Airport Bidding Probe Takes On A New Look

October 12, 2003

Airport Bidding Probe Takes On A New Look
By Joseph Tanfani and Marcia Gelbart
Philadelphia Inquirer, PA

Months before a bug was found in Mayor Street's office, federal corruption
investigators were pulling records and interviewing people about a
behind-the-scenes bidding war over a contract at Philadelphia's airport.

One area of interest to those investigators: the firing of a city
procurement official after she got into a dispute with an aide to Mayor
Street.

The fired official says the 2001 dispute centered on whether a certain
company would qualify for millions of dollars worth of airport maintenance
work. That company had ties to the mayor's brother, T. Milton Street Sr.

The mayor's aide wanted some sensitive information: Had the company passed
muster in the bidding process?

"I felt uncomfortable with the questions I was being asked," Marla Neeson,
the former deputy procurement commissioner, said in an interview last
week. "Uncomfortable enough that I specifically told the aide that this
was not public information, and could give the impression of impropriety
in the bidding process."

Federal investigators are examining that conversation and the bidding war
that surrounded it. They have subpoenaed 25,000 pages of city records and
interviewed at least five people about the airport contract.

One subpoena, issued in July, ordered a bidder to deliver all
airport-related "correspondence, memoranda, e-mails, financial statements
and reports" to a federal grand jury.

Law enforcement sources said last week that the bugging device found in
Street's office ceiling was part of a two-year inquiry into possible
corruption in city contracts, including airport work.

It was still unclear whether the bug played a direct role in the
continuing probe of the Milton Street-related airport deal.

In an interview last week, Milton Street said he thought it did. He said
the winning bidder, Philadelphia Airport Services, had won the $13.6
million contract fairly, and that he and his brother had done nothing
wrong.

Milton Street termed the bugging "a dirty trick" by Republicans trying to
bring down his brother.

"I think they're using the whole airport thing as a reason to bug the
office... . I say without fear of any serious contradiction, I've done
nothing wrong," Milton Street said. "I'll take a lie-detector test."

The former Street aide who talked to Neeson, Mary-Rita D'Alessandro, has
since left the Mayor's Office to work for Street's reelection campaign.
She did not return phone calls seeking comment last week.

The mayor's spokeswoman, Barbara Grant, also did not answer requests for
comment last week. She had said previously of the airport inquiry: "We can
only cooperate fully with the federal investigation, and let the chips
fall where they may."

Philadelphia International, one of the nation's busiest airports, has long
been a honey pot of contracts for people with political connections. It
hasn't changed under Street: Friends and contributors to his campaigns
have received everything from legal work to landscape design jobs to food
concessions to construction contracts.

For instance, lawyer Ronald A. White, a Street confidant, has represented
companies that have won coveted space for restaurants and shops. White has
also performed legal work for the airport in land condemnations and on a
bond issue. William Wilson, who owns a landscape-design firm and is a
major Street fund-raiser, has worked on the international terminal.

Street has said in the past that, while his donors may have an easier time
getting city work, his administration would never hire firms that are
unqualified or that gouge the public.

One airport contractor says making friends in politics is just a fact of
life in the big city.

"People who do work with any city - not just Philadelphia, but New York or
Washington - you need to have people who are involved politically or
community-activist types," said Jim Dobrowolski, president of U.S.
Facilities. "It's a necessary evil."

Dobrowolski should know. His firm is among three in the joint venture that
won the airport's maintenance contract - the one now under federal
scrutiny. U.S. Facilities also won a $49 million deal to maintain three
city government buildings, known as the Triplex.

Millions were at stake in the airport maintenance deal. For a decade, the
work had been done by Elliott-Lewis, a veteran company with friends of its
own: It has ties to Gov. Rendell and had given more than $50,000 to his
2002 campaign.

Three companies formed a joint venture to compete for the airport
maintenance work when it came up for bid in 2001. General Asphalt Paving
Inc., owned by the family of city GOP leader Michael Meehan, put the deal
together with help from Milton Street, who had worked for General Asphalt
as a consultant.

