By Adam Hocking
MARSHFIELD — On Thursday night the UW-Marshfield/Wood County (UW-M/WC) University Commission approved the contract of a project manager for the building of its new science, technology, engineering, and math (STEM) facility, Miron Construction Company Inc., which was recently investigated by the FBI.
Neenah-based Miron Construction Company Inc. underwent a multiyear FBI investigation in relation to its billing and financial reporting practices, which concluded with the signing of a non-prosecution agreement between the company; its president and CEO, David Voss; its CFO, Dean Basten; and the U.S. Attorney’s Office for the Eastern District of Wisconsin, according to a release from that office in April of 2014. The agreement was signed in February of 2014 and lasts three years.
The agreement mandated Miron pay $4 million to the federal government, that money then being passed on to five different school districts that Miron entered into contracts with between 2003 and 2008. The money would be dispensed as “restitution,” according to then U.S. Attorneyfor the Eastern District of Wisconsin James Santelle, who has since retired from that post. Those school districts are named in a statement of facts included with the agreement as DePere, D.C. Everest, Marathon, Waunakee, and Abbotsford.
According to the statement of facts, in the contracts with the five school districts, “Miron represented that its construction manager or design builder percentage was a sum ranging from 1.75 to 3 percent of the total contract price. Those contracts defined chargeable labor costs as ‘wages’ or ‘wages paid.’ In reality, Miron billed overhead and other expenses to its labor charges by applying a markup to labor above what it paid a laborer in wages and attendant burden.”
The agreement also stated that, “Miron will employ a new accounting firm to conduct the company’s yearly audit and its preparation of Miron’s financial statements.” In addition, Miron is now required to detail the labor rates it charges customers in all contracts, according to Santelle.
The agreement stated that, “Miron does not admit or deny the statement of facts.”
Miron was also required to adopt a corporate responsibility program in accordance with the agreement and to accept oversight from an independent monitor, which is charged with making sure Miron complies with the agreement, overseeing the company’s “maintenance and execution of the corporate responsibility program,” and other responsibilities.
The UW Commission’s decision to approve Miron
Alderman and UW Commission member Gordy Earll and UW Commission Vice-Chair Al Breu voted against approving the Miron contract and Earll discussed with the commission several news articles written about the FBI investigation.
“Do we want this firm to do this?” Earll asked, noting that the company and its executives Basten and Voss did not admit guilt. “What we’re looking at is the same company that went through all of this, and they’re still there. And so now the question is do we really want them to represent the community of Marshfield in this process? Do we want their name on this?”
Commission member and Alderwoman Alanna Feddick, who is an attorney, said she did not place stock in a news story in terms of guiding the decision of the commission.
“A news story is a news story. It doesn’t mean anything,” Feddick said. “I don’t believe a news article.”
Feddick added that despite the news reports, Miron had the qualifications to be the project manager.
“They are qualified,” Feddick said. Feddick, along with University Commission Chair Doug Machon and commission member Donna Rozar, voted to approve the contract.
Miron Vice President of Business Development Corey Brumbaugh attended the Thursday UW-Commission meeting and downplayed the FBI investigation. He said that the investigation only related to construction done in the K-12 sector.
“The government looked at over 120 of our contracts in the K-12 market from the periods of 2003 to 2008. They couldn’t find anything wrong except a transparency issue with our labor rates that were attached to the contract, which was specifically D.C. Everest, … Abbotsford,” Brumbaugh said.
In the D.C. Everest situation, Brumbaugh said, “We had an agreed upon labor rate with the school district, and we had worked in the district for many, many years. We had another project come up. We had those agreed upon labor rates, and we did not attach that to our contract. We didn’t think it was necessary. The government took exception to it, saying, ‘Nope, you should have been smarter. You should have had those labor rates attached to it,’ so it was a transparency issue.”
Of the non-prosecution agreement, Brumbaugh said, “This was an agreement. We had done nothing wrong in our opinion.” He added, “We are still the strongest, largest construction manager in the state of Wisconsin, continuing to get work.”
“We got a new accounting firm. We got a third party monitor,” Brumbaugh said, adding that because of these extra mandates, other entities Miron has worked with say, “There’s no better time to hire us because we do have a third party monitor, and our contracts are so perfect because of this unfortunate situation that we went through, that there’s absolutely no concern associated whatsoever.”
Brian Panzer, the UW-M/WC buildings and grounds superintendent, did a series of reference checks with other entities that had Miron work on projects that were similar in nature to the planned STEM facility in Marshfield. He said he did not ask any of the references about the FBI investigation and looked at “strictly past performance on the project.”
“There was nothing that came out that would be a detriment to them (Miron) in any of the projects and of all of the people that I talked to. They all were very high on the final project, the ongoing project, and the initial preconstruction work,” Panzer said.
In an email to Hub City Times, Assistant Campus Dean of Administration and Finance Michelle Boernke described Miron’s role as project manager, saying, “They are responsible for guiding the entire project through from beginning to end. They will not ‘self-perform,’ meaning construct, but they instead guide the process.”
The STEM project, which in addition to building a new facility also includes renovating the existing Aldo Leopold Science Building on campus, is estimated to cost $8 million with most of the funds being privately raised. The city of Marshfield and Wood County have agreed to contribute $1 million each.