Port Firm’s Hefty Fireboat Contract Stirs Controversy

The San Pedro firm that designed a troubled ocean-research vessel for the city of Los Angeles also has a city contract to design and monitor the construction of a new fireboat for $600,000--more than three times the company’s original bid.

Records also show that Rados International Corp., owned by city Harbor Commissioner Robert Rados Sr., won the contract after missing the original deadline for proposals. And since winning the contract in 1988, records show, the firm has been paid $320,000 for a design that it completed and submitted to the city only a month ago.

Late Friday, a Harbor Department spokesman said the port staff will soon recommend that the final phase of the contract, worth about $200,000, be canceled. The spokesman, Chuck Ellis, said the recommendation was not a response to inquiries by The Times about the contract. Rather, he said, port staff was responding to a conflict-of-interest policy adopted by the Harbor Commission about the time the contract was awarded.

Asked why the staff had waited so long to make the recommendation, Ellis said the logical time to end the contract was after design work had been completed. If the recommendation is approved, he said, the remainder of the contract, which involves overseeing the construction of the fireboat, would be open to new bidding.

In interviews conducted before Friday’s disclosure, city port and fire officials had repeatedly defended the time and money spent on the design of the fireboat. The contract, they said, provides for far more design work than originally sought by the city. And, they said, the 100-foot vessel will be far more sophisticated than the one they originally envisioned.

The officials and Robert Rados Jr., the company’s president, also insisted that no favoritism was shown by the city in its handling of the contract, noting that Rados International had city contracts long before its chairman became a commissioner in 1984.

“There was no preferential treatment. None,” said Robert Rados Jr., who is the son of the company’s chairman.

Added port Executive Director Ezunial Burts: “Throughout the entire process, and I looked at it very carefully (in response to questions from The Times), I did not see anything unusual or improper in the way it was handled.”

But records and interviews raise numerous questions about the fireboat contract. They also show that although Rados International had many small city contracts before its chairman was appointed a harbor commissioner, the company has since won the only two boat design contracts awarded by the city. And they show that both contracts have soared in price and scope over original bids.

The fireboat contract, for example, was originally bid at $169,000 by Rados International, but the final cost negotiated with port and fire officials was $600,000. And the fireboat, originally expected to cost $2.5 million and to be in service a year ago, is now projected to cost $4.6 million and not to be built until late next year.

Similarly, the design contract for the ocean-research vessel, La Mer, was originally priced at $441,000. But after numerous changes in the contract, Rados International eventually received $1.2 million. The vessel, commissioned by the Bureau of Sanitation and plagued by numerous design and construction problems, has so far cost the city $5.5 million--more than three times its original estimate of $1.5 million.

Records show the competition for the fireboat contract got under way in 1987, two years after the fire and port departments outlined an ambitious safety plan for Los Angeles Harbor. The plan, drawn to accommodate the expansion of the port, called for building a new fireboat to replace the oldest of five now in service. Under a longstanding agreement between the departments, the cost of the fireboat was to be paid by the Harbor Department, which administers operations and leases in the Port of Los Angeles.

(Originally, plans called for the contract to be awarded by the Harbor Commission. But because of Rados International’s participation, the final decision was made by a City Council panel, which based its action on recommendations by city fire and port officials.)

In February, 1987, records show, the Harbor Department invited 43 naval architecture firms nationwide to submit design proposals for the fireboat by March 4.

Eight days after the deadline, with five companies responding, the port extended the deadline to March 25. In a letter sent to all 43 firms, the port said its original deadline had been extended because “a limited number of firms” had responded to the first invitation for proposals.

When the new deadline arrived, only Rados International had joined the competition.

Port officials, including Chief Engineer Vern Hall, said their records show that Rados International, like most of the companies originally contacted, did not respond to the original request for proposals.

But Robert Rados Jr. said the company did not submit a proposal because it was not originally invited to do so. “My recollection is that someone in the Harbor Department, not in the upper echelon, saw our name on the list and took us off,” Rados said.

The reason, according to Rados, was concern that the company should not compete for a port contract unless it was determined that doing so would not constitute a conflict-of-interest problem for Robert Rados Sr., who by then had been appointed to the Harbor Commission.

Robert Rados Sr. declined to comment for this article, but his son said the conflict-of-interest question was resolved by the Los Angeles city attorney’s office before the company began competing for the contract.

Yet city records show that it was not until May, 1987, two months after his company submitted a proposal, that Robert Rados Sr. formally asked for a written opinion from the city attorney’s office about competing for the contract. Records also show it was not until September of that year--long after Rados International was recommended for the contract by city officials--that Kathy Vale, a deputy city attorney assigned to the port, issued an opinion permitting the company to compete for the contract so long as it was not awarded by the Harbor Commission.

