LAS VEGAS, N.M. (KRQE) - In August no one seemed to notice when the state starting stocking a Department of Transportation supply warehouse with merchandise from a new vendor.
DOT employees claimed a Las Vegas, N.M., hardware supplier called PB Industries was the low bidder for everything from sledgehammers to batteries to safety equipment.
Over the course of 2 1/2 months, PB Industries supplied the state with thousands of dollars worth of merchandise.
It may be just a nondescript government warehouse, but a krqe news 13 investigation found it to be the center of a scheme to cheat the system and bilk taxpayers.
So what is PB Industries? A hardware store? A wholesale supplier?
Well, it's not in the phone book, it doesn't show up on a Google search, it's not incorporated and it's listed address is just a post office box.
Who are these guys?
"I have no knowledge of where their warehouse is located," said Sal Archuleta, business manager for Las Vegas-based DOT District 4.
Welcome to PB Industries. It's not a warehouse, and it's not a hardware store.
It's the home of Phil Baca. Name doesn't ring a bell? Well, at the DOT, everyone knows Phil Baca.
You see, he was a long-time highway maintenance worker. In 2010 Baca formed PB Industries, and in June 2011 he retired from DOT.
Then in August last year, DOT employees Justin Garcia and Sam Stroud started shifting the state's supply business away from places like Ace Hardware to Phil Baca.
A KRQE News 13 investigation found, even though employees knew merchandise could be purchased cheaper elsewhere, they funneled the higher-priced requisitions to Baca in apparent violation of the state procurement code.
And even though the paperwork was approved by supervisors and reviewed by auditors, no one suspected a thing.
- In July, the DOT bought earmuffs from a Pennsylvania supply house for $5.60 each. Two months later, it bought the same product from PB Industries for $11.88 each.
- In July DOT bought a sledgehammer from Ace Hardware in Santa Fe for $32.88. In September it purchased the same sledgehammer from PB Industries for $49.99.
- In July, Air Gas Safety supplied the DOT 288 pairs of work gloves at 54 cents each. In October the state purchased the gloves from PB Industries for $1.82 each.
Archuleta approved many of the transactions but in retrospect concedes taxpayers paid too much.
"Based on reviewing the information now, no, it doesn't appear to be a good deal for taxpayers," he said.
And how about flashlights for $6.38 in July at Ace Hardware in Santa Fe but three months later $16.62 from PB Industries?
A good deal?
"No," Archuleta said, adding he approved the purchase.
In September a DOT purchase order bought 50-pound drums of ice melt from PB Industries. Instead PB Industries delivered 25-pound bags.
"No, it's not by the book," Archuleta said.
So somebody's cheating the system?
"Correct, and that's what we are going to fix," he said.
The list goes on and on: ear plugs, brooms, bleach, batteries, safety glasses.
Phil Baca told KRQE News 13 the state DOT is his only client but said he has done nothing wrong.
"The only thing I can say is I had the lowest bid," Baca said. "When I worked for the state, and I dealt with a lot of vendors, we always went with the lowest bid.
"So I imagine they did the same thing."
Baca express surprise when told DOT had not gone with the lowest bid.
"They didn't in this case?" he said. "I don't know, sir.
"That's something you are going to have to ask Mr. Garcia."
Following the News 13 investigation, DOT procurement employees Justin Garcia and Sam Stroud were briefly placed on paid administrative leave pending an internal DOT investigation.
But why did no one at a supervisory level at DOT noticed what was going on?
"Well, No. 1, we weren't notified that Mr. Baca was the owner of this business," Archuleta said. "No. 2, we failed to look at the price quotes.
"It does bother me, Mr. Barker. It does bother me tremendously."
Paul Gray, the DOT deputy cabinet secretary, said the department will find out how this happened.
"The issue is: Are we being good stewards of taxpayer dollars? And in this case I don't think we are," he said.
The DOT's internal auditor is reviewing hundreds of work orders, bids and requisitions in an effort to find out just what went wrong.
"I think one of the things we need to do is look at our entire procurement process, particularly for small purchases where purchasing agents have the latitude to be able to pick which vendors they choose to get quotes from," Gray continued. "We're going to take corrective action to make sure it doesn't happen again, not just in District 4, but we're going to use this as a case study for all of our purchasing agents so that we have a good idea of what we're doing.
"When I spoke to our procurement bureau chief, his indication was this could have statewide ramifications, and I said absolutely."
Still, were there enough red flags that somebody should have caught what