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Shadow on the finish

Blocked businesses. Torn-up roads. Inadequate traffic controls and signage. These are among many, many disputes between contractor Smith & Co. and the Department of Transportation in the widening of U.S. 41.

© St. Petersburg Times
published February 9, 2003

BROOKSVILLE -- Sandy Mizell noticed something alarming when she looked out the window of her business about a year ago.

Just before a Friday lunch hour, usually the busiest of the week, a road construction crew blocked the main entrance of Mizell's Restaurant on U.S. 41.

Once the barricades went up, Mizell said, the workers did what fewer than a dozen customers were doing in her expansive dining room.

"All of the men gathered underneath that red light and started eating their lunch," she said.

"I was furious, just absolutely furious. I thought it was so inconsiderate to the business people. But it just followed suit with the things (the company) was doing for three years."

A road builder with a state contract is entrusted with real power over the daily life of a community -- especially when, as in Brooksville, the project occupies a town's main commercial corridor.

Smith & Co. of Stuart violated this trust in many ways, say residents and city and state officials. The widening of U.S. 41 and the State Road 50 truck bypass, which began in September 1999, was not completed until three weeks ago, more than a year past the original deadline.

During most of that time, the lane closings and mess stalled traffic and frustrated drivers.

For nearby businesses, and the people who depend on them, the stakes were higher.

Suppliers went unpaid, waitresses scraped by on meager tips and Mizell was forced to close a sports bar she started with her son -- the Catcher's Mitt -- at least partly because of the construction.

Road crews left piles of dirt and debris in front of driveways. They had to be badgered into erecting signs for stores and restaurants, Mizell and other business owners said. And, most damaging of all, Smith & Co. seemed in no hurry to complete the project, with workers sometimes vacating the site for weeks.

"It was a joke. That sums it up. Their job performance was a joke," Mizell said.

Documents on file with the state Department of Transportation tell a similar story.

The contractor missed construction deadlines and failed inspections. The consultant supervising the work for the DOT repeatedly criticized Smith & Co. for poor maintenance of signs and lane markers.

On this and other contracts with the state, the company stiffed subcontractors while telling the DOT that some of them had been paid, according to department records. For that reason, as well as work deficiencies, the department informed the company it planned to suspend its right to bid on state jobs.

"(Smith & Co.) has demonstrated a pattern of conduct ... including but not limited to false, deceptive, or fraudulent statements ... to the department," the DOT wrote to the company in November.

Smith & Co. never falsified documents, the company said in a written statement to the Times, and voluntarily decided not to bid on DOT projects because of financial problems. The problems were caused by the DOT, the statement said, as were most of the delays and other difficulties with the Brooksville project.

Or, maybe they were caused by a way of doing business that makes speed and quality almost irrelevant.

Some contractors bid low enough to win jobs and then use the contracts as an avenue to seek more money, claiming poor design or unforeseen work, transportation experts say.

That is the pattern of Smith & Co.'s work in Brooksville, said Emory Pierce, the city's public works director. Change orders already have added $1.9-million to the original $20.5-million contract, and Smith is seeking millions more.

"All companies try to get extra amounts. It's just that Smith & Co. seems to try to get unreasonable extra amounts," Pierce said.

"I think they are just claim-happy," John Coxwell, a former contractor who now helps resolve disputes between the state and road builders, said of Smith & Co.

"They bid low and sue high."

Early warning signs

Before the Brooksville project began, Smith & Co. had a solid rating for its DOT work, most of it done in South Florida. An engineer with the consultant supervising the U.S. 41/SR 50 job, AIM Engineering & Surveying Inc., predicted that Smith might finish the job in less than two years because of incentives for early completion.

But Smith & Co. never worked efficiently or urgently, said David Price, who has owned Ye Olde Fireside Inn on U.S. 41 for 15 years.

On separate occasions, Smith crews severed his telephone, power and water lines. Price watched them dig holes, fill them and dig them again. While his weekly receipts dipped 10 to 25 percent below preconstruction levels, the project dragged on with only a few sluggish workers, or none, on the job.

