LAMS contractor certification comes under state scrutiny

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LAPS: Builder awarded $18 million for middle school construction

The state Taxation and Revenue Department now believes McCarthy Building Companies — which was awarded in-state preference certification by the state — is actually not eligible for the perk and is seeking to revoke its status.

“The Department is taking the necessary steps, in accordance with New Mexico law, to issue a notice of contemplated action to remove this designation so that the preference cannot be applied to its bids for public projects,” Department Spokesman S.U. Mahesh said in a recent email.

And according to a June 7 notice of contemplative action from the Department to McCarthy there is enough evidence demonstrating the company may have provided false information to receive in-state preference and is not otherwise eligible for the certification.

McCarthy was awarded two contracts last month including an $18.5 million construction project for Los Alamos Middle School as well as a project for Los Lunas Public Schools.

But Albuquerque-based contractor Bradbury Stamm Construction, which also submitted bids for those projects, protested those awards stating that the company should’ve never received the in-state perk in the first place.

Bradbury Stamm Chairman Jim King said he hasn’t seen the bidding war tabulations the company received from Los Alamos and Los Lunas Public Schools for their recent projects.

Los Alamos Public Schools is providing the Los Alamos Monitor with the bidding documents from its bidding war.

At the center of McCarthy’s certification is a recent New Mexico law that went into effect at the beginning of the year. The law increased eligibility requirements for contractors to receive in-state preference certification.

“Really anything qualified before,” King said. “It was a step by the legislature to really toughen the statute.”

As part of the new law, all contractors in the state had to resubmit their applications for in-state preference to the Taxation and Revenue Department to determine if they met the new requirements.

McCarthy — which received its certification Jan. 19 — is a multi-state business with offices in all over the country including in Dallas, Phoenix and Albuquerque.

Mahesh said multi-state companies could receive in-state certification as long as they still met the certification requirements.

Requirements for in-state preference include paying property taxes or rent on real property for the last five years, having a least one vehicle registered in the state and paying unemployment insurance on a least three full-time employees who are residents of the state.

Even so, six months after the Department initially awarded McCarthy in-state preference certification, it has determined that the company does not meet certification requirements.

In the notice of contemplative action, the Department stated that it will revoke McCarthy’s certification if the company does not respond within 20 days after receiving the notice for a formal hearing on the matter.

McCarthy faces becoming ineligible to bid on public contracts in the state for the next five years and $50,000 penalties for each violation, the notice states.

In a June 15 letter between Bradbury Stamm’s legal counsel and McCarthy, Bradbury Stamm accuses McCarthy of misrepresenting its resident status for its own benefit in derogation of state law.

“We believe that McCarthy has violated the Fraud against Taxpayer Act as a beneficiary of public money,” the letter states.

It further states that no party should benefit from McCarthy’s false claims and the school districts affected and the state Attorney General could take legal action.

McCarthy was also awarded a construction project for Santa Fe Public Schools, but another company — Jaynes Corporation — is protesting that award. Santa Fe Public Schools has suspended its award to McCarthy pending a decision from the Department regarding McCarthy’s certification.

But the Los Alamos Public School District had decided to move ahead with construction despite the protests.
School Superintendent Gene Schmidt argued the district did its due diligence in formally evaluating the bid proposals and awarding the project to McCarthy. Schmidt said should the state Taxation and Revenue Department determine that McCarthy’s in-state preference certification was awarded in error then a revocation of that certification should only affect future projects.

Mahesh said it’s the department’s responsibility to increase its efforts in reviewing in-state preference applications.

“We want to stress, though, that most applications are relatively straightforward and simple to review; most of the entities to whom the preference has been granted can quickly be shown to comply with (New Mexico) law and qualify for the preference,” he said.

He said the department will conduct a thorough review and audit of all the submitted application adding that extra attention will be given to those companies with more complex organization structure and history to ensure compliance with the law.

McCarthy could not be reached for comment.