Deal Reached on Air-Conditioning Schools

Eight months of rancorous competition for a contract to air-condition hundreds of Los Angeles schools came to a sudden and unexpectedly felicitous end Wednesday when the two surviving bidders agreed to do the work jointly and cut their price by millions of dollars.

Representatives of the two large utility consortiums said they jumped at the compromise, which was presented to them Wednesday afternoon by Supt. Ruben Zacarias in a last-ditch effort to end months of indecision.

“All the competition, the vying and the jockeying will cease and we’ll get down to work on the air-conditioning that our students deserve,” an elated Zacarias said in announcing the agreement.

Under its terms, the two groups will install air conditioning at 285 schools for $234 million--$25 million less than the lowest of either of their bids--matching the budget established by Los Angeles Unified School District staff.

They also have committed to working with, rather than around, the 10 regional project managers hired by the school district to oversee more than a billion dollars in Proposition BB repairs and construction, of which the air conditioning is only a small part.

Zacarias said that he has given the two groups two weeks to work out the terms of their partnership and that he will present the proposal to the board at its next meeting in February.

Principals of both groups effusively praised Zacarias for asserting leadership in bringing them together, despite his demand that they adhere to the district budget or lose out.

“The man knew what he wanted to accomplish and he took us straight to the end zone,” said Michael Dochterman, general manager of the Energy Alliance, a group consisting of the Los Angeles Department of Water and Power and the parent company of The Gas Co.

Dochterman said he was able to snatch up the offer--cutting Energy Alliance’s bid by nearly $25 million--because he had foreseen it as a possible outcome and was prepared.

David Gralnick of PG&E; Energy Services/CH2M Hill said his group is studying how it can shave more than $40 million from its $276.5-million bid.

“The devil is in the details,” Gralnick said, declining to discuss where the savings may come from.

The Energy Alliance touched off the bidding war in May by proposing to install the air conditioning in 300 schools for millions less than the school district’s $200-million budget and in a third of the time. Steven Soboroff, chairman of the citizens committee set up by Proposition BB to review the bond work, championed the proposal as an example of the kind of private-public cooperation needed to restore confidence in government. But school district officials insisted on seeking competitive bids, and raised the stakes by requiring bidders to dig trenches for underground electrical power.

In all, 11 companies and joint ventures responded. In the ensuing months, district staff dropped several bidders as being too small for the job, and three dropped out expressing frustration over the bidding process and suspicion over the district’s behavior.

At every turn the ill will escalated.

Last fall, a district selection committee recommended leaving the work under the existing project management team, but former district business czar Hugh Jones stepped in and recommended that the low bidder, New West/Rodgers, get the job.

But, in the crowning embarrassment of the saga, the Orange County joint venture bolted the day after the Board of Education authorized Jones to begin exclusive negotiations with it.

The firm’s general manager said he thought that district staff intended for the negotiations to fail so they could keep the air-conditioning work under their project management team.

Soboroff, who had long criticized district staff for trying to monopolize the work, became increasingly strident, accusing the district team of dropping everything but the air-conditioning work to protect its stake.

Although the district’s estimate was millions less than the two private-sector bids, Soboroff favored either of those because the prices were guaranteed.

After learning of Wednesday’s agreement, in which the maximum price is guaranteed, Soboroff joined the chorus of praise for Zacarias and the district for getting the private firms to beat each other’s price down.

“I think it’s a huge step forward,” Soboroff said. “It takes this to 100% accountability. I think Zacarias is showing real leadership here.”