UC Davis Exposed for Hiring General Contractor Known to Hire Unlawful Subs

CALPASC Questions Why UC Davis Prequalifies Brown Construction Even After Subcontractors Ordered to Pay Millions for Violating Labor Codes and Arrested for Felony Insurance Fraud

May 23, 2011, 15:13 ET from California Professional Association of Specialty Contractors (CALPASC)

SACRAMENTO, Calif., May 23, 2011 /PRNewswire/ -- The University of California, Davis (UC Davis) contracted with West Sacramento based general contractor Brown Construction in 2010 for the Tercero II student housing project. Seven of Brown Construction's subcontractors working on the project, including 84 Lumber and Russell/Thompson, Inc., were ordered by the California Labor Commissioner to pay a total of $3.25 million in civil wage and penalty assessments. Earlier this year, Valery Thompson, President of Russell/Thompson, Inc., and Earl James (EJ) Thompson were issued arrest warrants for felony criminal insurance fraud associated with the project. Valery Thompson was taken into custody by Jefferson County, Colorado authorities on May 19, and EJ Thompson surrendered and was booked in Shasta County on May 21. The California Professional Association of Specialty Contractors (CALPASC) questions why, in spite of Brown Construction's disregard for the law and the subcontractors' employees, has UC Davis selected Brown Construction as one of four final candidates for a $4.5 million demolition, abatement and utility relocation project and prequalified the construction firm as one of three final candidates for the $60,500,000 construction of Tercero III.

"The UC Davis Tercero II project was the site of one of the biggest wage violations published by the state in 2009 and 2010," said Cees Molenaar, chief operating officer, CALPASC. "Given this and the recent arrests of Valery and EJ Thompson for insurance fraud, it is unconscionable that UC Davis continues to consider Brown Construction for future projects, including the Tercero III Project, particularly knowing Brown Construction's reputation for hiring these types of subcontractors."

For the Tercero II Project, UC Davis hired Brown Construction, Inc. as the general contractor, which contracted with 84 Lumber, Inc. for the framing work. 84 Lumber subsequently contracted the framing work to Russell/Thompson, Inc. to actually perform the framing work. According to a press release, "The California Department of Industrial Relations (DIR) Division of Labor Standards Enforcement uncovered evidence which established that Russell/Thompson willfully violated the law by failing to pay proper prevailing wages on a public works project at UC Davis. Russell/Thompson failed to pay overtime and misclassified workers by identifying them as lower paying positions rather than higher rate skilled positions that they worked." As of this writing, the workers have not been paid. It also was uncovered that Russell/Thompson falsified payroll records.

President of Allied Framers, Inc., Jakki Kutz, had serious concerns about the Tercero II Project being awarded to Brown Construction.

"I knew the numbers didn't add up," said Kutz. "With labor wages and steel and cement prices continuing to rise, it just didn't make sense that the low bidder, in this case Brown Construction, could come in 40 percent below the original estimated cost of construction, and in some cases for portions of the contract, 50 percent below other bidders, unless Brown and its subcontractors were cutting big corners."

Kutz went on to say, "I was proven right and NOW UC Davis is considering Brown Construction AGAIN. UC Davis knows about Brown's history of subcontracting with firms that have a poor history with the law. I have to wonder what it will take for UC Davis to change its construction management practices."

Public policy exists for public organizations, such as UC Davis, to re-examine requirements in listing subcontractors. The California Legislature enacted the Subletting and Subcontracting Fair Practices Act of the California Public Contract Code to address problems with subcontractor financial solvency and the quality of subcontractor work on public projects that might be detrimental to the public.

"If organizations, like UC Davis, don't take the history of contractors and subcontractors into consideration when awarding bids, contractors and employers like Brown Construction and its subcontractors can thrive in an underground economy while intentionally violating California laws by underpaying employees and committing insurance fraud," said Molenaar. "As a result, law-abiding contractors and the state of California lose."

According to the California Labor and Workforce Development Agency, since 2006 the construction industry has lost more than 415,000 jobs. It is estimated California's state and local governments lose approximately $1 billion in revenue annually due to contractors not adequately paying required wages, taxes and other fees. In 2010, CALPASC initiated the LEVEL Program to fight against the underground economy and create a business environment where professional contractors can compete fairly.

"There must be consequences for those who accept unreasonable bids that are insufficient to get the job done safely and in compliance with California laws," concluded Molenaar. "In this case, UC Davis knows about the questionable and law-breaking practices of Brown Construction and should be held accountable by the public for poor use of taxpayers' funds."

The California Professional Association of Specialty Contractors is a nonprofit 501(c)6 trade association advocating on behalf of trade contractors and suppliers of building materials in California. CALPASC is committed to educating members on complex issues and advancing safety and compliance within the building industry.

SOURCE California Professional Association of Specialty Contractors (CALPASC)