Newtown Tie To DeMarco—

State Settlements On HVAC Bid Rigging Top $160,000

By John Voket

Two defendants involved in industrywide illegal bid rigging in the heating, ventilation, and air-conditioning (HVAC) industry, which included a state project overseen by the same management company that handles Fairfield Hills, announced settlements with the Attorney Generals office July 17.

Attorney General Richard Blumenthal said the bid rigging activities transpired over the course of several years on projects including a Hartford building acquired by the state and put under the management of Maria DeMarco of DeMarco Management Corporation.

Consumers harmed by the scheme included Ms DeMarco’s company, the State of Connecticut, CTTransit, Vernon Waste Water Pollution Control Authority, and others, Mr Blumenthal said.

Ms DeMarco said one of the two companies, B-G Mechanical Services, Inc, was already an existing contract vendor for HVAC services on the building when the state acquired it, and in a somewhat unusual move, instructed DeMarco to continue retaining the firm.

Under the state settlements, John J. Haggett, former president of B-G Mechanical Services, Inc, will pay a $70,000 penalty, and Link Mechanical Services, Inc and its president and owner, Christopher Link, will pay a $90,000 penalty to the state.

As part of the settlement, these defendants will also cooperate with the state’s ongoing litigation against additional defendants.

“This industrywide bid rigging scheme raised prices and reduced service in air conditioning and heating for consumers and companies across the state,” Mr Blumenthal said. “Haggett orchestrated the statewide scheme to create the illusion of a competitive market.

In reality, Mr Blumenthal said the co-conspirators secretly choreographed false bids and cover bids, steering business to benefit themselves, not their consumers. Consumers were robbed of competitive choice and potentially better prices for HVAC services.

“My office will continue to aggressively pursue additional defendants who participated in the scheme,” he added.

According to an announcement from Mr Blumenthal, Mr Haggett allegedly conceived and implemented the bid rigging schemes with his staff, either concocting false bids — or “cover bids” — on competitors’ letterhead and then submitting them to customers along with B-G Mechanical’s bids, or requesting that his competitors submit bids directly to consumers at prices higher than B-G Mechanical’s.

In either scenario, the alleged result was the same — customers believed that B-G Mechanical’s bid was the lowest of three competitive bids, which was not the case.

Most of the bids involved yearlong Contract Maintenance Agreements (CMAs) to provide preventative maintenance and service for a set price. These contracts were often worth more than the face value of the contract because customers often used the CMA vendor for any additional repair work above and beyond the contract, the AG explained.

Ms DeMarco said, with B-G already in place as the vendor, she would have had no idea anything illegal was going on.

“Fortunately for us, we never used Link in anything and B-G we inherited when the state purchased and refurbished that building — we really never sought them out or part on any bidding with us, and we never used them anywhere else — it was a very isolated application for us,” she told The Newtown Bee following Mr Blumenthal’s announcement.

“No matter who we work for, we are there to handle details for owner. [When the] owner dictates how they want things done we just do it,” Ms DeMarco said. “Municipal and state agencies have a very formal bidding process — all we can do is obtain bids for them and list them in order of lowest bidder to highest.

“Property managers very rarely call the shots. We may make recommendations, especially when the clients may want to select someone specific who we might not recommend.”

And sometimes, she said, clients don’t go with lowest bid, instead choosing to negotiate based on a vendor’s relationship with the property’s owner.

“The state is more clear cut and almost always accepts the lowest qualified bidder,” she added.

Mr Blumenthal announced settlements last year with B-G Mechanical, which has since relocated from Connecticut to Massachusetts, for allegedly orchestrating bid rigging schemes from at least 1997 through 2004. The bids involved HVAC service contracts on behalf of state and municipal entities, and private companies. The state also has previously settled with two B-G Mechanical employees, George Pelletier and Francis J. Fallon.

The state has continuing legal action against other defendants who participated in the bid rigging, including Industrial Steel & Boiler Services, Inc (ISB) of Massachusetts and its part owner, William O’Neil.

Mr Blumenthal credited those from his office who worked on the investigation, including Assistant Attorneys General Clare Kindall and Antonia Conti, paralegal Holly MacDonald, and senior investigator Jeffrey Meyers, under the direction of Assistant Attorney General Michael Cole, cChief of the Attorney General’s Antitrust Department.