This story was updated.
Connecticut officials are examining why the state paid a contractor an estimated $1.4 million to clean up asbestos and other hazardous materials at Cedarcrest, an abandoned mental hospital in Newington, when that work was never formally authorized.
The state Department of Administrative Services confirmed that AAIS, a West Haven company, was hired to perform the cleanup and provide security services at the former Cedarcrest Hospital from August 2020 to December 2021.
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But state officials now say that project was not approved through an appropriate contracting process. And they said DAS is still trying to understand how much work AAIS completed at the site.
John McKay, a spokesman for DAS, told the CT Mirror there was no specific contract between the state and AAIS for the remediation work at the the former hospital, which is located just off the Berlin Turnpike in Newington.
Instead, he said, the roughly $1.4 million that AAIS received was initiated through a “blanket purchase order,” which was also used to fund cleanup services at other state-owned properties in recent years.
That irregular payment process, according to DAS, was handled by former state employee Michael Sanders, who died of a drug overdose in late 2021 shortly after a federal grand jury began requesting records related to AAIS, the state’s hazardous waste contracts and Connecticut’s school construction program.
“The project was being overseen by Mike Sanders,” McKay said.
Prior to his death, Sanders was responsible for managing the state’s relationship with AAIS and several other companies that were part of the state list of demolition and hazardous waste contractors. The list was created to offer a streamlined path for the state and municipalities to hire hazardous waste contractors that could be used on public projects or in cases of emergencies.
Sanders was also part of the state’s school construction office that was led by former state deputy budget director Konstantinos Diamantis, who is at the center of the federal investigation.
This isn’t the first time that Sanders has been publicly blamed for improperly awarding demolition and abatement contracts for state-funded building projects.
Diamantis, who stepped down from his position in state government in late 2021, also pointed the finger at Sanders last month after local officials in New London accused both men of pressuring the municipality to hire AAIS for work at New London High School.
It’s unclear if the payments for the Cedarcrest property are of interest to federal prosecutors. Nobody has been charged to this point in connection with the federal grand jury investigation, despite numerous subpoenas being issued to Gov. Ned Lamont’s administration and several school districts in Connecticut.
Even so, the former hospital has become a focal point in an ongoing audit that was commissioned by the state last year in the wake of the federal criminal investigation.
DAS hired Marcum LLP, an independent auditing firm, last March and paid the company to sample 10% of roughly 321 demolition and hazardous waste projects that were awarded through the state contracting list that Sanders managed.
At the same time, the state specifically ordered Marcum’s audit team to examine the invoices that were issued for Cedarcrest. Officials instructed the auditors to determine whether the state was accurately billed for the work that was performed at the hospital, which officially closed in 2010.
“The HAZMAT revised scope of work will be centered around a random sample (approximately 10%) from the 321 projects included on the state’s tracking database and an analysis of the invoices requested related to the Cedar Crest Hospital project for accuracy of amount billed and determination of open invoices,” the purchase order for Marcum said.
DAS officials told the CT Mirror that they singled out the Cedarcrest property because the agency wanted to review AAIS’s invoices so that Marcum could “quantify the work” that had been completed inside several buildings at the former state hospital site.
But that analysis failed to provide the state with the answers it was looking for, according to DAS.
“Marcum was not able to quantify the work that had been done,” McKay said. “DAS continues to review this matter.”
“DAS did not ask Marcum to review other specific projects,” he added. He did not address why other projects were not subject to the same level of scrutiny.
According to state officials, the money that AAIS received for the Cedarcrest project was funneled through the blanket purchase orders that were used to fund numerous projects that involved asbestos cleanup and other hazardous material handling.
Financial records obtained from the State Comptroller’s office show that AAIS made millions of dollars through some of those purchase orders, but those records do not clearly detail all of the work that was supposed to be performed for that money.
Some of the jobs assigned to AAIS in those documents are vaguely described as “asbestos removal services for various locations.”
According to McKay, DAS began its review of the Cedarcrest property in late 2021 shortly after the Lamont administration was served with the initial federal subpoena.
