STAMFORD – A 2006 lawsuit that an asbestos removal company brought against the state may be remarkable for having gone to court at all.
The company filed the suit after one of its top employees – the son of the owner – admitted in 2001 that he defrauded Bridgeport taxpayers of $80,000 in a widespread kickback scheme that landed that city’s mayor, Joe Ganim, in prison for seven years on convictions for corruption.
Still, AAIS Corp. took the state Department of Administrative Services to court for refusing to consider it for a lucrative contract.
DAS officials told the court AAIS was excluded because of the “prior criminal activities” of one of its employees, according to the lawsuit.
DAS said the company did not “insulate itself from further corruption by the employee” because Bannon kept the same job he had when he overcharged Bridgeport for removing asbestos from abandoned properties, billed for equipment that was never used, and paid kickbacks to a Ganim friend and political fundraiser.
The only thing Bannon changed was that he transferred his 44 percent ownership interest in AAIS to his wife. That, the DAS charged, was “an inadequate security measure.”
AAIS said the state was guilty of favoritism for not considering the possible criminal backgrounds of other contractors. The company lost in trial court, took it to appellate court and lost again.
Now AAIS is back in the news.
It is one of two companies named in a federal grand jury subpoena investigating Konstantinos Diamantis, who ran the Office of School Construction Grants & Review at DAS and another state agency until he was fired in October.
The probe stems from a list of contractors, created by DAS five years ago, naming AAIS and three other companies to handle all hazardous waste removal for state buildings. The list was supposed to help the state, and municipalities, expedite emergency hazmat work.
By statute, municipalities hire contractors, but the federal probe raises questions about whether Diamantis or others pressured municipal officials to hire those on the emergency list.
It’s not how the system should work, said Max Reiss, director of communications for Gov. Ned Lamont.
“Municipalities do the hiring. We provide a list of vendors who have met the standards, but the state is not in a position of driving things one way or another,” Reiss said.
Media outlets have reported that, between 2017, when AAIS was put on the list, and the end of last year, the state paid contractors nearly $29 million to remove asbestos, lead, mold and other hazards. More than $20 million of it went to AAIS.
So AAIS has gone from being excluded from bidding on state hazmat removal contracts to almost exclusively getting state hazmat removal contracts.
The state does not, as a rule, tag contractor behavior, Reiss said.
“If they end up on the list it means they’ve met the standards and requirements,” he said. “There may be information on a contractor that’s out there publicly that we may be aware of, as happened in 2006. Municipalities also can use publicly available information when they are looking to hire a contractor.”
AAIS, a West Haven company founded in 1986, has gone through changes since 2006. State records show Bannon family members were involved in the company after 2006, though Brian Bannon is not among them. AAIS merged with a Pennsylvania company, Spectrum Environmental, in 2019.
Federal investigators are looking at why so many contracts for work on state buildings went to so few companies, but no one knows all the work contractors do on municipal buildings. The state does not keep track of municipal contracts.
It appears that municipal officials give a lot of weight to state contractor lists.
In Stamford, which has spent millions in the last decade to remediate mold and asbestos in aging municipal buildings, particularly schools, AAIS is listed as the contractor on multiple jobs.
A 2012 bid waiver form on a project to insulate 37 classroom air-handling units at Toquam Magnet Elementary School, for example, was characterized as a “critical emergency purchase.” A note on the form to proceed with the $73,849 job without a bid states that AAIS was chosen because it “has the state contract in this field.”
There’s another issue with contracted jobs – they add up.
The cost of removing hazardous materials is notoriously difficult to estimate, since contractors often don’t know the extent of a problem until they start taking things apart, especially in older buildings.
In 2017, Stamford signed a five-year contract with AAIS to remove hazardous materials in two high schools, one middle school and five elementary schools. The $73,878 contract “allows for additional work,” according to a notation on the document. The total ended up at $121,757, a 65 percent increase.
As the state waits for federal officials to conclude their investigation, DAS has placed restrictions on how municipalities hire from the emergency contractor list.
The stakes are high for taxpayers – and contractors.
“Companies want to work with the state,” Reiss said. “The state is a reliable payer and generates a lot of work, so they want to be in the mix.”
Editor’s note: The 2017 AAIS contract for $73,878 rose to $121,757 — a 65 percent increase, rather than 39 percent as previously stated.