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The Fix Is In 

At least that's what Janet Campbell claimed about construction bids at UCSF, where she soon found herself out of a job

Wednesday, Feb 26 2003
The time: February 2001. The place: Moscone Center. The event: a trade show for those involved in the roofing industry. Milling about in the crowd is Janet Campbell, a former UC San Francisco architect who was fired after blowing the whistle on allegedly rigged construction-bid procedures at the sprawling Parnassus Heights medical school.

Campbell sidles up to a sales representative for W.P. Hickman, an Ohio-based manufacturer of roofing materials. The rep pitches his firm, saying that it tries to win jobs by helping customers draft construction contracts that favor the use of Hickman products, according to a transcript of the exchange. This practice, called writing proprietary specifications, is illegal in most states since it can limit competition.

What the rep doesn't know is that Campbell is carrying a hidden camera for a Cincinnati TV station investigating bid rigging in public-school roof contracts. The salesman's comments bring media and government heat to bear on his company -- in Ohio.

Corruption in the roofing industry has become a hot topic in some parts of the country. A few months before Cincinnati's WLWT-TV camera captured the sales rep's remarks in San Francisco, Hickman and another roofing manufacturer, Tremco Inc., also based in Ohio, had been accused by New Jersey officials of manipulating public construction bids by doing exactly what the hapless sales rep described: influencing design criteria.

Campbell, a San Francisco resident, is notorious in national roofing circles. In 1999, UCSF canned her after she contacted the FBI with allegations that architects, engineers, and project managers employed by the university regularly wrote proprietary specifications favoring Tremco products in return for kickbacks. Her charges were featured in an exposé of corrupt practices by roofing-material manufacturers published by the Dayton Daily News in 2000.

In San Francisco, however, Campbell was unable to interest the daily press in a potential roofing scandal. Steve Bennish, the Dayton Daily News reporter who broke Campbell's story, says he was surprised the San Francisco press did not cover her saga. "Sure, roofing and hot tar are dull in and of themselves," he says. "But the loss of hundreds of millions of dollars -- perhaps billions of dollars -- in the whole country is not boring."

Shortly after being terminated, Campbell, 49, filed a whistle-blower lawsuit in federal court against the University of California and her boss, Gary Nelson, alleging that UCSF officials violated California's public contracting law by specifying the use of brand-name materials in dozens of roofing jobs at UCSF starting in 1982. After Campbell spoke out to law enforcement, the university retaliated by terminating her, her lawsuit claims.

An FBI investigator said his review of Campbell's proprietary-spec allegations indicated possible wrongdoing, but the local U.S. Attorney's Office decided against extending the probe for unexplained reasons. Two state agencies investigated Campbell's claims, and at least one of those probes appears to be ongoing.

Government investigators in New Jersey concluded in 2000 that public officials in that state had inserted proprietary specifications from Tremco and other roofing manufacturers into multimillion-dollar construction projects -- resulting in overpriced contracts and, in some cases, misuse of government funds. (In San Francisco, Tremco's products are used in capital projects undertaken by UCSF, the San Francisco Unified School District, and the S.F. Housing Authority.) In recent years, journalists in Ohio, Illinois, and Kansas have taken close looks at proprietary-spec writing by Tremco and other firms that has resulted in excessive payments for roofing materials.

Campbell found a source of potential moral and investigative support last April when a San Jose supplier of heating and air-conditioning equipment also leveled charges of bid rigging against UCSF and the UC regents. The contractor uncovered a recent audit from UC Davis which concluded that unnamed construction contractors and vendors had given gifts -- including "a variety of golf tournament gratuities" -- to employees of the university's architectural and engineering departments.

Campbell has converted her apartment into a kind of national clearinghouse for information about corrupt practices in the roofing business. Using a wheezing copy machine and an ancient fax, she supplies building-industry reformers, lawyers, government investigators, and journalists with reams of documents and analysis. She does not charge for her services; her goal, she says, is to make the world safe for ethical architects.

Created as a nearly sovereign entity by the state constitution, the University of California empire -- and no other word but "empire" truly describes the extent of its wealth and political clout -- is composed of 10 semiautonomous nations -- its campuses -- stretching from San Francisco to San Diego. A board of regents appointed by the governor governs it. This year, the UC system's $3.4 billion budget will finance the education of 192,000 students by 157,000 faculty and staff. Six hundred million dollars of the imperial treasury is reserved for building new facilities and maintaining older buildings. (In San Francisco, UCSF controls more than 100 buildings at 15 major sites, including the new 43-acre biotech campus under construction in Mission Bay.)