"They went in and tore everything up, and then months went by when nothing would be done on this part of the road. Absolutely months would go by. That's what really hurt," he said.

That was mostly DOT's fault, the company's statement said.

Smith & Co.'s "inability to overcome the problems encountered (are) ... a sign of frustration on the part of Smith & Co.'s employees trying to overcome the problems with little or no help by the owner of the project."

The DOT has a formal process to do what Price and other business owners did informally: grade Smith's job performance.

The scores can affect a contractor's ability to bid on state projects; two identical grades of 66 -- termed "unsatisfactory" by DOT -- on state contracts in the Orlando area played a role in Smith & Co.'s losing that privilege last year, said DOT spokesman Dick Kane.

Though AIM has not issued a final score on the U.S. 41/SR 50 project, it did grade Smith about halfway through the project, in April 2001.

Along with good marks for such items as safety training and having adequate equipment available, Smith received several low mark, most of them for the pace of the work.

On a scale of 0 to 10, it received a 0 for "starting and completing intermediate or critical project phases within scheduled time."

AIM gave the contractor 2's for "organizing all operations to maintain work schedules," "providing supervisory personnel that demonstrated experience in the types of work performed" and "advanced planning and coordination ... on complicated or critical work to assure a smooth operation."

And, as Price and other business owners observed, crews and equipment sometimes disappeared without explanation.

"It appears that all of the paving equipment has been demobilized from the project," Mark DeLorenzo of AIM wrote in a letter to Smith last year.

"There still remains an extensive amount of friction course (paving) to be completed. Please indicate Smith & Company's plan to complete this project in a timely manner."

Road stays bumpy

At one point, the road next to Auto Salon was so rough that four-wheel-drive vehicles scraped the asphalt as they entered its parking lot off U.S. 41, said owner Rob Bryson.

Other times, Bryson said, large mounds of dirt blocked drivers from entering his car detailing and window tinting business altogether.

"(Smith & Co.) had this pile where the road is now, and then they'd use it up and bring in another pile. It was almost like a storage area for a while," he said.

When he took his complaints to the contractor, Bryson said, "I got zero response."

Keeping vehicles moving and buildings accessible may be the least expensive part of a major road project, but to the public it is the most important one.

Smith & Co.'s statement to the Times said it always tries to be considerate of the communities where it works, and that was reflected in its interim grades, which showed generally high marks for what DOT calls "maintenance of traffic."

That changed as the job stretched into 2002, when AIM sent frequent letters to Smith, citing, among other deficiencies: rough pavement; inadequate signage; using traffic-control drums that were battered, dirty and had lost their reflective properties; unclear lane markings, and a lack of officers to control traffic. Like Bryson, AIM got little cooperation from Smith & Co.

"Entrances to existing businesses off U.S. 41 are quite rough, and this is causing customers to go elsewhere," Frank Proch of AIM wrote to the contractor in January 2002, adding that, because of uneven sidewalks, "we have seen handicapped people stranded in the vicinity of Candlelight Blvd. and U.S. 41."

AIM sent a letter the next day ordering the removal of 34 business signs for "severe deficiencies." The letter said AIM took this action after asking Smith & Co. to fix the problem for three months, "with requests for corrections falling on deaf ears."

In July of last year, AIM ordered Smith to stop work at U.S. 41 and the SR 50 bypass. AIM did so, the consultant said in a letter, because it had warned the contractor to station traffic control officers at the intersection one day and, the next day, found none were present.

On Aug. 8, AIM cited the company for closing a lane "without proper maintenance of traffic setup. We have been in contact with (Smith's) on-site traffic supervisor and have received excuses for not having the proper setup. We have attempted to work with (Smith) to complete this project in a timely manner, but the safety of the traveling public cannot be jeopardized."

Unpaid debts

Paving subcontractor Grubbs Construction Co. claims it is owed nearly $1-million on the U.S. 41/SR 50 job -- a debt that was partly responsible for Grubbs' recent decision to sell some of its holdings and close its main office in Brooksville, company officials said.

