A politically connected engineering firm passed on more than a half-million dollars in contract markups to District taxpayers, investigators told the D.C. Council — the most dramatic finding of a lengthy probe into parks and recreation construction spending by former mayor Adrian M. Fenty’s administration.
Robert P. Trout, the lawyer who led the investigation, presented his findings and took questions from legislators Friday. His report, released by the council Monday, found no evidence that Fenty (D) influenced the awarding of a project management contract to Banneker Ventures, a firm owned by Fenty fraternity brother Omar Karim — or that the mayor sought to evade council approval by routing the money through the D.C. Housing Authority.
But Trout highlighted findings that government officials gave the parks spending little oversight, enabling a “classic case of waste and abuse.” Although $87 million in spending was authorized, only $6.2 million went to the Housing Authority before the council ended the contracts.
Under the project management agreement that the Fenty administration negotiated with a partnership that included Banneker, the firm was entitled to a flat management fee, plus a 9 percent markup on subcontractor invoices. Trout said that the structure was “overly favorable to Banneker” and provided no incentive to hold costs down.
That was particularly true, Trout said, in the case of Liberty Engineering and Design (LEAD) — a firm owned by Fenty ally Sinclair Skinner that Banneker hired to perform site surveys and various engineering tasks.
The investigation found that LEAD had little internal capacity to do the work and instead hired outside firms, then passed on their bills to Banneker with “grossly excessive” markups.
At the hearing, council member Harry Thomas Jr. (D-Ward 5) highlighted one such bill, for “civil engineering services” at the Fort Stanton Recreation Center. A Maryland firm completed the work, billing LEAD $11,365. LEAD in turn charged Banneker $17,905 for the same services. Banneker then passed on that invoice to the city, adding the firm’s 9 percent markup, bringing the total to $19,516.
During the course of the projects, LEAD paid about $422,600 to its subcontractors. It then billed Banneker about $969,000 for the same work, Trout’s report indicates. Banneker partners told Trout attorneys that a 10 percent markup was the industry standard, with some special cases meriting 20 percent.
Skinner attended the hearing with several supporters and afterward rejected the idea that the markups weren’t justified, saying that Trout “didn’t understand the engineering process.” LEAD’s fee was justified, he said, by its ability to quickly marshal subcontractors and navigate District government bureaucracy.
“If they had anyone who had any level of experience, they would have realized that we did a great amount of work in a short period of time,” he said.
But Trout said he was left unsure what value Skinner brought to the project. “He may have answered the phone, he may have attended the meetings,” Trout said. “But I don’t think he contributed to getting these contracts done in a timely, quality matter.”
Trout also criticized officials in the Housing Authority and the Fenty administration for not doing more to scrutinize the invoices Banneker presented. “It does not appear there was any push-back from anyone in government,” he said.
Fenty, who did not respond to a request for comment earlier in the week, denied any role in procuring the contracts as they became a campaign-trail sensation, fueling accusations of “cronyism” from rival candidate Vincent C. Gray (D), now the D.C. mayor. But Fenty made no effort during the race to distance himself from Karim and Skinner — who became fixtures at Fenty campaign headquarters during the race, according to multiple campaign workers.
Trout declined to comment after the hearing on the investigation, which occupied his eight-lawyer firm for 18 months. “We all learned a lot about city government,” he said during the hearing. “I think we learned a lot about city politics in the process.”