Each campus is administered by a chancellor and runs its own affairs, including the writing of design specifications. Each campus also has an internal auditor responsible for investigating allegations of corruption. But the institution does not take kindly to whistle-blowers -- witness the firing of employees who smoked out corruption at the UC-run nuclear laboratories. The university did not investigate Campbell's allegations before it terminated her employment.

Vivacious, articulate, and witty, Campbell is an Atlanta native who earned a master's degree in architecture from Georgia Tech and an M.B.A. from Georgia State. Arriving in San Francisco in 1991 after a series of emotionally devastating family crises, she was hired as a senior architect in the UCSF facilities management division at a salary of $55,000.

In interviews over the past five years with government investigators, Campbell has repeatedly alleged that her supervisors forced her to write specifications for roofing jobs at UCSF that gave an edge to products manufactured by Tremco Inc. of Beachwood, Ohio, one of the nation's larger suppliers of glues, caulkings, tar papers, tin flashing, and other roofing materials. When she complained in writing to higher-ups at UCSF about being ordered to draft proprietary specs, she was ostracized by co-workers and eventually assigned to a meaningless job in the archives, she says.

In February 1997, Campbell went to the FBI, alleging that Tremco's local sales representatives were presiding over the insertion of Tremco-friendly specs into architectural and engineering plans at UCSF -- to the university's detriment. Using her access to archives and databases, Campbell calculated that the proprietary specifications had caused UCSF roofing jobs to increase in cost by about 30 percent. She says she identified $1 million in excess costs caused by the ultra-restrictive specs on 10 UCSF roofing jobs.

In a sworn deposition, FBI agent Kraig R. Graham said Campbell claimed that "the price of repairs of doing a roofing job was excessively high and that she suspected that the roofing company Tremco was colluding, if you will, with certain building managers, superintendents, employees of her department."

Meeting Graham in a mall cafeteria, Campbell turned over UCSF bidding and contract documents. She suggested that the agent contact one of her supervisors, Julie Lau, for corroboration. Graham promised that he would not identify Campbell as a whistle-blower while interviewing her co-workers, but his method of investigation was rather ham-handed. For example, he interviewed Julie Lau at the Richmond District police station, apparently at her request, and asked her point-blank "if she had any knowledge of contract fixing or any fraud or impropriety within the department. ... I asked her specifically about roofing contractors. ... Lau did not and could not corroborate any of the information that Mrs. Campbell had given me." (Lau did not return repeated telephone calls requesting comment for this story.)

Graham used the same confrontational method with several of Campbell's other co-workers and superiors, asking them, "[Are you] aware of any contract fixing or kickbacks?" Not surprisingly, they all denied any such awareness. Nonetheless, Graham concluded, from reviewing Campbell's extensive documentation, that "there was the possibility of impropriety." In his deposition, the FBI agent said he was not sure that he hadn't inadvertently identified Campbell as the whistle-blower to the people he interviewed. Graham warned Campbell, "Keep your head down."

In September 1997, Graham presented Campbell's evidence to Assistant United States Attorney Ben Birch, who told Graham -- without further explanation -- that he "was reluctant to pursue prosecution," effectively killing the investigation. Before dropping the matter, Graham called Ronald Hicks, director of facilities management and construction for the UC system. "I told him that the FBI had received a complaint that there was possible contract fixing or fraud at the University of California, San Francisco, that involved a roofing contractor; and that I had conducted an investigation, and that the FBI wasn't going to pursue it; but based on my investigation, there may be some indication of a violation of the California Contract Code. He thanked me for the call. I recall him saying something to the effect that they had trouble with roofing contractors before and that he would look into it."

This was the first but not the last time that a law enforcement agency looked into Campbell's allegations and punted.

In March 1998, Campbell went on extended medical disability leave. When she returned in January 1999, she was abruptly terminated from her job. In a letter, UCSF officials said she was being laid off because she didn't know how to program certain engineering-design software. After unsuccessfully protesting with a formal grievance, she sued in federal court, alleging that she had been wrongfully canned for her whistle-blowing activities. She also started bending the ear of any government official, investigator, or journalist who would give her a second glance.

Investigators from the California Attorney General's and the state auditor's offices interviewed Campbell, who supplied them with piles of UCSF contract and bidding documents, internal memoranda, and charts highlighting what she claimed was a pattern of corruption in her erstwhile department. She also gave investigators the names and telephone numbers of several roofing-industry professionals who had published articles in trade magazines asserting that Tremco has long had a policy of instructing its sales reps to insinuate themselves into the lives of public officials in order to promote the use of proprietary specifications.

