Ex-LAX Official Says Pacts Were Driven by Politics

Staff Reporter

Los Angeles Airport Commission President Ted Stein and other commissioners took the lead in reviewing bids for some of the most lucrative airport contracts, shunting aside professional staff, according to a former senior executive of Los Angeles World Airports.

The observations by Franklin Sterling, LAWA's chief information officer in charge of technology contracts from April 2001 until his resignation in early 2002, reflect criticisms of the Airport Commission leveled by City Controller Laura Chick.

Sterling said the political influence was apparent, especially in the awarding of contracts.

"The board of commissioners tended to step in at that last step and make decisions on political issues rather than operational or technological issues," said Sterling, who now has his own engineering consulting firm in Piedmont, Calif.

"What any (contractor) wants," Sterling continued, "is a qualifications-based procurement to be selected because your qualifications are the right ones for the job. When you have politically oriented people on the selection committee, you know they're not necessarily looking at qualifications but rather making procurement decisions based on their criteria."

He added: "When the commissioners saw a procurement that had some importance to them, for whatever reason, they stepped in."

In releasing an audit of the city's airport department, Chick said that the practice of having commissioners sit in on meetings with bidders created an "environment ripe for potential abuse."

She stopped short of saying any illegal activity had occurred. But referring to the practice of exchanging favorable bid reviews for political contributions, Chick said, "I have been looking at the awards of contracts because of, in part, the rumors about pay-to-play."

Sterling said that he and his staff, which wrote the requests for proposals and evaluated the technical, logistical and financial merits when responses were received, typically met with contracting candidates and selected a "short list" of companies.

The staff interviewed each candidate separately, asking questions about technical capabilities and qualifications. In most cases, the staff submitted their selection to the Board of Airport Commissioners for approval, he said.

When commissioners got involved, however, the questions during interviews turned into "posturing," he said.

"They don't even ask questions addressed to qualifications," Sterling said. "They asked candidates about their opinions about the airport, that sort of thing. Most of the time they made speeches."

In one instance, Stein and another commissioner, whom Sterling said he could not identify, participated in the selection process for a contract related to underground utilities and pipes at the airport, Sterling said. He would not be specific about the contract or the successful bidder.

When he discovered the role Stein and the other commissioners were playing, Sterling said he declined an invitation to attend the meetings.

"When they took it over, I recused myself from the process," Sterling said. "It was their decision, and I wasn't going to have my name on it at all."

He said he knew from previous selection interviews in which commissioners were involved that "they not only sat in but took it over. They said, 'We'll run this, and you guys be quiet.' I sat down and was quiet."

LAWA spokesman Paul Haney refused to comment on unspecified contracts, and Stein did not return phone calls. LAWA operates Los Angeles International, Ontario International, Van Nuys and Palmdale Regional airports.

'Inherently inappropriate'

Dan Garcia, the Airport Commission President from 1996 to 1998, said he and his commissioners never sat in on selection interviews because final approvals were supposed to be made by neutral parties.

He called the practice of commissioners becoming involved in interviews "inherently inappropriate."

Garcia, a commissioner during Stein's first term as Airport Commission president from 1993 to 1996, said during that time he experienced first-hand and heard from bidders on airport contracts that Stein was regularly involved in contractor selection interviews.

"Almost everything presented to the commission was a consent item," said Garcia, now chief compliance officer at Kaiser Foundation Health Plan Inc. "It appeared Ted had already made the decision."

The city controller's audit of the airport department covered the past three fiscal years and reviewed 25 contracts. It found that in each of the 10 cases in which a commissioner sat in on the final selection interviews, the contract awarded did not have appropriate, supporting documentation as to why the candidate was selected. Contract awards in which commissioners did not participate had appropriate supporting documents, the audit found.

L.A. City Councilwoman Cindy Miscikowski was set to introduce a motion last Friday calling for committee hearings to address a number of issues facing contracting policies at all of the city's proprietary departments, including the airport.

She was seeking a committee hearing to start the process of having the city attorney draft an ordinance prohibiting commissioners from engaging in any fund-raising activities on behalf of any elected official and a separate ordinance prohibiting city commissioners from participating in the contract evaluation and recommendation process.

Meantime, David Kissinger, Miscikowski's airport deputy, said she would ask commissioners to voluntarily stop sitting in on such meetings while council considered the issue.

The release of the controller's audit and the comments by Sterling come at a time Stein and the commission have been under increasing scrutiny for the way contracts are handled.

Chick said last week that she had turned over the findings of the audit to L.A. District Attorney Steve Cooley in October, and that California Attorney General Bill Lockyer and the U.S. Department of Transportation had received copies of the report. She said she referred the report to prosecutors to investigate potential wrongdoing.

The Business Journal first reported that the district attorney's office was looking into airport contracts on Nov. 24.

Assistant District Attorney Peter Bozanich confirmed receipt of the audit and said in a statement: "An investigation will ensue if warranted."

In addition, the City Ethics Commission proposed at a Dec. 9 meeting that all commissioners be required to disclose their roles in political fund-raising activities.

In November, a senior city official, speaking on condition of anonymity, told the Business Journal that at least two LAX contractors told him that Stein asked them for political contributions during 2002, including for LA United, the anti-secession effort.

The official named URS Corp., a San Francisco-based consultant of facilities design, planning and construction management and one of the primary contractors to Mayor James Hahn's LAX master plan.

"Ted approached (URS) and said, 'We want you to give to LA United, and (URS) said, 'That's not something we can do because we're a publicly traded firm, and corporate governance prevents that. But we'd like to help you with anything else,'" the city official said. "And Ted said, 'No, you're out of luck.'"

URS officials have not responded to requests for comment.

This month, the airport commission voted 4-0 to expand the URS contract. Stein recused himself from the vote, after calling the Business Journal report "unsubstantiated and erroneous."

Senior role

Sterling was an information technology consultant at LAX before his appointment to a staff position.

As a consultant, he was involved in security, fire and life safety, UHF radio controls, energy management, local area network systems, closed-circuit cable television, intercom, public address, paging, telephone systems and data networks.

As chief information officer, he was one of about a dozen senior executives who oversaw various departments of airport management.

Many of the contracts approved during his tenure involved the monitors and telecommunications functions at LAWA's component airports: LAX, Ontario, Van Nuys and Palmdale.

Sterling said he has been an engineer for more than 40 years, including at San Francisco-based Bechtel Group Inc. Sterling was a design consultant on the San Francisco International Airport expansion at the time of his appointment as LAWA's chief information officer, according to a June 2001 press release issued by LAWA.

He said he resigned in March 2002 amid budget tightening in the wake of the 2001 terrorist attacks. He remained a consultant for six months following his resignation.

(On Dec. 18, Los Angeles World Airports announced it hired a new chief information officer. Louis Charles Hook, president of his own consulting firm and former director of the communications technology services division for UCLA, will oversee information system and telecommunications at all four airports.)

"The airport decided they wanted to reduce the staff," Sterling said. "I knew I was a candidate to have the position canceled, as were several other executives who were not civil-service tenured. I speculated there was going to come a time when they would run out of money, and I had no intention to be a bureaucrat."

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