Affiliated Building Services Inc., then a subsidiary of Enron Corp.,
signed on as managing partner, and U.S. Facilities, partly owned by former
City Controller Thomas A. Leonard, a major Democratic fund-raiser, and
businessman Willie Johnson, also had a stake.

Milton Street spent a lot of time dogging city procurement officials for
information about the bidding process.

"Milton's role, the best I was aware of, was to be the 800-pound gorilla,
to tell the bureaucrats to make sure everyone plays by the rules," said
Dobrowolski.

Here's how the bidding worked: Companies had to submit paperwork showing
that they were qualified to maintain the baggage, people-mover, and
heating and air-conditioning systems at the airport. Qualified companies
could bid, and the lowest bid would get the job.

Philadelphia Airport Services passed the test. This new company bid $13.6
million, nearly $2 million below Elliott-Lewis - and won the contract in
2001.

But the process became messy. Elliott-Lewis went to court, trying to prove
that the award was "tainted" by special treatment given to the winning
bidder.

The city overlooked deficiencies and accepted misleading documents,
Elliott-Lewis claimed. But the joint venture said the suit was just sour
grapes. A judge dismissed it.

"The reality of the whole situation is, Philadelphia Airport Services was
the low bidder by a couple million bucks," said Louis Applebaum, a former
city procurement commissioner. "That's why it was awarded to them, not
because of Milton Street."

The venture was short-lived. Last Dec. 31, General Asphalt and U.S.
Facilities left the partnership over what they called "management
differences."

Applebaum said FBI agents questioned him last summer about the contract,
asking about any role played by Milton Street and his brother.

"They wanted to know if he [Mayor Street] played any role in it, had any
discussions with me, and I said absolutely not," Applebaum said in an
interview.

"They're really going into depth," Applebaum said. "They wanted to know
everything I could tell them from beginning to the end of that contract."

Milton Street asked him questions about the bidding process, but did
nothing improper, Applebaum said.

It was Applebaum who fired Marla Neeson, the procurement official who had
had a dispute with a mayoral aide over the maintenance contract. Applebaum
said he fired her for speaking rudely to the aide and to other city
officials.

Neeson denied this, saying she received good performance reviews and was
never rude.

Applebaum said Neeson ultimately agreed that the joint venture was
qualified. Neeson declined comment on this.

Milton Street later played a role in another contract involving many of
the same players - one that also produced allegations of questionable
bidding.

Last year, Elliott-Lewis lost another job, one it had held since 1997: the
Triplex contract, to maintain three city buildings.

In July 2002, about 30 people attended a Triplex pre-bid meeting. Among
them: Milton Street.

He wasn't empty-handed. Wearing shorts and a T-shirt, Street distributed a
letter he had written criticizing Elliott-Lewis' work and questioning city
payments to the company.

Milton Street wrote that the deal should go to the low bidder - to "guard
against favoritism, improvidence, fraud and corruption." He called himself
"a consultant for a Pennsylvania maintenance service company."

It's not clear which company. U.S. Facilities, which eventually won a $49
million, four-year deal, said it wasn't the firm.

But Elliott-Lewis executives still think Milton Street helped sink them.

"You don't go through the effort of typing two pages and hand it out at a
public forum without trying to totally discredit the existing vendor,"
said Elliott-Lewis chief executive Bill Sautter.

Sautter thought he had the deal locked up. On Dec. 18, top city officials
ate and drank at the company's holiday party in a city office building.

Late that night, they got the word: Their deal had been canceled.

The winning bidder says it won on the merits - "I don't care what anyone
says," said U.S. Facilities' Dobrowolski. He also said he has never paid a
dime to Milton Street. "Maybe he did it because we are a minority-owned
company. I don't know."

But he wasn't sorry that Milton Street showed up at the meeting. "He's a
smart guy," Dobrowolski said. "He knows how the system works."


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