She gave investigators copies of a 1997 report in Midwest Roofer that published Tremco's internal guidelines encouraging sales reps to offer "free" spec writing to public officials in order to restrict use of materials to Tremco products. Campbell also steered government investigators to a 2000 report by the New Jersey State Commission of Investigation, Waste and Abuse in Public School Roofing Projects. The path-breaking investigation concluded that by convincing public school district officials to use proprietary specs, Tremco and several other roofing companies siphoned off more than $6 million in excess profits from $38 million worth of roofing jobs. A Tremco spokesman says school officials selected his firm's materials on the basis of quality and that Tremco was not involved in any improper or illegal activities.

Two roofing consultants were shown to have taken hundreds of thousands of dollars in improper payments in the form of fees for "inspecting" roofs. A commission spokesperson says the state board of architecture sanctioned one of the consultants, but no criminal actions were filed. He says that corruption in roof spec-writing is a national problem.

Meanwhile, the Dayton Daily News published a series of investigative reports showing that New Jersey's problems were but a microcosm of a larger universe of corruption. In October 2000, staff writer Steve Bennish reported on Campbell's charges: "UCSF Counsel Chris Patti acknowledged university administrators favored Tremco enough to let the company 'help' write roof replacement specifications, calling Tremco an 'industry leader.' He also acknowledged the FBI investigation, but said no charges resulted and university officials did not suspect Campbell as the tipster."

The California Attorney General's Office in 2001 handed Campbell's allegations off to the U.S. Attorney's Office in San Francisco, since they seemed to be national in scope. A state investigator who pored over Campbell's paperwork for several years said her charges "stretched further [across the country] than we had the resources to look at."

But federal prosecutors declined to take up the case a second time, saying that "it failed to show anti-trust violations." (Campbell says her case is not about federal antitrust issues, which would involve collusion between materials suppliers; her charges concern public contract fraud covered by state law.) A spokesman for state Auditor Elaine Howle refuses to confirm or deny that Howle's office is looking into Campbell's allegations. But Campbell says she supplied Howle's investigators with UCSF documents as recently as last June and that "the investigation is not dead." In addition, the FBI recently reinterviewed Campbell, apparently as part of its broad probe of the nuclear labs.

Her wrongful-termination suit, however, has foundered. After a federal judge ruled in 2000 that her case was not a federal matter, it was remanded to San Francisco Superior Court. Campbell got a new attorney, Martin F. Jennings, who's working on a contingency basis. (Campbell lives hand-to-mouth doing small architectural jobs.) Jennings appealed this month to the California Supreme Court after a state appellate court ruled that Campbell can't sue UC because she "did not exhaust her administrative remedies." The fatal Catch-22 occurred because Campbell filed her grievance under what turned out to be the wrong university personnel policy before she filed her whistle-blower suit; therefore, lower courts have ruled, she is not entitled to protections in state law for whistle-blowers.

The library of Campbell's sunlit apartment near Golden Gate Park is stuffed with boxes full of UCSF memoranda, specifications, contracts, and telephone logs: potential evidence of wrongdoing that Campbell often shares with law enforcement agencies and regularly combs through in preparation for her day in court.

But it's unlikely that her mountain of paper will ever see the light of a courtroom if the California Supreme Court rules against her. Although Campbell's suit does not name Tremco, it is clear from her documentation and from FBI agent Graham's deposition that she's targeting the Ohio firm. (The bulk of her court filings relates to whether or not she exhausted her administrative remedies, and she says Tremco is to be named when and if her lawsuit is allowed to proceed.) Tremco spokesman Carl Zeitz says Campbell's claims about his company "have no merit."

The writing of a highly technical specification favoring the products of a single manufacturer is not as easy as scrawling, "Use Tremco product here," or something to that effect. The state Legislature, recognizing that proprietary specs are a problem in public contracting, wrote into law that brand names may only be used in building specifications when there are "no known equals." And even then, descriptive details must be written in such a way that competition to supply the product is not limited by unreasonable technical restrictions.

For example, Campbell says she was ordered to write a series of specs that included such highly specific items as "TREMCO Burmastic [a roof glue] or approved equal." Since Tremco reps at UCSF helped write the specifications, the requirements for becoming an "approved equal" often meant that no other materials could qualify.

Campbell kept meticulous files on her allegations. On Aug. 18, 1992, for instance, she protested in a memo that her supervisors would only discuss creating specs that eliminated all but Tremco products from consideration. In early 1996, Campbell herself wrote specs that favored Tremco for roofing work at UCSF's Woods Building and Buchanan Dental Clinic Building. In February 1996, Campbell e-mailed her boss, Gary Nelson, that these specifications were "written by Tremco to exclude all other manufacturers." Nelson e-mailed her back not to change the criteria.

