MTA Choice for Subway Job Has Mixed Record

The Metropolitan Transportation Authority’s staff has recommended that a politically connected business team with a mixed record in government contracting work be awarded a lucrative contract to supervise subway construction on the Eastside.

The consortium, called Metro East Consultants, was ranked last among three contenders for the $65-million job by an independent panel of seven construction experts, but was boosted to the top spot by three of the MTA’s top officials, according to interviews and documents obtained by The Times.

The choice next goes to the MTA board of directors, which could accept the staff recommendation, choose one of the other two contractors or solicit new bids.

The winning team includes one contractor involved in the sinkhole-scarred tunneling along Hollywood Boulevard, another that has been upbraided by the MTA inspector general for awarding itself “unreasonable” bonuses with public funds, and a third contractor that has come under federal scrutiny for its mismanagement of a U.S. Commerce Department project downtown.

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The leader of the consortium, O’Brien-Kreitzberg, however, has been generally praised for its management of the MTA’s Green Line trolley construction in southern Los Angeles County. The consortium also includes the German-based tunneling firm Hochtief, which is highly regarded for work with the advanced type of digging machine the MTA plans to use in East Los Angeles.

MTA construction chief Stanley Phernambucq, a member of the final three-member panel, said the selection was tough, “like choosing between three Thoroughbreds.”

But an executive for JMA, a North Hollywood-based joint venture that was selected No. 1 by the review panel, took the news hard.

“We are in total disbelief that they essentially took the recommendation of seven senior construction authorities and discarded them completely,” said Dennis O’Connor, an executive at Jacobs Engineering, the lead firm in the JMA team.

Judy Johnson, business development manager for Metro East Consultants at its Encino offices, said Tuesday that her firm is “very excited” that the MTA has expressed confidence in the group’s abilities.

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In a memorandum sent Monday to the MTA board, Phernambucq acknowledged that JMA was rated first at the end of a three-step selection process in which the independent panel awarded points to each team based on a review of written materials and oral arguments. The panel then conducted a “round-table” discussion to make its final choice, according to the memo.

The memo reports, however, that MTA’s top three officials found the final ranking “somewhat inexplicable.” It says Metro East won the written round and JMA won the oral round. The memo states that after the final round-table discussion the panel pushed the third contestant, Bechtel Corp., above Metro East, even though Bechtel earned fewer points in previous rounds.

As a result, the top three officials found “no merit” in the panel’s recommendation, the memo states.

The memo states that Metro East was ultimately moved to the top of the list because the agency wanted JMA to concentrate its best technical expertise on management of the troubled subway tunneling through the Santa Monica Mountains, a job it won a year ago.

O’Connor called that reasoning “ludicrous,” noting that partners Jacobs Engineering, Mott Macdonald-Hatch and ACG Environments together can draw on 25,000 employees worldwide. The joint venture has barely more than 100 people in North Hollywood, he said.

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The final decision rested with Phernambucq, MTA Chief Executive Joseph Drew and his chief of staff, Frank Cardenas. The recommendation marks the second time in seven months that the MTA staff has selected Metro East to supervise construction of the East Los Angeles leg of the $5.9-billion Red Line subway system. The extension, which will run from Union Station to 1st Street at Lorena Avenue, is scheduled to open in 2003.

The first recommendation, made in March, was thrown out by the MTA’s chief executive after the agency’s inspector general raised serious questions about the ethics and quality of the selection process.

Metro East is considered to have close ties to Los Angeles City Councilman and MTA board member Richard Alatorre, who represents the Eastside. Several executives for companies in the consortium have either worked for or raised money for the councilman.

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Phernambucq said Alatorre had not contacted him on the decision to recommend Metro East.

At least three Metro East joint venture members had trouble with MTA or government contracts in the past:

* DeLeuw, Cather & Co., a management consultant, has been involved with its parent company, the Parsons Corp., in the joint venture called Parsons-Dillingham, which has supervised the subway’s troubled Hollywood leg.

MTA officials were critical of Parsons-Dillingham’s oversight after portions of Hollywood Boulevard sank as much as 10 inches in 1994. Parsons-Dillingham accused the tunnel contractor of concealing deficient work from inspectors. On another matter, an independent review concluded that Parsons-Dillingham fell short of “acceptable industry practice” in its supervision of the subway work downtown, where sections of tunnels were built with concrete thinner than designed.

* Cordoba Corp., which would provide computer and safety expertise to the consortium, has been the subject of a congressional investigation of its management of a $3.2-million business development contract in Los Angeles. The company’s project was closed down by the U.S. Commerce Department after an audit which found numerous management failures.

* Jenkins/Gayle & Martinez, which would provide construction management talent, was accused last year by the MTA inspector general of charging the agency for an “unreasonable bonus” of $36,000 in 1993 and 1994 to the wife of a top company official. The audit also revealed that the firm had charged the agency for a $2,676 country club membership, leases of a $1,208-per-month Mercedes-Benz and a $938-per-month Range Rover, and a $7,100 trip by five executives to Europe.