The N.C. Department of Transportation's Office of Inspector General issued a report in October about complaints that Durham-based Mainline Contracting, which has filed for bankruptcy, had not been paying minority subcontractors promptly on a $5.8 million project it was awarded in 2008 for work at the Smith Reynolds Airport (SRA) in Winston-Salem.
Mainline was signed as the prime contractor on the SRA job on Oct. 7, 2008. The project was to rehab and make improvements to an airport runway.
The DOT was brought in to investigate after a group of Disadvantaged Business Enterprises, or DBEs, hired for the project voiced concerns about civil rights violations because they were not being paid promptly by Mainline.
The Civil Rights Act includes a clause stipulating that contracts and subcontracts must be paid promptly, in this case that the payments are released within 7 days of the contractors receipts of payment from the owner.
The SRA project was funded with a $6.5 million block grant from the state. The Office of Inspector General report shows that Mainline invoiced $2.96 million and was paid $2.81 million.
Among the DBEs complaining about Mainline were RAL Demolition and Grading, Stewart Hauling and Cat-a-Hula Hauling.
The DOT's investigators reviewed Mainline's books at the company's Durham offices in July. Among its findings:
- "Mainline continuously had payment request issues, poor record keeping regarding quantities, and a poor payment history to DBE subcontractors."
- "It has not been determined whether Mainline deliberately withheld payments (due to cash flow) or was unable (or unwilling) to determine the correct quantities for payment."
The Inspector General ultimately said it was SRA's responsibility to ensure that the DBEs were being paid promptly:
"The ultimate responsibility rests with SRA to enforce compliance ... by its administration and oversight of the project. The construction meeting notes and email show there is knowledge and concern about the payment issues, but the issues were not elevated to the level expected from a project sponsor who is a grant recipient receiving FAA funding. SRA continued to pay Mainline for approximately five months without confirming payment to the subcontractors on the project."
Mainline filed for Chapter 11 Bankruptcy in September and a month later was ordered to change its filing to Chapter 7 after its creditors refused to expect the company's reorganization plan.
The Chapter 7 Bankruptcy trustee recently said Mainline's main officers in recent years have funneled millions of dollars from Mainline to themselves and two sister companies they formed.