Why does a private contractor have a free city office space and inside access to top officials who keep extending his contracts?
A private-sector engineering and construction consultant has worked for years out of the San Francisco Department of Public Works (DPW) offices for free, using public resources and having inside access to top department officials, a status gained through a questionable competitive bidding process, a Guardian investigation has revealed.
Andrew Petreas, senior project manager for Environmental and Construction Solutions, Inc. (ECS), which has done contract work for DPW since 2004, has a city e-mail address. Petreas and his assistant both work on the fourth floor of DPW's Bureau of Construction Management (BCM) building on Mission Street, in close proximity to bureau manager Donald Eng.
According to documents obtained by the Guardian earlier this year, ECS is providing construction and consultation services for various DPW projects, including repairs to the building where he works, trying to bring it in line with the city's Green Building Ordinance, a project that is still going three months after its scheduled completion date of June 2009.
Because of the city's competitive bidding process for using outside consultants on DPW projects such as construction, repairs, and construction management on all city-owned buildings and maintenance of city streets and sewers Petreas' inside access raises questions of fairness among competing bidders and could pose a conflict of interest. DPW officials confirm the working arrangement, but deny that there's anything improper about it.
DPW spokesperson Christine Falvey told us that Petreas' occupancy is necessary to "improve the flow of communication between staff and consultants" and "deliver the project more efficiently." She also said Petreas will vacate the premises once his contract has expired. But insider sources and department documents indicate that Petreas has been in the department for many years, beginning as an employee under Don Todd Associates, which first began consulting for DPW in the early 1990s. And because of questionable contract extensions, there seems to be no end in sight for the department's relationship with Petreas or his great deal on office space.
No other contractor appears to receive this kind of advantage, and all are subject to the same competitive bidding process for obtaining contracts. City Attorney's Office spokesperson Matt Dorsey told the Guardian that "it makes sense in some cases to co-locate," but he couldn't provide specific guidelines that regulate such arrangements.
When the Guardian requested all correspondence directed to and from Petreas' city e-mail account, we were given e-mails dating only as far back as July 2008. We were further stonewalled by DPW when we asked how long Petreas has had a working relationship with the department.
Frank Lee, executive assistant to the director of the DPW, told us via e-mail: "I do not know the exact length of time that Andrew has worked for our department, but the e-mails that were forwarded to you were the only e-mails that we currently possess." He further told us that five e-mails were withheld in accordance to California Evidence Code Section 1152, which essentially states that public records can be withheld if it contains information about a money dispute between the city and a contractor. Lee would not say if the disputing contractor was Petreas or his firm, but did tell us that the matter is in litigation and the content is about "litigation strategies."
Earlier this year, ECS completed work on the department's Materials Testing Lab, a project that initially began in March 2008 with a two-month timeline, but was given a 15-month extension. The firm also has been contracted to train DPW staff to estimate the cost of DPW projects, a contract worth $102,000, which is just below the $114,000 threshold for inviting competing bidders.
The documents also show that in the 2007-08 fiscal year, the department funneled additional money to ECS on top of its initial contract amount for "multidisciplinary construction management services" essentailly retainer services when other contractors on retainer had not yet fulfilled their contracted amount. ECS received an additional $500,000 on top of its contracted $1 million when the other contracted consultants (AGS, Inc., CPM/TMI Joint Venture, and PGH Wong Engineering, Inc.) had spent less than 50 percent of its $1 million contracted amount.
It's not that ECS is better qualified or cheaper than these other private consultants. Consulting firms for the four open retainer slots are selected by the city's Human Rights Commission for a two-year period through a competitive request for proposals (RFP) bidding process. For the last two periods, the commission ranked ECS in third place; before that, it came in second, but got a contract anyway.
Yet Petreas continues to be the only consultant who enjoys city e-mail privileges, not to mention a rent-free, roomy office in the city-owned building, with a view from the fourth floor. But if fairness among competing private contractors is an issue, the other contenders aren't complaining, perhaps out of fear of not being awarded future contracts by DPW or other city agencies.
When asked whether the RFP process was even-handed and if Petreas' insider status gives him an advantage, Jack Wang, principal engineer for AGS, Inc., hesitated to speak with us, saying that he didn't want to get in trouble and that he "can't comment on undue influence." He also told us that Petreas' augmented contract amount and time extensions were "not enough for me to be alarmed about." He later added that "the industry is small. It's very competitive."
When the Guardian took a look at all contract agreements between the department and ECS, as well as with Don Todd Associates, we discovered an employment gap that coincided with public scrutiny of the arrangement. Shortly after a September 1999 article by Peter Byrne ("It Ate City Hall") in SF Weekly reporting that Don Todd Associates had been paid $6 million over the course of nine years, some of it in apparent violation of city policies, its contract agreement ended and was never renewed or extended. But Petreas reemerged in 2004 under ECS, where he and his wife are the current owners.
The department offered no explanation for Petreas' ongoing good fortune or his relationship with Eng, who did not return calls from the Guardian. Instead it diverted inquiries to public information officers. Several attempts were made to contact Petreas and other ECS representatives, but our calls were not returned.
So is it fair to say that there are no guidelines or oversight for the length of time a private consultant may provide services to the city and that it is wholly up to the discretion of the department manager? When we brought up this opportunity for cronyism and corruption a big loophole in city labor law to Deputy City Controller Monique Zmuda, she told us that "there's no prohibition on the city contracting with one entity for a long time."
Earlier this year, ECS completed yet another round of contract negotiations with the city and signed a new master agreement for multidisciplinary services for the next five years, in which it will be paid out $1 million for as-needed services.