Bidding Process for Kiosks, Bus Shelters Is Challenged

The award of a contract worth $750 million to build bus shelters and street kiosks has been delayed after allegations that the firm favored by the city failed to disclose past involvement in bidding irregularities in Europe.

Infinity Decaux LLC was recommended by the Los Angeles Public Works Department, but the matter was placed on hold after a competitor complained that the bidder failed to disclose, as required, past violations.

Decaux officials said the criminal charges were minor and are on appeal in French courts, and do not meet the standard for disclosure.

“Without question, we have complied with all of the city bidding requirements,” said Peter Kelly, an attorney for JCDecaux, a French firm that joined New York-based Infinity Outdoor Inc. in forming a limited liability company to bid for the work.

Assistant City Atty. Christopher Westhoff traveled to France with five others to check out Decaux, but did not discover the alleged irregularities. Westhoff has now been asked to study the case and recommend action to the Los Angeles Board of Public Works.

In a June 8 report to the board, department officials said an investigation was conducted into the bidders’ backgrounds and “no negative information was obtained during the investigation of either candidate.”

At issue is a contract to provide self-cleaning public toilets, transit shelters and kiosks. The winning bidder will be allowed to sell advertising on the sidewalk furnishings which may bring in $750 million to $1 billion over the 20-year life of the contract, with the city getting at least $150 million over that period, officials said.

“We believe Infinity Decaux has submitted a false, inaccurate and misleading response on its [work history] questionnaire, and therefore cannot be awarded this contract,” said Amy Forbes, an attorney for competing bidder Adshel Inc.

The founder of the French firm, Jean-Claude Decaux, was given a six-month suspended jail sentence last year in France and a one-year suspended sentence nine years ago in Belgium after being accused in both cases of illegal actions in procuring government contracts, according to the company’s own documents.

In a prospectus filed May 30 as part of a pending stock offering, the Decaux firm said its street furniture contracts have been the subject of “investigations” by local authorities in France 15 times in the last 10 years, resulting in six contracts being terminated.

The filing said Jean-Claude Decaux was sentenced by a court in Bordeaux in February 2000 for “conspiring to restrict free and equal access to a public bid process” involving a contract for school clocks in the French region of Aquitaine, said Peter Kelly, attorney for the firm.

Decaux was sentenced for working out a no-bid contract with a French politician for a job that the courts later ruled should have been competitively bid, according to the prospectus. The politician, a member of the French Senate, was convicted of favoritism and received the same sentence, according to media reports.

But when Infinity Decaux LLC was asked on city bid forms, under penalty of perjury, whether it or any of its officers had “no conviction of a crime involving bidding upon or performance of a local, state or federal government contract” during the last five years, it answered “yes.”

Kelly said the answer was proper because Decaux’s case is being appealed and under French law there is no conviction until the appeal is settled. He also said the case is the result of a peculiarity of French law which outlaws no-bid contracts.

“What he was convicted for in France would not result in a prosecution in this country,” Kelly said.

Westhoff said he may have to hire a private attorney with expertise in French law to rule on Decaux’s claims.

Kelly said the company also indicated that the wording of city bid documents can be confusing because it asks about crimes involving “local, state or federal government contracts” which might not be interpreted to include contracts in foreign countries.

The attorney said the firm probably should have attached an explanation informing the city about the foreign case. Westhoff has not yet determined whether their actions constitute a failure to responsibly bid, which can result in disqualification and a five-year ban on city contracts.

“The question for the Public Works Board and the City Council is, does all of this information rise to the level of knocking these people out of the contract?,” Westhoff said.

In 1992, Jean-Claude Decaux was convicted of spending $30,000 on campaign expenses and luxury vacations for the mayor and other officials in Liege, Belgium, which was buying sidewalk toilets.

In that case, Decaux received a one-year suspended sentence and was ordered to pay a fine of 60,000 francs. The company prospectus noted that Decaux’s conviction for violating campaign finance laws “was expunged from his record on Oct. 3, 1996 after the passage of a certain period of time.”

As part of the Los Angeles investigation, Westhoff and five other city officials traveled to England and France to check out both bidders. The Los Angeles officials, among them aides to Councilwoman Rita Walters, flew to London to talk to other municipalities contracting with the bidders, and then took the train to France for a tour of Decaux’s manufacturing plants outside Paris.

None of the European city officials raised questions for the Los Angeles delegation about problems with Decaux, Westhoff said.

The entire six-day trip was paid for by the city, Westhoff said, adding he has seen no evidence of any irregularities involving the city’s handling of Decaux’s bid in Los Angeles.