He said the agency eventually ordered AAIS to halt its work at the Cedarcrest property in February 2022 — the same month the federal grand jury investigation burst into public view.
“DAS construction services undertook a review of the Cedarcrest project at that time and determined that pausing the work would allow for further evaluation,” McKay said. “That evaluation revealed that prior work had been executed without proper authorization and was not done in conformance with contractual procedures.”
The CT Mirror published a story around the same that detailed how AAIS and a second hazardous material contractor, BesTech, had received roughly 98% of the work that DAS commissioned under the state contracting list between 2016 and early 2022.
Following that reporting, local officials in Bristol and Groton alleged that Sanders and Diamantis pressured them to hire AAIS and Bestech for several school construction projects, even though other companies had already offered to do the work for less money.
Since then, state officials have said little publicly about those contracts or the ongoing audit, which the state paid Marcum more than $110,000 to complete.
During her confirmation hearing last month, DAS Commissioner Michelle Gilman told lawmakers that Marcum’s audit of the hazardous waste contracts could take another four to six weeks to complete.
“We take this audit review very seriously as well. That review is ongoing,” she said. “We are reviewing the hazmat contracts that were utilized by schools, by communities, by others, and that review is continuing.”
But Gilman, who was appointed to her leadership post in the wake of the federal investigation last year, sidestepped many of the other questions lawmakers asked.
That included questions about why DAS recently ended its relationship with AAIS and removed the company from the state’s list of hazardous material contractors.
The CT Mirror recently reported that AAIS was quietly fired, but the state refused to explain its reason for that decision.
Republican lawmakers tried to press Gilman on that issue, but she again refused to elaborate on the state’s decision, arguing it is a sensitive legal matter.
“What did you learn about AAIS that called for that termination?” Sen. Henri Martin, R-Bristol, asked Gilman during the hearing.
“Because this is a procurement and contractual matter, I’m limited as to how much I can share about this issue,” Gilman replied. “But I can share that we did terminate AAIS under a permissible action.”
She went on to explain that AAIS was “terminated for convenience,” which she described as a “routine action.”
“For convenience?” Martin said. “Can you elaborate about what that actually means?”
Gilman then explained that cancelling a contract for “convenience” means the state can end the business relationship without entering into a “full discussion” about why the contract was terminated.
“Are you prohibited from telling us why you chose to use that provision?” Martin asked, appearing visibly frustrated.
Gilman told Martin that she wanted to be more forthcoming with lawmakers but said her hands were tied.
“I really have to be cautious because it would involve contracting and legal authority,” Gilman said. “That really is not disclosable.”
“I hesitate to say that, because I want to be transparent, but I need to be considerate of our legal obligations and our contractual obligations to our vendors,” she added.
Lawmakers may still be waiting for answers, but that hasn’t stopped DAS from making plans to continue the work at the Cedarcrest property.
DAS officials told the CT Mirror the agency has already hired another consultant to determine how much cleanup still needs to be performed at the site in order to repurpose the property.
That consultant completed a report in October 2022 and found that there was still a large amount of asbestos and other hazardous material inside the main hospital building that needs to be removed before the state can demolish that structure.
“We’ve conducted an evaluation about what more needs to be done, and we’re having discussions about expanding the scope to include additional buildings on the site,” McKay said.
The Cedarcrest site previously included 16 buildings, according to DAS officials.
Two of those structures have been demolished, and a third burnt down last November following a suspected arson, according to state police investigators.
Of the remaining 13 buildings, DAS records show that 10 — including the main hospital building — either had their interiors inspected for asbestos or had all or part of the hazardous material removed.
That leaves three other structures that still need to be analyzed.
DAS officials said they plan to hire contractors for the remaining work at the site, and this time, they said, the agency intends to follow the appropriate contracting rules.
That includes putting the work out to bid so multiple companies can compete for the project.
Correction
This story has been updated to reflect that the state contracting list for hazardous waste cleanup services was used in both emergency situations and for other projects. It also clarifies that the state asked Marcum to review AAIS’s “invoices.”