By Hillel Aron
By Joseph Tsidulko
By Patrick Range McDonald
By David Futch
By Hillel Aron
By Dennis Romero
By Jill Stewart
By Dennis Romero
Intense scrutiny now embroils the massive public works project, with the DWP’s newly appointed board of commissioners embarking on a half-million-dollar audit of its chief contractor, Denver-based CH2M Hill. A confidential City Council report warns of a water-rate increase between 3 percent and 4 percent for the next three years, in part to cover the tab.
Patterson and Odell knew this day of reckoning for the DWP would come. Says Odell: “These jokers have proceeded in an irresponsible way.”
The 15th-floor boardroom at DWP headquarters is packed as project manager Richard Harasick stands before the board of commissioners, one hand stuffed in his pants pocket and hip cocked to the side. For the second time in a month, he faces a grilling about costs and charges of mismanagement and improper billing on the Owens Lake Dust Mitigation Project.
Looking out from a high-backed leather chair is Commissioner Nick Patsaouras, a sharp-tongued veteran developer and a former board member of the MTA, where he carried enough clout that a downtown travel plaza bears his name. “We’re spending 3 to 4 million dollars per month on this contract?” Patsaouras says with a thick Greek accent.
Harasick’s face is red. “You’re interpreting it wrong,” he says. “Tell me how I’m wrong,” Patsaouras insists, not waiting for an answer but plunging into a breakdown of costs on the half-billion-dollar project now under the microscope as the city faces budget problems. “It is what it is,” Harasick says. “It’s a standard contract. If you want to change it, go ahead.”
The DWP took responsibility for Owens Lake’s rehabilitation in 1998 and started work there in 2000. Despite a tripling of costs from early estimates, and a 2004 written warning about rising costs from the city administrative officer to then-mayor Jim Hahn, the project remained on cruise control and above scrutiny. Subcontractors were lining up for a piece of the action. The Lee Andrews Group, a public-relations firm accused by City Controller Laura Chick of overbilling the city in connection with the Fleishman-Hillard scandal, received contracts totaling more than $835,000. Even local businesses like Dave’s Auto in Lone Pine have done all right, what with the steady need for parts and repairs on DWP vehicles.
All was quiet up at Owens Lake and might have stayed that way until last October, when L.A. Weekly exposed DWP employees’ claims of faulty designs, rampant change orders and abuse of public funds on the project overseen by CH2M Hill. (The firm is an acronym made from the last names of its founders — Cornell, Howland, Hayes, Merryfield — and Hill, a company they merged with.)
With the project expected to cost $415 million, the DWP’s maintenance costs modestly estimated at $40 million a year thereafter and $25 million in change orders approved thus far, the City Council and DWP commissioners called for an audit.
Patsaouras, whose friend, Mayor Antonio Villaraigosa was briefed during his campaign a year ago on the alarming costs at Owens Lake, was the first to jump on CH2M Hill and call for new bids. He soon uncovered engineering and technical “soft costs” that put the project, when completed, nearer to $475 million. To date, the DWP has spent $304 million. CH2M Hill will receive $106 million.
“Who hires subcontractors?” Patsaouras asks. “Hill does,” Harasick replies. “Someone sits on a throne and moves subcontractors in and out like the flavor of the day?” Patsaouras shoots back. “I don’t want to be part of a false, unprofessional, incompetent process. I want a new bid for the rest of the project. Hill can compete, but by our rules.” When the grilling is over, Harasick turns and walks out, looking straight ahead.
Harasick has reason to be frustrated. He is not responsible for the deal that launched the dust-mitigation project. A potential scapegoat, he is responsible for fixing a problem that scientists have puzzled over for 30 years. There are signs of progress — costly, debatable ones. Patsaouras knows the tricks of public-works contracts but has not studied the intricacies of the dust problem with the same vigor he applies to lambasting DWP managers. Cynics in City Hall have questioned his motives. Some say he is making a power play to establish himself as Villaraigosa’s pit bull of fiscal reform, or that he may have friends looking to take CH2M Hill’s place.
But the DWP has a history of mulishness and Harasick, a 20-year veteran recruited out of college, is a product of his surroundings. Practically invisible is his boss, Tom Erb, leaving Harasick to resort to rationalizations and finger-pointing. “There is no example, nor does any information exist, on how to control [Owens Lake’s] one-of-a-kind dust-emitting surface,” Harasick wrote to the City Council last October. On December 6, he wrote to Jim McDaniel, chief operating officer of the water system, “What was not really contemplated was the operation’s organization and costs. What you are seeing is just a general lack of full support of the project by our own staff.” McDaniel then wrote to general manager Ron Deaton, “Equipment, material, final layout and the overall quality were not under the direct control of the DWP and were not up to its standards.” Deaton went to the commissioners and said, “We didn’t know what we were getting into.”