In the first test of Los Angeles' new anti-apartheid law, Mayor Tom Bradley on Friday joined two city councilmen in an effort to deny Fluor Corp. a contract to oversee the expansion of the Los Angeles Convention Center because of the Irvine-based company's ongoing operations in South Africa.
Bradley, in his first formal statement on the matter, said the contract, tentatively awarded to Fluor in June, was "clearly in conflict" with the city's new anti-apartheid policy. Last week, Councilmen Robert Farrell and Zev Yaroslavsky announced their opposition to giving the contract to Fluor.
"The City of Los Angeles has sent a message to the business community: You can do business with our city or you can continue to prop up South Africa's oppressive regime," Bradley said. "But you cannot do both."
Although the full Los Angeles City Council is not scheduled to vote on the matter for several weeks, Bradley's move Friday was widely seen as ending any possibility that Fluor would be selected to manage the Convention Center expansion--a $310-million project overall--as originally recommended by the members of the center's quasi-independent overseeing board.
Loss of the contract would cost Fluor Corp. less than $10 million in potential revenue. But it represents the first time the giant engineering and construction company has been potentially denied business because of its South African ties.
Fluor South Africa Pty., the subsidiary at issue, generated about $40 million in sales last year, less than 1% of the corporation's $4.2-billion total revenue.
Nevertheless, a Fluor spokesman said the company has no intention of giving up its 20-year-old South Africa operations, which include 15 engineering contracts with public and private agencies.
"We honor our contractual commitments wherever we work, and we have made our position clear to Los Angeles," the spokesman said late Friday. "While we find apartheid morally repugnant, we feel our presence there is a positive step toward a peaceful change."
In March, Fluor stockholders soundly defeated a dissident shareholder proposal to end its South African operations, with holders of only 15% of the company's 79 million shares supporting the proposal.
The spokesman said the Los Angeles Convention Center contract is the only one the company has pending in a city with policies limiting business with companies that do business with South Africa.
Company 'Not Sure'
However, it is unclear what will happen to Fluor's $1.5-million engineering contract with the Port of Los Angeles. The spokesman said the company believes the contract is exempt form the new anti-apartheid ordinance because it was awarded prior to the new law's passage. However, he conceded that the company is "not sure."
Word that Fluor could lose the Convention Center expansion contract surfaced almost immediately after the council approved the July 3 ordinance prohibiting the city from doing certain business with companies operating in South Africa.
Fluor was tentatively awarded the contract June 20 by the city's Convention and Exhibition Authority. But in an unusual action, the authority forwarded the selection to Bradley and the City Council for concurrence.
By the time the matter was scheduled for full council consideration, the new anti-apartheid ordinance was in effect. The contract goes before the council's Finance and Revenue Committee on Aug. 12, with discussion by the full council scheduled several weeks later.
Most Contracts Exempt
Most city contracts are exempt from the ordinance because of a city charter provision requiring the acceptance of the lowest bid. But the Convention Center project was covered by the new ordinance because price-competitive bids were not solicited. About 13% of the city's contracts--affecting an estimated $107 million annually--are expected to be covered by the new anti-apartheid ordinance.
Fluor's South African subsidiary employs 101 full-time workers, including 16 blacks, 6 Asians and 6 of mixed race, company officials said. The spokesman said Fluor subscribes to the Sullivan Principles, a voluntary set of employer guidelines for South Africa calling for equal treatment of all employees regardless of race and a commitment to the improvement of the careers and life styles of nonwhite workers.
The Fluor spokesman said the company's proposal for the convention center project called for between 22% and 25% of the work to go to minority companies.