Even a layman can see that these specs bear a remarkable similarity to those suggested by Tremco's internal guidelines for spec writing. For instance, both the UCSF documents and the Tremco rules say that roofing-material suppliers must have been in existence more than five years; must possess a certain net worth; and must own the factories in which the materials are manufactured. These are onerous restrictions that automatically eliminate many small- and medium-size roofing suppliers. According to Midwest Roofer, the use of Tremco guidelines in spec writing usually results in "literally pages of specification requirements that verge on the ludicrous because they are so blatant in their effort to eliminate competition."

After acknowledging that "We as a company are sometimes accused of writing tight specifications designed to eliminate competition," the Tremco guidelines advise the firm's sale force to get chummy with business managers and maintenance superintendents at public school districts. Convince them to let you write the specs, the guidelines urge, and then "write items into the specs which our competition does not have."

Once the competition has been squeezed out, the sole-source contractor can jack up his prices. The Dayton Daily News concluded that in Ohio, Tremco was able to charge substantially more for proprietary-spec jobs than for those where it had to bid competitively. Campbell obtained a comparison between Tremco products in use at UCSF projects and equivalent products of a competitor, Henry Co. The chart showed Tremco was charging two and three times Henry's price for comparable materials.

In April 1997, Campbell wrote a memo to her boss about proprietary specs for a roof at the UCSF dental school. She noted that the building manager had ordered the use of Tremco boilerplate specs. She said that Andrew Smith, the Tremco sales rep for UCSF, "was [improperly] paid [by UCSF] to do the specs." She also claimed that "safeguards appear to have been deleted ... [the safeguards are] necessary for Code Requirements, for accurate and lower bidding, and to be able to avoid change orders [i.e., cost overruns] and provide constructibility." She also listed 50 specs that were unnecessarily restrictive and costly.

Nelson, she says, never replied.

Campbell's crusade got some reinforcement when a San Jose heating, ventilation, and air-conditioning (HVAC) contractor filed suit last April in San Francisco Superior Court against UCSF, the UC regents, and several architects, consultants, and suppliers.

John Karamanos, owner of HVAC Sales Inc., alleges that employees of the architectural and engineering divisions at UCSF and UC Davis wrote proprietary specifications for millions of dollars' worth of HVAC equipment. Karamanos and his lawyer, Zane Negrych, say they've presented their charges to the same FBI agents who have interviewed Campbell. UC officials said they do not comment on pending litigation, and the other defendants deny the allegations.

To buttress his case, Karamanos produced a recent internal audit of the UC Davis architectural and engineering offices. Campus auditors had concluded that employees of those divisions "were treated ... to golf tournaments and related social events" by building contractors involved in six campus construction projects from 1992 to 2000.

The auditors said they found no evidence that contractors and vendors who had supplied the golf goodies had received preferential treatment in return. But they noted that "the acceptance of gifts put the University at risk of the appearance of favoritism." Their report also said that "construction culture promotes the offering of gifts to customers" and urged that university rules against accepting them be tightened. The audit said unspecified disciplinary action was taken against employees who took the golf freebies.

The audit, dated March 2000, also said that one vendor had "bundled" equipment sold to the university for four construction projects. Bundling is the practice of requiring a buyer to purchase a variety of goods from the same supplier on an all-or-none basis. In each of the four jobs, the bundling included a proprietary airflow control valve that was specifically required by the construction contract. Auditors concluded that while bundling opens the door to the university being overcharged, that apparently hadn't happened in the four projects examined, since all were completed within budget. The auditors remarked, however, that they were not able to determine whether or not the price paid for the bundled equipment was competitive.

After Karamanos sued, UCSF restored his contract to supply HVAC equipment for a multimillion-dollar animal experimentation lab, and he was given a piece of the UC Davis jobs, too. That success emboldened him to convert his breach of contract lawsuit into a whistle-blower suit, which could entitle him to share in millions of dollars in damages.

"Proprietary-specification writing is a new, complex area of construction fraud," says Matt Dorsey, spokesman for San Francisco City Attorney Dennis Herrera. "Learning about it is the cutting edge of corruption investigations."

The learning curve for Campbell and Karamanos, of course, is significantly less steep than for a layperson. Each has spent years mastering his or her trade; for them, a proprietary spec almost leaps off the page of a construction document. Law enforcers are faced with having to master the incredibly arcane -- and mind-numbingly dull -- language and mathematical formulas used in specs before they can bring civil or criminal charges to bear, when relevant. There is nothing like having a whistle-blower or two on hand to spot the improprieties masquerading as innocent specifications.

Lawyers working for City Attorney Herrera have been getting up to speed, though. Sources say Herrera is nearly ready to sue several construction contractors in federal court, alleging that they improperly used proprietary specs on projects including SFO and the de Young Museum. The lawsuits could be filed soon.

About The Author

Peter Byrne


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