Probe Sought of Contracts in Yorba Linda

The state’s Fair Political Practices Commission has been asked to determine whether there are conflicts of interest between the director of public works and a firm that has received all of the city’s engineering contracts for the past 20 years.

During the past five years, Yorba Linda has awarded BSI Consultants Inc. engineering contracts worth nearly $9 million without first seeking bids from other engineering firms, city records show.

Director of Public Works Roy Stephenson is an employee and former owner of BSI. This relationship and the longtime practice of awarding contracts without giving other companies the opportunity to bid on them is now being questioned by two local business owners and members of the City Council, who have requested the FPPC examination.

“If anything, just to avoid the appearance of a conflict, we should change the way we do this,” Councilman Mark Schwing said. “It has placed Roy in an untenable position.”

Since 1975, Stephenson has served as the city’s director of public works, but he is paid by BSI. Under contract, the city pays the firm for Stephenson’s service, which includes recommending and advising the city on all of its engineering projects, ranging from routine traffic lights to multimillion-dollar facilities. BSI’s contract requires the city to pay $168 an hour for Stephenson to be at City Hall three days week, from 8 a.m. to 5 p.m.

Recent projects include the Yorba Linda Community Center, which was built for $6 million, with about 15% of the costs assigned to design and engineering fees. BSI was also responsible for the design of the proposed widening of Imperial Highway; $1-million plans for the project were approved by the city but will be paid out of Measure M funds.

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On all of those projects, the design work and engineering did not go out to bid and was performed by BSI, city officials acknowledge.

City Manager Arthur C. Simonian defended the practice, saying all projects as well as design fees paid to BSI were approved first by the City Council, which always had the option to request proposals from other design firms.

“Roy never had the independent ability to spend money not approved by the council,” Simonian said. “And no one ever said, ‘Let’s use someone else.’ (Using BSI exclusively) was a practice that developed over the years on the basis that the council was satisfied with the level of expertise we are receiving.”

While the council is supporting the FPPC query, members requested it only after several public complaints from the two business owners.

“When city projects are discussed by the council, Mr. Stephenson” participates in those discussions, said Louie Scull, owner of Yorba Linda Plumbing. “Then BSI, with no bid, gets the contract to perform the studies for those projects. Is this a conflict of interest?”

Stephenson maintains he does not have a conflict of interest because he acts only on the orders of the council.

“I can recommend and say, ‘Here is a list of projects we should consider doing,’ but I don’t tell them what to do. They tell me,” he said.

FPPC spokeswoman Jeanette Turvill would not comment specifically on the Yorba Linda situation. Turvill said the question would essentially come down to what role Stephenson plays in the decision process and whether it can be reasonably assumed that decision will influence his income.

“If the decision before the public official is, for example, do we build this bridge, and the official is a partner in a bridge-building firm, it’s not necessarily reasonably assumed that firm would build the bridge,” Turvill said. “There would have to be a clear track record of the majority of bridges (in the city) being built by the public official’s firm.”

Yorba Linda’s practice has raised eyebrows among officials in other cities that contract with outside firms for a city engineer.

Until 1991, Laguna Niguel also contracted with BSI for a city engineer/director of public works. During that time, the city sought proposals from other engineering firms for all but the most routine projects, City Manager Tim Casey said.

“On all but minor assignments we sought competitive bids,” Casey said. “BSI got some of the work and other (engineering firms) got some of the work.”

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Laguna Niguel hired its own in-house city engineer as a way to save money and to avoid the appearance of conflict of interest.

“There would periodically be the dilemma of having the (contract) city engineer reviewing proposals from his own firm,” Casey said. “It places everyone in a delicate position.”

Officials in other cities said they solve that problem by excluding their contract city engineer from bidding on large projects or hiring another firm to evaluate and oversee projects designed by the contract city engineer.

“Generally, if we have a large project, it goes out to bid and (the city engineer’s firm) is not invited to participate,” Seal Beach City Manager Jerry Bankston said.

But Yorba Linda officials said they are not concerned about Stephenson being required to evaluate his own company’s work.

“I have always felt Roy’s loyalty has been in the best interest of the city,” Simonian said. “I consider him as loyal as any employee.”

And Stephenson said he has no problem finding out ways the city can save money on its contracts with his firm.

“That’s part of my job. When I’m serving the city as the director of public works, my first loyalty is to the city,” Stephenson said. “If the city didn’t feel they were getting a good deal, they could cancel my contract at any time.”