Voted to Reopen Contract Bidding : Mayor, 2 on Council Have Stakes in Firms

Mayor Maureen O’Connor and two other San Diego City Council members who voted Tuesday to reopen the bidding process for a lucrative new city telephone contract have substantial holdings in communications companies that will be given a second chance to win the contract because of their action.

In their financial disclosure statements, council members Bruce Henderson and Abbe Wolfsheimer state that they own stock in GTE Corp., parent company of one of the bidders, General Telephone Co. of California.

O’Connor, who last year earned more than $10,000 in income from another bidder, General Electric Corp., sold her interest in that firm Oct. 21 and on the same day invested more than $100,000 in General Electric Capital bonds. General Electric Corp. is listed as parent company of one of the bidders, RCA.

California’s Political Reform Act prohibit a public official from making or using his official position to “influence a governmental decision in which he knows or has reason to know he has a financial interest.”

Among the ways that an official can have a financial interest in a decision is if the action has a “material, financial effect . . . on . . . any business entity in which the public offical has a direct or indirect investment worth $1,000 or more.”

Henderson reported income of $250 to $1,000 last year from his holdings of $10,000 to $100,000 of GTE Corp. stock. Wolfsheimer, who at the time of the filing owned 600 shares in the same company, did not list any income from the holdings.

O’Connor also earned more than $10,000 from dividends and sale of stock in Nippon Electric Corp., parent company of another bidder. However, she and her husband, Robert O. Peterson, no longer own any NEC stock, which they acquired July 25 and sold Oct. 13.

It could not be determined Tuesday night whether the vote--which gives new life to the attempt by GTEL, RCA and five other companies to win a government contract valued by city officials at $12 million to $18 million--might have a “material, financial effect” on the large corporations. The Fair Political Practices Commission has issued detailed regulations by which those questions are decided.

When questioned about the possibility of conflict of interest, Assistant City Atty. Ron Johnson replied that council members can vote on matters when their participation in the decision will earn them less than $250 personally.

Henderson said that he believed he was protected by a blanket exemption to the conflict-of-interest laws for large, publicly traded corporations. Wolfsheimer and O’Connor could not be reached for comment.

Wolfsheimer has voted twice on the matter, casting ballots in favor of renewed consideration of the telephone contract Tuesday and May 16. Henderson and O’Connor were not present for the May 16 council discussion.

Technically, the council has no decision-making authority in the awarding of the contract for 7,100 telephones in government offices citywide. That authority is vested in the San Diego Data Processing Corp., a nonprofit corporation created by the council 10 years ago to handle the city’s communication and computer equipment.

However, the Data Processing Corp. agreed to reconsider bids from all seven companies when the council, led by Wolfsheimer and Councilman Ron Roberts, intervened May 16 and threatened to disband the corporation because of concerns over the bidding process.

After a rigorous competitive bidding process, the Data Processing Corp. had chosen Tel Plus Communications over the six other firms, and was set to begin negotiations with the company.

But the council, concerned that the Data Processing Corp. had mishandled the bidding process by failing to hold oral discussions with all seven bidders, pressured corporation officials into revamping their process.

Last Thursday, the corporation’s board agreed to accept “best and final offers” from the seven companies and to form a five-member panel that will hear oral presentations from all seven. The new bid process will delay a decision until July 17.

The panel, comprising five outside experts and a Data Processing Corp. official, will issue the final recommendation on a vendor to the corporation’s board of directors, which will make the final choice. The council also will be advised about the decision but has no decision-making role.

After a second day of examining the bidding process, the council Tuesday accepted the revamped process and agreed to separate the citywide contract for 6,300 telephones from one for the 800 telephones needed in the San Diego Convention Center. Convention center officials must install their phone system in time for the building’s Nov. 1 opening and may not be able to wait for the citywide contract to be awarded.

The council also abandoned its threat to disband the Data Processing Corp.