A city contract of up to $1 billion to upgrade seemingly mundane items such as bus shelters, public toilets and other street “furniture” is proving to be one of the largest in L.A. history.

And a battle by bidders for the work is becoming almost as large.

French ad giant JCDecaux working with Viacom Inc.’s Infinity Outdoor Advertising Inc. is moving ahead of the competition, having recently gained the blessings of the city’s public works board and the planning and land-use committee. But Adshel Inc., a division of San Antonio-based Clear Channel Communications Inc., isn’t giving up its challenge.

The contract is potentially worth between $650 million and $1 billion.

The City Council could soon decide whether to enter into negotiations with Decaux. This week’s changeover in city government would delay the process and make things tougher for Decaux, given that its bid was favored by outgoing council members.

Decaux had hoped to get the green light on negotiations before the new members were sworn in but was unsuccessful because Councilman Joel Wachs refused to waive a hearing on the matter before the Public Works Committee.

Whichever firm wins the contract will be responsible for installing, replacing and maintaining much of the street furniture in L.A. for 20 years. “This is a huge thing for them to get the L.A. market,” said Ellen Stein, president of the city’s Board of Public Works.

It’s also a big deal for the city, which stands to gain at least $150 million during the life of the contract.

Besides receiving a cut of the revenues generated by the project, the city will get everything from modular news-racks to self-cleaning public toilets at no cost.

Ad sales planned

The chosen bidder will benefit by selling ad space on the furniture.

If Decaux wins the contract, the city will see an annual return of $7.5 million or 20 percent of the company’s gross revenue, whichever is greater, over 20 years. Adshel offered the city a minimum annual guarantee of $4.8 million or 18 percent of its gross revenue.

Given the size of the contract, Adshel isn’t giving up without a fight. And the battle is getting nasty.

Adshel claims Decaux violated the city’s recently adopted bidder responsibility ordinance, which requires potential contractors to fill out a questionnaire revealing any criminal or ethical violations from the past five years.

Adshel claims Decaux violated the ordinance by not disclosing it was involved in legal proceedings in France over bidding irregularities.

Decaux and city officials say the French firm has done nothing to disqualify its bid.

City officials say an independent review of Adshel’s claims against Decaux revealed no fatal flaws in the French firm’s bid. “We answered the questions on the bid (questionnaire) as they were asked,” said Dennis Kuhl, president of Infinity Decaux. “We felt that we answered them truthfully.”

Questions about Decaux’s past dealings underwent an independent legal review and no grave omissions were found. “I feel very comfortable that we got very good, very impartial and very sound legal advice,” Stein said.

Money is also at issue in the fight between Adshel and Decaux.

When the bidding process began, Adshel guaranteed the city at least $85 million in revenues over the 20-year span of the contract. As the Board of Public Works’ hearing approached, Decaux raised its guarantee to $150 million, beating out Adshel, which made a final offer of only $96 million.

“I believe that was what heavily swayed the staff’s opinion,” Adshel’s Watts said.

Stein refutes the idea that city officials turned a blind eye to Decaux’s record in the interest of reaping more revenues. “To say that we did this for the money…diminishes the process and diminishes, really, the integrity of all the people who are working on this,” she said.

“These are two giants,” she said. “They are fully prepared to fight each other wherever they have to.”