(Newsday posted the following article by Joie Tyrrell on its website on April 13.)
NEW YORK — Two Long Island Rail Road environmental contracts expected to cost $1 million wound up more than $11.6 million over budget because of mismanagement by a mid-level employee whose father was a former powerful union leader and lax oversight by the railroad.
That is the finding of an investigation conducted by Inspector General Matthew Sansverie, who said the employee repeatedly exceeded budgets, ordered work he didn’t have authority over and violated Metropolitan Transportation Authority guidelines and procedures.
The investigation conducted last year concluded that Patrick D’Avanzo, the son of Anthony D’Avanzo, chairman of the Brotherhood of Railway Carmen in the 1970s, enjoyed a special status, protected from discipline or repercussions.
“One mid-level LIRR employee was able to single-handedly evade railroad policy and numerous layers of oversight to increase contract spending limits … without raising a supervisory eyebrow,” Sansverie said in the report.
“It shouldn’t have happened,” he told Newsday.
The recent findings came a year after the inspector general issued a May 2003 report that identified similar failures by LIRR management to provide proper oversight and accountability for middle level management. And another inspector general’s investigation in February revealed that the railroad had shorted its pension fund by more than $64 million. “It’s not a good story for the railroad,” said Beverly Dolinsky, executive director of the LIRR Commuter’s Council, a rider’s advocacy group. “I hope they have examined the causes so that it won’t happen again.”
Responding to a Newsday Freedom of Information request, the inspector general released reports from February and December of 2004 detailing contracts from the late 1990s and early 2000 that .D’Avanzo managed.
Through his attorneys, .D’Avanzo, who left the railroad in 2002, declined to comment on the report.
The railroad has since agreed to three recommendations to tighten controls and correct deficiencies, according to a 2004 letter from LIRR President James Dermody to the inspector’s office. The railroad has upgraded its procurement system to detect overspending, it has issued directives to departments on how procurements should be submitted to the MTA board, and it has put managers on notice that departing from procedures will lead to dismissal.
Investigators also found .D’Avanzo had accepted two checks from an LIRR vendor, Hazardous Elimination Corp. of Farmingdale, one for $8,500 and another for $2,000. He instructed the vendor to subtract this money from funds received from the LIRR. D’Avanzo, who is deaf, then used the money to purchase two text telephones and two digital cameras. But no equipment could be located, the report said. The company declined to comment.
D’Avanzo, an LIRR employee from 1979 to 2002, was the LIRR’s director of hazardous abatement for the years in question.
Investigators found that .D’Avanzo was given “unmatched and extraordinary discretion for an employee at his level,” and received favorable treatment because his father was considered to have “considerable influence within the LIRR.”
The report called the elder D’Avanzo a “confidant of [then-railroad president] Ken Bauer,” and noted that Bauer and .D’Avanzo’s father met for lunch 15 times from May 2000 to December 2001.
In a statement to Newsday, Bauer said he became aware of potential violations and requested the MTA legal department and audit department to review all environmental contracts. He said auditors found numerous procedural violations, “many of which occurred long before I became president of the railroad.”
“Although the office initiated the investigation at my request, I was never contacted to provide input either before or after my retirement from the Long Island Rail Road in February of 2003,” Bauer’s statement said.
But investigators said the inspector general’s office was already looking into suspect environmental contracts.
LIRR supervisors said they felt “chastised” after attempting to get D’Avanzo to follow procedures, the report said. One supervisor told investigators she believed she was removed from her position for trying to discipline D’Avanzo. Some said he was a “privileged character” and it was well known throughout the railroad that his family had a connection to Bauer.
“It’s easy to see how managers would be reluctant to hold him to the rules if he resisted corrections,” the report said. “Understanding this, however, is not the same as excusing it. The bottom line was D’Avanzo was allowed to control millions of dollars with minimal supervision.”
In his position as director, D’Avanzo oversaw the implementation of environmental contracts, including asbestos abatement above the tracks at Penn Station and at Jamaica Station and the Johnson Avenue Yard, and demolition work at Morris Park in Queens.
According to the report, in 1999 D’Avanzo improperly steered a contract to a firm called Safeway for the asbestos abatement project at Penn Station without going through the proper channels such as seeking MTA board approval.
The report said D’Avanzo was “assisted” by the LIRR’s senior contract administrator, Frank Conway, who did not question requisitions on which D’Avanzo signed for amounts exceeding his approval limit.
Conway retired in 2000. “He did nothing inappropriate, out of the ordinary, nor did he violate any departmental rules or regulations,” said Marvin Ray Raskin, Conway’s attorney.
But investigators said the inspector general’s office was already looking into suspect environmental contracts.
LIRR supervisors said they felt “chastised” after attempting to get D’Avanzo to follow procedures, the report said. One supervisor told investigators she believed she was removed from her position for trying to discipline D’Avanzo. Some said he was a “privileged character” and it was well known throughout the railroad that his family had a connection to Bauer.
“It’s easy to see how managers would be reluctant to hold him to the rules if he resisted corrections,” the report said. “Understanding this, however, is not the same as excusing it. The bottom line was D’Avanzo was allowed to control millions of dollars with minimal supervision.”
In his position as director, D’Avanzo oversaw the implementation of environmental contracts, including asbestos abatement above the tracks at Penn Station and at Jamaica Station and the Johnson Avenue Yard, and demolition work at Morris Park in Queens.
According to the report, in 1999 D’Avanzo improperly steered a contract to a firm called Safeway for the asbestos abatement project at Penn Station without going through the proper channels such as seeking MTA board approval.
The report said D’Avanzo was “assisted” by the LIRR’s senior contract administrator, Frank Conway, who did not question requisitions on which D’Avanzo signed for amounts exceeding his approval limit.
Conway retired in 2000. “He did nothing inappropriate, out of the ordinary, nor did he violate any departmental rules or regulations,” said Marvin Ray Raskin, Conway’s attorney.
D’Avanzo used that same company, Safeway, to demolish the Morris Park blacksmith shop after part of its roof collapsed in June 2000.
Then, according to the report, without going through a bidding process or gaining MTA approval, he directed Safeway to demolish other buildings and shops and also added some non-demolition work. The initial spending limit was $275,000. In the end, the cost of the work soared to $6.3 million as D’Avanzo continued to add unapproved work such as installing metal trusses, yard improvements as well as the purchase and installation of four Quonset huts.
In another job in 1999, investigators found, D’Avanzo disregarded LIRR and MTA policies for asbestos abatement at Jamaica Station and the Johnson Avenue Yard. The railroad set a limit of $721,000, but the spending grew to more than $6.3 million without proper authorization. Again, he ordered work he wasn’t authorized to, such as $1.5 million in replacement of platform canopies that weren’t in the scope of the contract.
In that case, increases were submitted after the contracts expired. On one requisition, the initial amount was crossed out and “$2 million” was written above it. D’Avanzo was the only person who signed the form — three times in three separate supervisory levels, investigators found.
Investigators also determined that the railroad’s database procurement system failed to detect overspending. The railroad has ceased using it.
The investigation also found that D’Avanzo had hired a personal assistant even though the position had twice been denied by the railroad. Using invoices from the vendor, Hazardous Elimination Corp., he was able to charge her salary back to the railroad at a cost of nearly $20,000 from November 1999 to May 2000. In his response to investigators, D’Avanzo said because of his hearing impairment, he was unable to follow discussions at meetings or conduct business over the telephone.