The companies' owners, Gary Grubbs and Stephen Smith, were longtime friends who lived similar lavish lifestyles, Kendra Sittig, Grubbs' former office manager, said in an interview in November.

Also, both have been accused by suppliers and subcontractors of not paying bills promptly, which Sittig and others said is an increasingly common practice among road builders.

DOT policies, however, tend to keep contractors honest to some degree. The state requires proof that businesses on each job have been paid before it forwards interim payments to the general contractor. If the contractor supplies false proof, the state can suspend its right to bid for a year; that is what it intended to do to Smith & Co.

A letter from the DOT to the company in November cited 40 instances of false reports on different state jobs, including five involving payments to Grubbs on the U.S. 41/SR 50 project.

The bills from Grubbs were not the only ones Smith & Co. ducked, DOT documents show. At various points during the project, it owed $300,000 to its supplier of traffic lights and guardrails, $39,800 to the company that provided culverts and more than $5,000 to Cliff's Septic Tank Service of Brooksville.

Also, threatening to suspend Smith & Co.'s bidding privileges was not the only action DOT took against the contractor. Last summer, the state set up an account that essentially bypassed Smith and allowed Grubbs to be paid directly.

"That worked for about two months," said Vic Taglia, Grubbs' chief operating officer.

In September, the state began to fine Smith & Co. $7,117 daily for missing the final deadline on the project, fines that would total $868,000 before it ended. That ate up revenue before Grubbs could claim it, Taglia said.

While Smith & Co. has paid most of its other debts, according to the department, the amount it owes Grubbs has climbed from $28,600 in June to more than $500,000. That is in addition to $390,000 Grubbs has claimed for the replacement of 2,800 tons of base asphalt that the DOT said did not meet state specifications.

Lowest bid, best bet?

The statewide practice of bidding low to win jobs and then peppering the DOT with claims reached scandalous levels by the time the department addressed it in 2000. Among the findings of a DOT study published that year: The amount paid in change orders had jumped more than 200 percent between 1996 and 1999, and the department settled some of these requests with virtually no supporting documents.

But as the department was starting to crack down on such payments, Smith & Co. began seeking them at an accelerated rate.

That may have been a response to mounting problems after the company won the Brooksville job and three others in Central Florida.

"They came up here and did some jobs in, I want to say, the summer of '98, and some of those didn't go too well," Taglia said.

The two Orlando projects that earned Smith low performance scores from the state lasted about a year longer and cost about $2-million more than the original contracts specified.

Smith & Co. has sued the state on one of those jobs and is seeking additional payments on the other, said Frank O'Shea, construction engineer for the DOT district that supervised the projects.

Some of the claims were legitimate, O'Shea said, "but Smith made an issue out of everything. ... Several hundred issues were raised."

The disputes on those jobs are dwarfed by the one generated by the $30-million contract to build the 10 miles of the Suncoast Parkway north of SR 50.

Because that project passed through land riddled with sinkholes and littered with shells left from a practice artillery range during World War II, the state agreed to pay Smith an additional $3.5-million and move the deadline back 242 days, said Joanne Hurley, DOT spokeswoman.

Smith wants much more.

The company has filed a suit in Hernando County Circuit Court seeking an additional $42-million from the DOT, which is believed to be the largest claim of any kind in county history.

If the tactic of firing off claims to the department has paid off for some companies, it hasn't for Smith & Co. -- at least not yet. Among the documents entered in the parkway suit is one that shows the contractor lost $10-million on DOT projects in 2000 and 2001.

And the company's statement said it decided not to bid on state projects "because of the financial nightmare caused by FDOT."

Legal standing

The statement also said Smith's claims are all backed up by analysis from engineers and contractors.

"There's nothing unusual about Smith & Co. (and its recent state projects), other than DOT has failed to resolve these claims," said one of the company's lawyers, Joe Lawrence.

Pierce, of the city of Brooksville, says otherwise.

Besides the state contract to widen U.S. 41, Smith & Co. won what was supposed to be a $2.6-million side job -- moving the city's sewer and water lines to accommodate the widening. A year after that work began, the contractor had filed $1.1-million worth of claims against the city.

