Car-test failures cost firm big bucks

02/11/00 By Dunstan McNichol and Robert Schwaneberg STAFF WRITER

The contractor responsible for New Jersey's problem-plagued car inspection system was docked almost $11 million yesterday by state officials enraged over the company's failure to deliver a working inspection system on schedule.

State officials announced yesterday they are withholding a payment of more than $10 million that Parsons Infrastructure and Technology Group was to have received today for completing the physical renovation and upgrading of 30 state inspection facilities.

Francis Rapa, a Treasury Department spokesman, said the payment will be put in an escrow account while state officials review whether Parsons has delivered the full inspection system it is billing the state for building.

In addition, the state yesterday withheld $369,000 in penalties for the hundreds of times Parsons violated its contract in December by keeping drivers waiting in line more than 30 minutes. After deducting that amount, the state treasurer's office paid Parsons $2.5 million for its January inspection work.

The company also has racked up almost $400,000 in additional penalties for long wait times during January, but those fines were not assessed yesterday because officials have not yet calculated the precise total.

Parsons officials could not be reached for comment on the state's action, which was announced last night.

Meanwhile, Attorney General John Farmer Jr. named Ken Merin, a former state insurance commissioner, and Walter Timpone, a former federal prosecutor who jailed a series of corrupt politicians, to his panel investigating the inspection system crisis.

Since it took over the state inspection system in November 1998, Parsons has been paid $106 million. Its seven-year contract eventually could be worth more than $500 million. The exact amount depends on the number of cars tested. Parsons was hired to convert the inspection centers to a computerized system including "enhanced" emissions tests designed to weed out more-polluting cars and help the state meet federal air quality standards.

When the company unveiled the new system Dec. 13, motorists confronted an array of delays, equipment failures and understaffed inspection centers.

Gov. Christie Whitman, who has called the conditions "ungodly" and "unacceptable," responded by suspending the new inspection program at about half the state inspection stations and calling on Parsons to deliver a plan for repairing the system by June 30.

That "recovery plan" was due today, but Parsons requested and received a one-week extension, Rapa said. As a result of the suspensions, less than half the motorists are actually undergoing the tougher emissions test. In a letter informing Parsons of the decision to withhold payments, the Treasury Department said that out of 127,260 cars inspected at the state centers last month, only 49,282 took the new emissions test.

Federal officials last month gave the state until June 30 to correct the emissions testing problems and begin imposing the new test on all cars.

Whitman last month ordered the attorney general to investigate why, in the year before the new inspections system was launched, a consultant's warnings that Parsons would not be ready to implement the system smoothly went unheeded.

In announcing yesterday that Merin and Timpone will join him in heading that investigation, Farmer said they "bring a balance of investigative and governmental experience to this inquiry."

''Mr. Timpone's extensive experience in conducting investigations of public and corporate entities is complemented by Mr. Merin's knowledge of the inner workings of both the Governor's office and executive agencies," Farmer said. "In addition, each brings a reputation for independence and integrity that will serve the panel well."

Both men are now lawyers in private practice. Timpone said he is a registered Democrat, while Merin served as chief of policy, deputy chief counsel and insurance commissioner for former Gov. Tom Kean, a Republican. Timpone was at the U.S. Attorney's Office from 1984 to 1995 and spent four of those years heading its unit that prosecutes corrupt public officials. He oversaw investigations that resulted in the convictions of former Essex County Executive Thomas D'Alessio, former Parsippany Mayor Frank Priore, former Jersey City Mayor Gerald McCann and former Newark Councilwoman Marie Villani, among others.

Timpone said last night he expects the probe to be "a fascinating and interesting experience."

Chuck Davis, a spokesman for the Attorney General's Office, said Timpone and Merin will be paid the standard rate of $130 an hour for outside counsel. He said they will review documents, interview witnesses and "pretty much be the guiding force behind the report."

Whitman wants the investigation completed by March 20.

Assemblyman Neil Cohen (D- Union), one of the harshest critics of Whitman's handling of the new inspection system, said he was "truly disappointed" by Farmer's selections.

Cohen said Merin was involved with "one of the worst auto insurance disasters in New Jersey" -- the creation of a state-run insurance pool that was later abolished after running up a huge debt. Merin implemented the fund as insurance commissioner, but a Democrat-controlled Legislature had authorized it.

Cohen described Timpone's law firm, McElroy, Deutsch & Mulvaney of Morristown, as "Republican-connected" -- but state Election Law Enforcement Commission records show Timpone and the firm have made campaign contributions to both Democrats and Republicans on a modest scale.

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-- Carl Jenkins (Somewherepress@aol.com), February 11, 2000