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Port Authority Says Cleaners Overcharged

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Kristin Moore
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« on: April 10, 2011, 01:49:57 am »

Port Authority Says Cleaners Overcharged
Published: July 22, 1992

 Dozens of tenants at the World Trade Center were overcharged by a total of almost $1 million for cleaning services over the last year because of inadequate monitoring by officials of the Port Authority, the executive director of the agency said last night.

In acknowledging the failure in oversight, the executive director, Stanley Brezenoff, said he was reassigning two top officials who were responsible for managing the trade center and its contracts with Ogden Allied Services Corporation, which has cleaned the offices in the twin towers since the mid-1980's. The Trade Center is owned by the Port Authority.

The disclosure and the quick action underscored the sensitivity of top Port Authority officials to suggestions of mismanagement, after reports that millions of dollars were wasted on major projects that were later abandoned at Kennedy International Airport. While those projects and the cleaning contracts with Ogden preceded Mr. Brezenoff's arrival at the agency, the poor supervision of cleaning services persisted under his tenure, which began in 1990.

A senior vice president at Ogden, Murray Rosenblatt, declined to comment on the Port Authority's disclosure when reached at his home last night. 'Inadequate Monitoring'

One of the Trade Center officials reassigned as a result of the audit is Frank Garcia, a 34-year veteran of the Port Authority who oversaw the Trade Center's business operations from May 1990 until January, when he was named director of the agency's economic development department. The other is August K. Preschle, who has been with the agency 23 years and who oversaw the Trade Center's maintenance and daily operations.

Mr. Preschle did not return a phone message left at his home last night. Someone who answered the phone at Mr. Garcia's residence said Mr. Garcia would not answer questions on the matter.

Mr. Brezenoff said the overcharges -- which he estimated at between $800,000 and $1 million -- were discovered during an internal audit that he commissioned earlier this year. The audit, which reviewed the Trade Center's cleaning-services contracts and is close to completion, "concluded that there were inadequate monitoring and oversight of billing and charges to the Port Authority and to tenants," Mr. Brezenoff said.

Mr. Brezenoff said the agency would move aggressively to recoup the extra charges and would consider suing the company if the money was not returned. He said the agency would not decide the fate of the company's current cleaning contract with the Trade Center, which expires in December, until the overcharges were resolved.

Since the company has not responded to the findings of the audit, he said it was too soon to say whether the overcharges were deliberate or a result of sloppy bookkeeping. He said that the agency was not considering pursuing a criminal complaint.

Under a $24 million annual contract that was last renewed in January 1990, the agency said, Ogden provides basic office cleaning for the tenants of the Trade Center, which include the Port Authority itself. In addition to overseeing that contract, the agency also monitors several dozen contracts -- totaling an additional $4 million to $6 million -- that individual tenants have signed with Ogden to provide more specialized and intensive cleaning services. Renovations Needed

Under the main contract, tenants are provided with such basic services as vaccuuming, dusting and the cleaning of bathroooms. Tenants negotiate the additional contracts to arrange for more frequent visits from cleaning crews and for extra services like furniture polishing.
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Kristin Moore
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Posts: 5137

« Reply #1 on: April 10, 2011, 01:50:39 am »

 It was under these additional contracts, Mr. Brezenoff said, that Ogden charged tenants rates that exceeded what it had negotiated with the Port Authority. Agency officials said they had not yet determined how many tenants had been overcharged and they declined to identify any of the tenants involved or detail the amounts individual tenants overpaid.

The disclosure of the audit comes as the Trade Center, one of the premier corporate locations in Manhattan, is in need of hundreds of millions of dollars in renovations if it is to hold on to its place in a competitive real-estate market. And the audit that uncovered the overcharges was conducted in part to help retain that competitive edge, Mr. Brezenoff said.

Mr. Brezenoff said he began taking steps soon after he joined the Port Authority in the fall of 1990 to shore up the center's management. Those steps included creating a new division within the Port Authority specifically to oversee the twin towers, and, earlier this year, beginning internal audits to assess operations.

"You fight tooth and nail to attract and retain tenants and you hate to run the risk of a facility getting a reputation for being overpriced on services," Mr. Brezenoff said. "The individual contracts were supposed to be reviewed and they were not."

Ogden Allied Services, the principal subsidiary of the Ogden Corporation, is a nationally known company that also handles cleaning and general maintenance at the metropolitan region's three main airports, which are also operated by the Port Authority. Ogden also used to handle cleaning and booking of trade shows at the Jacob J. Javits Convention Center, but the company was recently dropped at the center in a cost-cutting move.

In the wake of the overcharges, Mr. Brezenoff said the Port Authority would overhaul the Trade Center's cost-accounting system.

Photo: Stanley Brezenoff, head of the Port Authority, is reassigning two officials who were responsible for supervising cleaning services at the World Trade Center. (Dith Pran/The New York Times)(pg. B5)
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