Software didn't see alleged bid fraud

bmusgrave@herald-leader.comSeptember 9, 2008 

A software program designed to detect fraud in the Transportation Cabinet could not have spotted an alleged scheme by a top road contractor to bribe officials for internal cost estimates on road projects, officials say.

Contractor Leonard Lawson and former Transportation Secretary Bill Nighbert were indicted last week on charges that they tampered with the bidding process to benefit Lawson's companies during former Gov. Ernie Fletcher's administration.

Transportation officials have spent hundreds of thousands of dollars in the past three years on the software program, which is supposed to help the cabinet detect fraud in the bidding of millions of dollars in road contracts.

Still, it's difficult to say how many times the cabinet has even used the detection software, which was once trumpeted by Fletcher's administration as an important tool to detect bid rigging.

Moreover, it's also hard to say how much the program — Bid Analysis Management System/Decision Support System or BAMS/DSS — has cost taxpayers.

In 2002-04, $4.4 million was budgeted for an update to the software suite that included BAMS and a host of other programs, said Chuck Wolfe, a spokesman for the cabinet. The cabinet has also paid about $60,000 a year for the license for the program since 2005, for a total of $240,000.

Last week's indictment concerned at least nine road projects from 2006 and 2007, during Fletcher's administration.

Wolfe said the software was used under the Fletcher administration at least once, but not by the cabinet. Information from BAMS was used to produce the 2004 Dye Management Group report, a blistering independent report commissioned by the Legislative Research Commission that showed widespread problems in the cabinet.

"Historically it has been an analytical tool, not an investigative tool," Wolfe said. "But the cabinet now recognizes its potential as an investigative tool."

It was criticism of the cabinet's liberal use of change orders that increase the costs of road projects — including at least one Lawson company project — that prompted the cabinet to seek an update of BAMS in 2005. At the time, the cabinet pointed to the May 2005 update of BAMS as a vital tool to help detect dodgy practices.

In a 2004 Office of Inspector General report, transportation officials said the BAMS/DSS system would help the cabinet detect bid patterns, such as when a contractor consistently bids at a certain amount.

There doesn't appear to be such a pattern in the current federal investigation, although only limited information has been made public.

Investigators have asked to see details about nine Lawson road projects, which appear to be at the center of the inquiry.

Although Lawson allegedly obtained confidential cabinet cost estimates, which would have allowed him to bid at the upper limits of acceptable levels, his bids on the publicly identified projects were not uniformly high, according to a Herald-Leader analysis.

Ultimately, it was a person — Ryan Griffith, an engineer who developed the cabinet's bid estimates — who detected the alleged fraud.

Griffith had kept a log each time the estimates were requested by other transportation officials and turned that information over to investigators, an affidavit filed in the case said.

Federal prosecutors allege that Lawson then paid Nighbert, and a second transportation employee who has not been charged for that information.

"The software can analyze contract behavior," Wolfe said. "It is not a silver bullet. It would be just the beginning of the process to determine if there was collusion."

Regardless of what the cabinet has done with the program in the past, the transportation cabinet will use it going forward, Wolfe said.

Transportation Secretary Joe Prather has been given a tutorial on the system and what it is capable of doing, Wolfe said. "He thinks the cabinet should use every tool at its disposal."

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