Smith & Co. said Brooksville's design -- prepared by Coastal Engineering Associates -- gave an inaccurate picture of underground pipes and wires and underrepresented the scope of the project.

Though the company's claims were inflated, according to consultants for the city and state, the DOT agreed in April 2001 to award Smith 187 more days to finish the job and an additional $857,000; Brooksville's share was $256,000.

The state signed the settlement because it limited Smith's right to request more money in the future, said Jim Moulton, the construction engineer for the DOT office in Tampa. Also, he said, many of Smith's claims had merit.

But many did not, according to both Pierce and the state's consultants.

-- After Smith & Co. submitted a bid to build a pumping station early in the project, AIM wrote a letter pointing out costs that "seem to be excessive" -- including $10,925 for "mobilization" when the company was already at the job site, $3,450 to remove a set of three concrete steps, and $5.18 per yard for erecting temporary fence while the state contract called for a charge of $2.25.

"Smith & Company's estimates for doing this (pumping station) were outrageous and ridiculous," Pierce said.

-- AIM noted one of the contractor's bills for traffic control claimed that 43 officers worked on the same day and that one of the officers worked 33 hours.

-- Another consultant pointed out that Smith & Co. was seeking $3,650 apiece to change the height of manholes for the city while the state average for such work was $853.

AIM and Smith have also battled over much larger expenses, a fight that is probably far from over.

-- In May 2002, the company sent a letter to AIM asking for an additional $1.1-million and 237 work days because the fittings for the water and sewer mains were different than those outlined in the plans.

Not only was the actual delay a fraction of that -- between 20 and 22 days -- AIM responded, but the issue had been addressed in the previous settlement with the state. A review board made up of members chosen by both DOT and the contractor sided with the state. Smith & Co. has rejected that finding.

-- In December, the company requested an additional $3.1-million because the soil contained more muck and needed more fill than DOT's plans indicated. Proch, of AIM, said that Smith & Co. had the results of tests showing the soil's content before the job began.

-- Late in the project, DOT ordered Smith & Co. to remove 600 tons of new asphalt and replace the bed beneath it on U.S. 41 south of the SR 50 bypass. Smith was to blame for the deficiencies, the department said, because it built the road over a wet base. The contractor blames DOT's plans.

Considering Smith's record with other DOT projects and the number of outstanding disputes, Pierce said, a lawsuit seems inevitable.

"We are prepared for any eventuality," he said. "We in essence have experts on standby status in the event we need them."

Finished, finally

U.S. 41, formerly two lanes, is now about as wide as Dale Mabry Highway in Tampa, with three lanes in each direction and a turn lane in the middle; the SR 50 truck bypass has been expanded from two lanes to four.

Jim Kimbrough, chief executive officer and chairman of SunTrust Bank/Nature Coast, pushed for the improvements as a member of the state Transportation Commission in the 1990s.

Smith & Co.'s performance "absolutely was not business as usual. ... Everybody is frustrated that it has taken so long," Kimbrough said.

"But that's history right now."

Businesses, he said, should look ahead to the benefits of the upgraded road, which has already been credited with attracting residential and commercial development. Two major golf course communities are planned for south of town. A Wal-Mart Supercenter opened in Brooksville late last year; a Lowe's Home Improvement Warehouse may be on the way.

"This project, coupled with others, will prove to be extremely important in the ongoing quality development of the area," Kimbrough said.

But some business owners say customers driven away by construction have not yet begun to return. And, even if they do, their establishments may not be around to take advantage of it.

Bob Taylor has owned a jewelry store in South Plaza, at the U.S. 41/SR 50 intersection, for 24 years -- "since time began," he said. Business dropped about 30-percent shortly after the road-widening project began, he said, and remains down, though now he said the flat economy is partly to blame.

"When people get used to shopping someplace else, a lot of times they don't come back," Taylor said.

"They've already found a new home to shop."

-- Dan DeWitt covers the city of Brooksville, politics and the environment. He can be reached at 754-6116. Send e-mail to .

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