The Real Deal New York

Integrity test: After settlement, Port Authority is watching Tishman closely

Agency may bar companies who violate the law from future contracts

March 25, 2016 03:05PM
By Kathryn Brenzel

From left: John Degnan, Daniel Tishman and Patrick Foye

From left: John Degnan, Daniel Tishman and Patrick Foye

Tishman Construction is getting a nanny.

The Port Authority of New York and New Jersey will keep an extra set of eyes on the giant construction firm — and is considering a measure that could ban companies who violate the law from working with the agency in the future.

On Thursday, the Port Authority agreed to require Tishman to work with an “integrity monitor” to oversee all of its contracts with the agency. The decision was in response to Tishman over-billing the agency for its work on projects including One World Trade Center, the Javits Center and the WTC PATH Hub. Through a deferred prosecution agreement in December, Tishman agreed to pay $20 million in restitution.

The monitor, who has yet to be identified by the agency, will oversee all of Tishman’s “substantial ongoing contracts with the Port Authority” and any future contracts as a condition of working with the agency. Tishman will be required to foot the bill for the monitor’s services.

“We think the monitor is unnecessary because of robust protocols already in place, but will comply with whatever is required by our client,” said John Gallagher, a spokesperson for Tishman.

As part of Thursday’s resolution, the agency’s board agreed to study a policy that would bar or suspend certain firms from working for the agency, as part of its efforts to only contract with companies that are “responsible and law-abiding.”

Though the proposed measure didn’t name Tishman, it doesn’t necessarily bode well for the company and its many public projects. And like much of Thursday’s meeting, the resolution came with some political undertones: In January 2015, Gov. Andrew Cuomo appointed Daniel Tishman, the head of Tishman Construction, as chair of a panel charged with crafting a masterplan for LaGuardia Airport.

Gallagher pointed out that there have never been any allegations of billing problems at LaGuardia. Aecom, Tishman’s parent company, is also part of a team working on the first phase of the redevelopment of Moynihan Station, which includes creating the first concourse west of Eighth Avenue. Aecom was also contracted by AMTRAK as part of a team charged with preliminary work for the Gateway Tunnel Project. Port Authority plans to reimburse AMTRAK up to $35 million for the work.

Other major construction firms have had recent run-ins with the law. Skanska USA, the company now leading a team redeveloping Terminal B at LaGuardia, agreed in 2011 to pay $20 million to settle criminal allegations of fraud, stemming in part from its work on the Fulton Street Transit Center. In 2012, Lend Lease agreed to pay $56 million in restitution on charges that it overbilled on a series of public projects, including the renovation of Grand Central Terminal. It’s unclear to what extent — if any — the Port Authority’s proposed policy would affect these companies’ ability to get contracts for public projects.

Thursday’s meeting was full of tension between agency chair John Degnan, appointed by New Jersey Gov. Chris Christie, and Executive Director Patrick Foye, a Cuomo appointee. The two clashed over the projected price of LaGuardia’s redevelopment — Degnan said $5.3 billion and Foye insisted $4 billion — as well as the cost of rebuilding the bus terminal. Foye argued the terminal would cost $15 billion, a jump from a previous $10 billion estimate.

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