Dredging Companies Tainted by 1988 Bid-rigging Scandal

A nationwide bid-rigging scandal that broke in 1988 offered a sobering glimpse of how much money is at stake in pumping sand onto eroding beaches and the lengths some companies were willing to go to get it.

The nation's biggest dredging company paid $8.2 million in federal fines and agreed to pay more than $3.7 million to Florida in a settlement that included a Delray Beach project.

Great Lakes Dredge & Dock Co. also paid $1 million to the state for damage done to reefs during a beach project in Dade County.

Three Great Lakes officials were sentenced to prison, but the fines and settlements were minuscule to the company that boasts of its $500 million dredging fleet - and of its "strong reputation for professional and financial integrity."

State officials said the bid-rigging had gone on since the 1950's. It was not detected - or at least unveiled - until federal investigators tipped off the state in 1985.

By then, local, state and federal budgets had been hit for untold millions in inflated costs for inlet dredging and beach restoration projects.

A typical beach project costs from $1 million to $10 million and may involve three sources of money: the local sponsor - a city, county, taxing district or property owners' association; the state, with money channeled through the Department of Natural Resources; and the federal government, whose share is determined by the Army Corps of Engineers.The local sponsor must get permits form the Corps and DNR.

The process usually involves other agencies such as the state Department of Environmental Regulation and U.S. Fish & Wildlife Service.

To design the project, get the permits and oversee its installation, the sponsor is required by law to have a licensed engineer.

The engineer, often a firm with a large staff, determines to a great extent how much the job will cost - and thus what the firm's fee will be - by how the project is designed.

At the standard rate of 7 percent to 10 percent of the cost, the engineer would get $350,000 to $500,000 for a $5-million project.

A general rule is: The lower the project cost, the higher the engineer's percentage.

That's because getting permits for $2 million project can be just as costly and time-consuming - more so, if there are environmental problems - as for a $10 million job.

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