Editor’s Note: This article originally ran on Dec. 15, 1979, and was part of a series of reports that won a Pulitzer Prize in 1980.
This report was prepared by the Globe Spotlight Team, which consists of editor Stephen Kurkjian, reporters Alexander B. Hawes, Jr. and Nils Bruzelius and researcher Joan Vennochi.
The affirmative action director of the Massachusetts Bay Transportation Authority said yesterday that a Rhode Island company hired last June as a minority subcontractor on a $29 million construction project has been removed from the agency’s list of approved minority businesses.
Alan Dobson said that he was taking the action following a closed-door meeting with a representative of the company, New England Stud and Steel (NESS) of East Greenwich, R.I.
Dobson said he was told by a representative of NESS that the company was being reorganized, and that Benjamin Jiminez, the minority person who had previously been listed as its major stockholder, was no longer associated with it. Jimenez could not be reached for comment by The Globe.
The review by the MBTA of NESS’s qualifications as a minority business was prompted in part, Dobson said, because of questions regarding the MBTA’s past approval of the company by The Globe Spotlight team during the past two months.
NESS was to be paid $830,000 to do the concrete reinforcement work on the Davis Square station in Somerville, part of the MBTA’s Red Line extension project. Perini Corp., the general contractor on the $29 million job, had to demonstrate that 7 percent of its work would be subcontracted to minority businesses in order to qualify as a bidder on the contract.
Dobson said he will notify the Perini Corp. that NESS is no longer considered a legitimate minority business and that to continue work on the Davis Square project, Perini must hire another approved minority subcontractor.
In addition to its ongoing job at Davis Square, NESS was the proposed minority subcontractor for a $1 million share of the MBTA’s contract with Slattery Associates of Maspeth, N.Y., to build a Porter Square station in Cambridge on the Red Line extension.
There had been serious questions raised within the MBTA and the State Office of Minority Business Administration (SOMBA) whether a minority person actually controlled NESS when the Perini/NESS contract was approved by the MBTA board of directors in June. Nevertheless, the former head of the MBTA’s affirmative action office, Joan Kapolchuk, approved it as a legitimate minority company after a one-day review of incomplete files.
The MBTA hired NESS despite warnings from Dobson, then minority business coordinator, and SOMBA that the company was apparently not controlled or financed by Jimenez, the Philippines-born man listed as its president and majority stockholder.
SOMBA found that although Jimenez owned 55 percent of the company stock, the company’s corporate bylaws required 60 percent of the stockholders to approve policy decisions by the company.
According to sources at SOMBA, Jimenez had no money personally invested in the company. Instead, all his stock was pledged to cover a $20,000 loan that came from a financing company that was owned by the wives of the two other listed officers of NESS, Albert Frechette, a Newport, R.I., attorney, and his brother-in-law, Richard Vezina of Warwick, R.I. Both Frechette and Vezina are white.
The SOMBA investigation also found that Jimenez, a former mail carrier and army supply sergeant, had no previous experience in the construction business. In interviews with state officials he was unable to demonstrate any specific knowledge about the work his company would be doing on the Davis Square project.
Frechette and Vezina also operate and control a second corporation, Erectors Inc., which shares office space and telephones with NESS.
NESS was approved as a legitimate minority business on June 21 by Kapolchuk, then acting director of the affirmative action office, one day after Dobson submitted his critical findings to her in a memo.
In addition, two days before Kapolchuk’s approval, Foster was sent a letter from SOMBA informing him that there were reasons to suspect that NESS was not legitimately owned by a minority person.
Kapolchuk now works in the MBTA personnel office.
Foster said in an interview Wednesday that he could not recall the letter but because of recent discussions he has had with both Dobson and Kapolchuk on the matter he now thinks that “we should have looked at” Dobson’s and SOMBA’s warnings more closely.
NESS is one of 11 companies hired by the MBTA for federally funded construction projects on the basis of their ostensible minority ownership.
Last June 16, the MBTA board of directors approved the Perini/NESS contract, pending final approval from Dobson, then the MBTA’s minority business officer.
Five days later, in a memo to Kapolchuk, Dobson listed six reasons why NESS was “deficient” as a legitimate minority business. His recommendations were based on his past investigation of the principals of NESS, who had applied for minority status under a different corporate name last November, as well as on deficiencies he found in the April application submitted by the same men for NESS.
Among the six reasons listed by Dobson for his disapproval was that Jimenez had “failed to exhibit any managerial expertise” in his past discussions with Dobson.
”When I got the application (from NESS) I thought, maybe they think I’m stupid or maybe they’re hoping that as a result of the new administration someone else is making the decisions,” Dobson told The Globe.
Despite Dobson’s June 21 memo, Kapolchuk approved the NESS application the next day, after discussing the matter with MBTA General Counsel Joseph Elcock. She said she discussed the case with no other MBTA official, and specifically not Foster.
MBTA Chairman Robert L. Foster was employed by the Perini Corp. as a field engineer and project manager from 1963 to 1970.
”Based on the information they (NESS) delivered to us, and going over the definition of what a legitimate (minority) contractor was, I approved it,” she said. She added that she had no discussions with any officials from the NESS company concerning Dobson’s warnings, and admitted that NESS’s application did not contain any statement regarding its financial state.
Shortly before Kapolchuk cleared the way for the Perini/NESS job to begin, Foster received a letter sent by SOMBA June 20 informing him that there were reasons to suspect that NESS was not legitimately owned by a minority person. Foster’s response came in a letter from Elcock that stated the board had already approved the contract and asked SOMBA to keep the MBTA informed of its investigation.
SOMBA’s investigation lasted most of the summer, and in October the MBTA was informed that SOMBA had officially decided that the firm was not a legitimate business and would not be eligible for state contracts other than those awarded by the MBTA.
Despite the warning from SOMBA in July, Foster initiated no investigation of his own. NESS’s work on the Davis Square project began about two months ago.
Under guidelines mandated by the Urban Mass Transit Administration, minority companies must be allotted a certain percentage of contract work on all MBTA construction projects totalling more than $500,000. UMTA defines a minority company as one that is at least 51 percent owned and controlled by minority persons.
When contacted by The Globe earlier this week at Erectors Inc., Jimenez refused to discuss his background in the construction industry. When asked how he could control the daily operations of the Davis Square job from Rhode Island, he said, “I can be in the office and on the job at the same time.”
Frechette did not return telephone messages left by The Globe.
Although federal officials at UMTA are charged with monitoring the MBTA’s performance on hiring minority contractors, they leave it up to MBTA officials to determine whether a minority business is legitimate.
“We have to assume that the people who are the recipients of large federal grants are honest,” said Donald Sullivan, UMTA’s regional director.