After Rados International entered the competition, the six proposals for the fireboat contract were sent to the city Fire Department for evaluation. And by mid-April, three weeks after the second deadline, fire officials made the first of several recommendations that Rados’ company get the contract.

Records show that the original proposals ranged in price from $60,000 to $312,000.

In judging the firms, city fire officials were not bound to select the company that offered the lowest responsible bid. Instead, under the generally accepted rules of so-called personal services contracts in government, other factors--including a company’s presentation, experience, personnel, references and even its location--were weighed in the judging. And when those factors were scored, Rados International was judged to offer the best proposal.

In an April 12, 1987, evaluation, for example, Battalion Chief William Burmester wrote that Rados International’s proposal “gives us all the major items we are looking for in our new boat and clearly wants our input in the design.” Burmester also seemed swayed by the fact that the company was based in San Pedro, saying this would make the firm sensitive to Los Angeles’ desire for a quality fireboat.

Fireboat pilot William Dahlquist also noted Rados International’s location in his April 13 evaluation of the proposals. “I believe that overall, Rados Corp. had the outstanding reply . . . and has superior qualifications to provide our consultant needs. The bonus of being located in Los Angeles Harbor makes it stand out well above the others,” Dahlquist wrote.

But a recent review of the evaluations, and interviews with all of the competing companies, shows the judging included some erroneous information about several of the firms.

Most significant, perhaps, may have been the comments made about Morris Guralnick Associates, a San Francisco firm that placed second in the judging and originally offered a proposal within $1,100 of Rados International’s.

In Burmester’s evaluation, Morris Guralnick was scored behind Rados International because of its location and alleged complaints in San Francisco over the modernization of a fireboat there. And Dahlquist’s report said the company had no available design for its proposal and was short on references.

But the company’s president, Hubert Russell, recently said his firm never had the San Francisco contract--a claim supported by a San Francisco fire official. And Dahlquist’s own report notes that four of the six companies, including Rados’, had no available design for the fireboat. Furthermore, Dahlquist’s report notes that Morris Guralnick, supposedly “short on references,” had in fact designed Los Angeles’ last fireboat in the 1960s.

Based on the judging and subsequent review of the proposals by other fire officials, the department made its final recommendation for Rados International on Sept. 18, 1987. In a five-page report, Fire Chief Donald Manning cited the company’s experience, financial stability, location, price and references--among them one from the city’s Bureau of Sanitation.

Before that final recommendation, city officials had asked Rados International and the other two finalists for the contract to offer price estimates for additional work. And those estimates raised the company’s proposal to $252,423--well below the price quoted by other finalists.

But records show that long before Rados International was officially awarded the contract, its price had soared to $594,000 during negotiations. (It has since reached $600,000 because of change orders in the contract).

The higher price of the contract was driven largely by the city’s decision--after the original bidding--to have the designer of the fireboat also oversee its construction. As a result, the cost of Rados International’s contract rose by $113,000 for full-time inspections of the ship during its construction, and another $70,000 for travel and per diem expenses associated with those inspections. Just where the vessel will be built depends on a yet-to-begin competition among shipyards, though officials from Rados International and the city have already visited several shipbuilders in the Pacific Northwest and on the East Coast.

Port and fire officials say those increases--as well as $73,000 for a computer and program to monitor the ship’s maintenance--were justified to assure a quality fireboat. They also said it is standard procedure to negotiate fine details of a contract before it comes before a city agency for approval.

But harbor-area Councilwoman Joan Milke Flores, who urged the contract’s approval in 1988 by a City Council panel, said in a recent interview that she was unaware that the contract rose so much in price during exclusive negotiations between the city and Rados International. And, she said, she was troubled by that disclosure.

“I believe if any firm is given exclusive rights to negotiate, that needs to go to the board for approval before they start negotiating,” Flores said. “Staff shouldn’t decide which bid was the most responsive, regardless of which contract we are talking about.”

In recent interviews, others competing for the contract said they were also surprised by its final price and by the delays in completion of the fireboat design.

“We certainly could have come in under that” figure, said Morris Guralnick’s Russell, who also said his company would have finished the fireboat design in less than a year.

“I’m flabbergasted that so much time has gone on,” he said.

But Robert Rados Jr. and city officials said the higher costs of the contract were justified to assure a quality fireboat. And the delays in starting construction of the vessel, they said, were not significant to the city.

“If we had had our druthers, it would have all been completed. But as far as operationally, it is not hurting us in fire protection in the harbor,” said Deputy Fire Chief Donald Anthony.

Added Robert Rados Jr.: “Sure, we would have liked to have had the design done before. . . . But if you’re asking if the city has gotten its money’s worth, I will tell you they have gotten far more from this contract than they paid for.”