One of the Washington, D.C. area's biggest general contractors agreed to take $1 million less than it had requested for a big district high school renovation project because the district said the company had misrepresented its work with a minority-owned business enterprise on the project and two others.
The contractor, Rockville, Md.-based Forrester Construction Co., made itself the majority and controlling partner of the joint ventures, entitling it to most of the profits, without informing the district and in violation of its contracting rules, the district alleged in the settlement.
Irv Nathan, the district's attorney general, said in a statement on May 9 that Forrester had engaged in a pattern of using EEC of D.C., a certified, minority-owned company, to gain preference points that helped the joint venture win three recent major projects. The projects include the $49-million Anacostia High School renovation, for which Forrester had requested a major payment.
"We send the clear message that we will not tolerate abuse of programs designed to promote D.C. businesses," said Nathan. "We are ready to use all available remedies, including any applicable federal statute, to deter such misconduct and to provide the District with the benefits of honest, competitive bidding."
In a statement, Forrester said, "The theories and allegations raised were decidedly without merit." However, the firm says it "settled before legal proceedings were instituted to prevent the matter from becoming an ongoing distraction to our company and employees."
In a lawsuit filed in federal district court and settled last year, EEC of D.C. claimed the company’s joint venture with Forrester originally provided for EEC to be the 51% majority owner of the joint venture. Later, Forrester "usurped control over the JV, including its bank accounts and books and records and otherwise coerced EEC into modifying the parties' JV agreement." As a result, EEC experience financial difficulty, it claimed. (The company's attorney declined to comment on the lawsuit or settlement.)
Under another contract, for the $48-million Dept. of Employee Services headquarters, the complaint alleged, Forrester “relegated” to EEC “less than $500,000 worth of work," most of it in hours billed for a project executive, a field engineer and an administrative assistant.
The total hours assigned for EEC employees on the project, which was substantially complete in Dec. 2010, was 5% of those required on the project, according to EEC’s complaint.
Forrester, EEC additionally claimed, opened the joint venture bank account without providing any signature authority for EEC.
In a motion to dismiss the lawsuit, Forrester argued that EEC never proved that it signed documents changing the joint venture agreement under duress. Forrester never filed a full counterclaim or response to the lawsuit and on November 9 EEC’s attorney notified the court that the parties had reached a settlement.