed the WSSC's initial inquires about their pricing practices.
The WSSC general manager had ordered the probe following a conclusion by independent analysis that some WSSC contracts were being awarded for as much as 40 percent more than their reasonable cost.
McGarry's office sent letters to 10 contracting firms, seeking to have them open their books for examination. Under regulations written into every construction contract, the WSSC has the authority to examine the books of any contractor with whom it does business, to "inspect all work, materials, payrolls, records . . . invoices . . . and other relevant data and records."
The contractors resisted the WSSC investigation saying it was an intrusion into their private business practices.
It's none of their business whether we made 100 percent or 5 percent profit," said Carl Miller, owner of Concrete General and a former head of the powerful contractors' association. "If we lost money, we never got any of that back."
The contractors told WSSC auditors that they had no intention of cooperating. They argued that the WSSC's request for records was too vague and its reasons for conducting the investigation were too general.
Attorneys for one firm, Suburban Utility, sent a strongly worded, four-page letter to General Manager McGarry, charging the WSSC with "unbridled harassment."
Another contractor approached a WSSC official at one bidding session and angrily demanded to know which WSSC auditor was conducting the investigation. "Which one in here is that bastard?" the contractor asked.
The contractors finally demanded -- and got -- an audience with McGarry.
"I went into the meeting with our attorney's advice in my pocket that we could not justify our original request," McGarry said in a recent interview. He said he told the contractors at the meeting that the WSSC would not pursue its effort to look at the contractors' books, and the investigation was dropped.
"Rather than have a confrontation (with the contractors)," McGarry said, "I just backed off."
The investigation dropped by the WSSC would have been the first probe of the agency's contractors since a 1976 bribery scandal in which five WSSC construction inspectors and officials of two contracting firms were indicted for bribery. The indictments were later dismissed, largely for technical reasons.
The officials of the firms, Rosario Marinucci, head of Marbro Construction of Beltsville, and Joseph Canova of Canova Brothers Inc., were charged with various counts of bribery. Both firms have done -- and still do -- millions of dollars of WSSC sewer construction work.
Also charged on bribery counts were five WSSC inspectors, four of whom still work at the agency. The charges against the officials of the firms and against the inspectors were later dropped for several technical reasons, including the fact that no local bribery or conflict-of-interest laws covered WSSC employees.
In the wake of the 1976 scandal, the WSSC adopted a new code of ethics, requiring financial disclosure statements from senior officials and prohibiting employes from engaging in situations in which the potential for a conflict of interest exists.
Many contractors still harbor bitter feelings about the 1976 investigation. One called it a "witch hunt." Another said he resigned from the contractors' association because it had failed to speak out sufficiently against the prosecutions.
As a result of the earlier investigation, there has emerged a stronger contractors' association and a feeling that contractors must stick together.
McGarry and other WSSC officials maintain now that they are tough on their contractors. McGarry said of the frequent negotiation meetings between the contractors and the WSSC management, "We don't bargain with (them), but I have a policy that I'll meet with anyone.
"I think some good comes out of it," he added, "but the whole thing makes me uncomfortable."