Firms’ Alameda Corridor Ties Raise Questions

Two state senators have raised questions about whether lobbyists and an engineering company overseeing the Alameda Corridor project have conflicts of interest because of their financial ties to potential bidders for contracts and to firms that have already been hired.

State Sens. Tom Hayden (D-Los Angeles) and Quentin L. Kopp (I-San Francisco) said they began looking into the relationships two months ago and have requested a full explanation from the Alameda Corridor Transportation Authority, which is in charge of the 20-mile shipping link between downtown Los Angeles and the county’s ports.

“I am confounded by these relationships,” said Kopp, who heads the Senate Transportation Committee. “There are obvious complications that could have easily been avoided by the corridor authority. I am not sure what they have done is the best way to serve the public.”

Attorneys for the corridor authority said they have analyzed the issue at least twice over the last year and have found no evidence of wrongdoing. After sending Kopp a preliminary response in May, they embarked on a more detailed examination that is scheduled to be sent to the senators in mid-June.

The people in the community making these allegations “do not have their facts straight,” said Gill V. Hicks, the corridor authority’s general manager. The charges are “100% false.”

One relationship in question involves Lisa Specht and June DeHart, who work as government affairs consultants and lobbyists for the corridor authority. Both are attorneys in the governmental affairs unit at Manatt, Phelps & Phillips, a politically active law firm with offices in Los Angeles and Washington. Senior partner Charles Manatt is a former chairman of the Democratic National Committee.

The attorneys for Manatt, Phelps have been subcontractors for various government affairs companies hired by the corridor authority since 1995. Since last year, Specht and DeHart have worked for a group headed by former City Councilwoman Joan Milke Flores, which receives $13,600 a month to pay for subcontractors, according to the firm’s contract.

Manatt’s government affairs unit also has been hired by Bechtel Infrastructure Corp., an internationally known Northern California construction company, to help prepare a bid to build the largest section of the $2-billion corridor--a huge open trench that will provide a rail track bed and roadway. The contract is worth up to $700 million.

In addition, Specht has worked for two other companies that have joined Bechtel in the bid for the trench section of the project. According to corridor authority records, they are Herzog Contracting Corp. and Parsons, Brinkerhoff, Quade and Douglas Inc.

The other relationship under scrutiny involves Daniel, Mann, Johnson and Mendenhall, one of four engineering and consulting firms hired by the corridor authority to help plan and supervise construction of the transportation link.

AECOM owns Daniel, Mann as well as two other engineering firms that work on the corridor--Frederic R. Harris Inc., a bridge design specialist, and Holmes & Narver, which is a subcontractor.

Authority documents show that Daniel, Mann’s sister companies have been allowed by the corridor authority to participate in any team of companies that want to bid for the trench contract. Holmes and Narver, as well as Harris have joined two different consortia interested in bidding, the records show.

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Kopp said he became aware of the relationships in late April during a public hearing in South Gate. The hearing was held to gather information for a bill by Hayden to make corridor jobs available in economically depressed cities along the project’s path.

The legislation was defeated in committee at the end of April.

Shortly after the hearing, Kopp sent a letter to the corridor authority asking for an explanation. He said he was concerned about the potential for conflicts of interest involving Bechtel and Manatt, Phelps, as well as the AECOM companies.

“They all share in the same source of revenue,” Kopp said. “There certainly may be direct and indirect conflicts of interests.”

Under state law, conflicts arise if the work of the entities in question relates to something that could benefit one or the other or both of the parties.

If a lobbyist for the corridor authority influences any decisions or determines any policy that could affect the hiring of the companies represented by his or her legal associates, then a conflict could exist, said Randall Difuntorum, an attorney in the professional ethics division of the State Bar of California.

Difuntorum said that under the state business and professions code, attorneys have an additional responsibility to maintain the confidences of their clients. The law, he said, would preclude a legal consultant for the corridor authority from sharing information with a company his or her colleagues represent before that agency.

“You need to determine the relationship and what are the roles of all the parties before you can determine whether a conflict exists,” Difuntorum said. “Appearances alone are not enough.”

Corridor authority officials maintain that Specht, DeHart and Bechtel’s attorney are sufficiently isolated from each other to prevent Bechtel from gaining any advantage during the bid process.

Specht and DeHart, corridor officials said, have focused on getting federal funding for the project, a role completely removed from the process of awarding contracts or setting requirements for bidders. George Kieffer, Bechtel’s attorney at Manatt, Phelps, provides legal analysis for bid proposals. He also chairs the committee appointed by the Los Angeles City Council to propose reforms of the City Charter.

“There is nothing that the Washington, D.C., office would learn that has anything to do with the request for proposal” for the trench section, Kieffer said. “We don’t even talk to each other about corridor business.”

Moreover, Kieffer said, Manatt, Phelps decided to represent the corridor authority only after the Los Angeles city attorney’s office, acting on behalf of the corridor authority, determined that there were no conflicts of interest involving Bechtel.

“One is dealing with apples, and the other is dealing with oranges,” said Richard M. Helgeson, a Los Angeles assistant city attorney on loan to the corridor authority.

In December 1997, corridor authority officials asked Specht herself to address whether Manatt, Phelps had any conflicts of interest involving Bechtel. After an in-house review, Specht concluded: “We have researched this potential conflict issue and conclude that no legal or ethical conflict exists in this regard.”

Helgeson, however, said he is now reevaluating Manatt, Phelps’ relationship with Bechtel and the corridor authority.

With respect to Daniel, Mann, corridor authority officials said they have forbidden the company from considering bids from its sister companies or supervising the work of those firms.

Future contracts with Daniel, Mann, Helgeson said, will clearly spell out the restrictions. They do not do so now.

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In addition, corridor authority officials say, an independent panel of engineering consultants evaluates construction bids for the corridor.

Hayden said that when Helgeson’s response is received, he and Kopp probably will refer the matter to the state Legislative Counsel’s Office for further review. The office of 85 lawyers provides legal analysis of issues for lawmakers.

Kopp said he has not been reassured by the corridor authority’s initial response.

He contends that the corridor authority could have easily avoided the present situation by hiring government consultants and engineering firms that do not have close ties to companies interested in working on the project.

“There is red tape involved in establishing all this claimed separability,” Kopp said. “I am dubious that separability always occurs. I personally would not use this approach.”