Port Authority Asserts It Overpaid for Security

[Kristin Moore]

Port Authority Asserts It Overpaid for Security
By JACQUES STEINBERG
Published: July 23, 1992

 The Port Authority may have overpaid as much as half a million dollars over the last two years to a company that provides security services for the World Trade Center because the authority failed to properly monitor its contracts with the company, authority officials said yesterday.

The overpayments to the security company, City Wide Security Services Inc. of Brooklyn, were disclosed the day after the authority said a cleaning company at the Trade Center was able to overcharge dozens of tenants because of a similar lack of scrutiny.

The authority, which owns the Trade Center, said it had discovered the security overcharges through an internal review of overtime expenses, further underscoring management difficulties and oversight problems at the twin towers, one of the premier corporate addresses in Manhattan.

Most of the overcharges resulted from the security company's billing the authority at a higher rate than was stipulated in its contract, the authority said.

The problems at the Trade Center follow reports that the Port Authority had wasted millions of dollars in recent years on a major project at Kennedy International airport that was later scrapped. Top Officials Reassigned

On Tuesday, the authority said dozens of tenants had been overcharged by a total of as much as $1 million over the last year for cleaning services provided by the Ogden Allied Services Corporation. Two top officials at the Trade Center have been reassigned, in large part because of the lax monitoring of the security and cleaning contracts.

A woman who answered the telephone at City Wide Security's Brooklyn office yesterday afternoon said no one was available to discuss the matter. Repeated phone calls to the company's office in the Trade Center were not answered.

David Hahn, a spokesman for Ogden Allied, which has cleaned the Trade Center since the mid-1980's, said the company had no comment on the authority's findings.

There appear to be further management problems at the Trade Center that authority officials refused to discuss yesterday.

In January, the Trade Center construction manager, John Urinyi, was reassigned as a result of an internal audit into construction services at the Trade Center, which are provided by another private concern. Officials of the Port Authority of New York and New Jersey have declined to release or discuss the contents of that audit.

With the Trade Center fighting to maintain its edge in a competitive real-estate market, the Port Authority moved yesterday to assure tenants that it would do a better job of supervising its cleaning services. In a memorandum sent to tenants, the authority said it would meet with them individually to examine their cleaning bills and listen to their concerns.

"After discussions with the cleaning contractors, we are currently unable to determine, with any certainty, the actual amounts tenants may have been charged," the director of the Trade Center, Charles J. Maikish, wrote in the memo. "However, we are continuing our review of these charges."

[Kristin Moore]

 The Port Authority said it was still reviewing bills and logs to determine the extent of the overcharges. The authority signed a two-year, $5 million annual contract with City Wide Security in January 1989 to patrol the twin towers' doorways, stairwells, lobbies and offices. The contract, which was renewed last year for another year, is due to expire in December.

Although an internal inquiry is continuing, Mr. Maikish estimated yesterday that over the last two years City Wide overcharged the Port Authority by $200,000 to $500,000.

Mr. Maikish said the overcharges came largely through overtime. Although the contract specifies that City Wide charge the Port Authority its regular hourly rate if overtime is booked more than 24 hours in advance, City Wide frequently charged the authority time and a half, something the authority's oversight monitors should have, but did not, pick up, Mr. Maikish said.

In most but not all cases, City Wide Security was believed to have paid its employees the same amount it charged the Port Authority. The authority said it intends to recoup all the lost money.

"There was no windfall that we know of to City Wide," Mr. Maikish said. "I don't think it was anything vile."

Several tenants at the Trade Center reacted with surprise yesterday to the authority's disclosure of the cleaning overcharges.

Alex Smith, the administrative manager of facilities at the accounting firm of Deloitte & Touche, which occupies seven floors of the Trade Center, said he had not yet determined how much, if any, Ogden Allied had overcharged his firm. "At this point, we're trying to figure out what is going on," said Mr. Smith, whose company had contracted with Ogden Allied to provide cleaning services that were more frequent and more thorough than those offered through its lease with the Trade Center.

Although Mr. Smith said he had never been told of the Port Authority's responsibility to monitor that contract, he said he was still satisfied with the authority's management of the Trade Center.

"You have to sit back and say, in the overall scheme of the world, these buildings are huge in size," Mr. Smith said. "Given that, they are efficiently operated."

Stanley Brezenoff, executive director of the Port Authority, stressed yesterday that the authority was moving quickly to improve its contract monitoring. He said the authority was drawing up new contract formats, imposing tighter controls on those contracts and reviewing contract terms more frequently.

He also said the authority has withheld, in each of the last two months, 15 percent of its monthly payment to Ogden Allied in an effort to build a war chest that could reimburse tenants if the company refuses to do so.

The authority also plans to bring in an outside consulting concern to overhaul the Trade Center's cost accounting system.

http://www.nytimes.com/1992/07/23/nyregion/port-authority-asserts-it-overpaid-for-security.html?ref=worldtradecenternyc