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BELMONT PLOT THICKENS ROMER DISQUALIFIES ONE OF PROJECT'S BIDDERS.

Byline: Beth Barrett Staff Writer

After months of denial, Los Angeles schools Superintendent Roy Romer acknowledged on Wednesday a conflict of interest problem in the bidding process to complete the Belmont Learning Center and disqualified one of the three competing firms.

When the Daily News reported the conflict-onterest issue last November, top officials of the Los Angeles Unified School District insisted that the firm, The Eastridge Companies, had not gained any competitive advantage from one of its officials having access to confidential information on Belmont while working for the district under a separate contract.

But Inspector General Don Mullinax investigated the matter and issued a report last week that found there was at least the ``appearance'' of a conflict that violated the firm's contract, according to a copy of the confidential document obtained by the Daily News on Wednesday.

Confronted with Mullinax's report, Romer said: ``The facts that I saw (in the report) were not the facts that I got when it first came to me, and the question was posed to me whether Eastridge's work for us, in the capacity of acquiring real estate, whether it barred them from putting in a bid on Belmont. My answer was no.''

Romer said with more details - including the report's finding that one of the firm's employees had opportunities to become familiar with LAUSD real estate decision-making processes - Eastridge's continued participation in the Belmont competition ``was clearly improper,'' and he ordered the firm disqualified.

But given the star-crossed history of Belmont, the nation's costliest school, critics said the latest problem called into question the bidding process itself and Romer's effort to complete the $175 million project that was abandoned over serious environmental problems.

``I think it is becoming more transparent that there isn't really a market here,'' said board member David Tokofsky. ``We've got more people bidding on 'sporks' (the combination utensil used in school cafeterias).''

Few bidders expected

Board President Caprice Young said she expected few firms would be qualified or interested in Belmont, which sits atop a shallow oil field seeping potentially explosive and hazardous gases. Purchase of the site and its development was so badly bungled by school officials that the board eventually abandoned the project.

``I never thought there'd be a zillion bidders,'' Young said. ``It's an extra huge and complex project, with very high risks.''

Eastridge officials said they were stunned by Romer's action, saying that for months they'd worked at the highest levels of his administration to make sure they had cleared all conflict-onterest hurdles.

Susan Eastridge, principal in the firm's Washington D.C. office, said knowing Belmont's difficult legal history, its team proceeded with great caution to guarantee it had satisfied all the district's concerns.

Eastridge said she twice talked to Romer's executive administrator, Anne Valenzuela-Smith, for clearance on the conflict issue, and that it was her impression the matter was run ``up and down the flagpole.''

``It is an extraordinarily difficult project, but because we could do it I felt almost a moral obligation to offer up our services,'' she said.

Valenzuela-Smith did not return phone calls Wednesday.

Mullinax's Jan. 31 report concluded the ``appearance'' of a conflict at a minimum did exist, because TEC employee Jeff Baize appeared to have worked for the district on property acquisition projects while working on TEC's Belmont bid.

Company completely open

Baize told the Daily News the company was completely open and candid and that he had only explored TEC bidding on Belmont - ``phone calls, but never any analysis'' - before leaving the school district. The TEC team spent as much as $500,000 on its proposal, he said.

``The residents were promised the school there and that it would be beautiful,'' Baize said. ``Our proposal was just that - to finish the dream. Someone has to answer to the community why there is one less option to have that school.''

Mullinax chided the district for lacking any written ``procedures, guidelines, and policies'' to determine when conflicts exist, and under what circumstances waivers can be granted.

Romer said the district ``obviously needs to give further thought'' to those issues.

Sources close to the investigation said the absence of formal conflict- onterest policies was shocking, and opened the door to widespread political favoritism just as the LAUSD is embarking on a massive construction program to build 85 new schools.

LAUD officials in ``blowing off'' the conflict problem for months were acting as though there was ``no harm, and no foul,'' one source said.

``(They) don't know what the harm was, and the potential is for serious harm ... you're back to political influence and favoritism versus true competition.''

According to Mullinax's report, Romer's inner circle discounted warnings in October by the district's top real estate official, Scot Graham, about Baize's earlier access to proprietary district information, his frequent inquiries to co-workers about Belmont and a computer trail to a floppy disk that contained a file named ``belmont1.doc.''

Graham said in an interview that he was ``just trying to do the right thing.''

Valenzuela-Smith, Romer's executive administrator, and the district's general counsel, Hal Kwalwasser, concluded that ``even if Mr. Baize and TEC possessed insider information'' there was no conflict of interest because they didn't have a ``competitive advantage,'' the Mullinax report said.

Valenzuela-Smith and Kwalwasser said most of the information on Belmont was public anyway, that the cost-structure data were so complex they wouldn't necessarily provide a company with an edge, while the award wouldn't necessarily go to the lowest bidder anyway.

They also said the district wanted as many bidders as possible.

Frank DeMartino, president and CEO of Parsons Corp. of Pasadena, whose subsidiary Parsons Infrastructure and Technology Group is part of one of the remaining teams bidding on Belmont, said he agreed with the district's assessment of Belmont's complexity.

``The three bids are unique within themselves,'' DeMartino said. ``With the governor (Romer) asking everyone to give their best idea, I'd be surprised if there was much in the way of an advantage in having some insider information.''

The third bidder, Alliance for a Better Community, could not be reached for comment.

Participation welcomed

The inspector general's report said Baize handled property acquisition for new schools in the San Fernando Valley under an existing contract and asked Valenzuela-Smith whether there would be a problem for TEC working on two projects at the same time.

``Mr. Baize stated that Ms. Valenzuela-Smith told him that the two classes prohibited from bidding were a) debarred contractors and b) contractors in default with the LAUSD.''

When TEC officials asked whether it would be a problem if they worked both for the school and submitted a Belmont bid, ``the Superintendent's Office stated it wouldn't be a problem and welcomed their participation,'' Mullinax said.

Graham, the LAUSD's director of real estate, learned by mid-August that TEC was among the companies preparing a Belmont bid and was concerned Baize ``would have access to confidential information and LAUSD proprietary information located within the Real Estate Department that was not available to other bidders.''

Graham's concerns were heightened by real estate co-workers reporting that ``Mr. Baize was asking a lot of questions'' about Belmont.

Baize said the computer with the file ``belmont1.doc'' was used by others and that the information cited by Mullinax would not have helped TEC.

Despite denying that Baize was working on Belmont, TEC later withdrew its bill to the district for Baize's property acquisition services.

Voicing concerns

Graham went to Valenzuela-Smith about his concerns when TEC was named a final bidder in late October.

``Ms. Valenzuela-Smith told Mr. Graham that the (request for proposal) process did not preclude entities from bidding that had knowledge of (Belmont). However, Mr. Graham believed there was a difference between individuals who had technical knowledge of (Belmont) and individuals who possessed insider information,'' Mullinax wrote.

Mullinax noted that Baize told another TEC employee ``not to say anything about his working on the (Belmont Learning Center bid).''

``Mr. Baize told the co-worker that there could be a lot of money in this for us as TEC employees and that all Eastridge employees would benefit if Eastridge got the Belmont project.''

Baize said his comments were misconstrued, and that he merely told TEC employees Belmont is ``an extremely important project,'' and that they shouldn't get involved until we were prepared to make a bid - long after he said he was out of the LAUSD's offices.
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Publication:Daily News (Los Angeles, CA)
Date:Feb 7, 2002
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