Graw, you may recall, is the former MTA construction executive who claims that, in part because he prepared the special panel of experts that rejected a certain dubious bid for a $65 million Eastside subway contract, he was fired out of hand in 1996. As we noted last week, that Metro East contract — 20 percent of which was to go to TELACU and Cordoba Corp., firms helmed by ancient Richard Alatorre cronies David Lizarraga and George Pla — was, Graw alleges, wired to a new $13,200 tile roof on Alatorre’s house in Eagle Rock. The roof, courtesy of TELACU, was invoiced a week after Graw was fired and days before MTA chief Joe Drew tried to toss out the Jacobs Management Associates bid that had been recommended by an independent MTA panel in favor of the Metro East bid backed by Alatorre.
But Graw contends that’s not the only reason he was deep-sixed. According to papers in the suit, he was also fired for acknowledging an even bigger, costlier problem. Graw had dared to talk at a public meeting about a two-year epidemic of more than 2,000 MTA contract change orders (a change order is a change in the contract that allots more money to the contractors for unexpected contingencies) that hadn’t been approved by the board.
Graw’s case, which seeks unspecified damages for unlawful firing and other counts, is to go to trial in June. This trial could shed more light on our transit authority’s dark, endemic chicanery than anything else in its shadowy history.
The court papers suggest that MTA is a system gone wrong on many levels. It is a system, for instance, where you can first fire someone for doing the right thing and then patch together a shoddy, defamatory rationale. Witness the firing of Graw.
Richard Brouwer, an MTA contract county counsel, tried to justify Graw’s firing after the fact in a handwritten memo entered into evidence. The memo said that Graw sometimes looked “disheveled” and had “stared at the breasts of a female” and “refus[ed] to make eye contact with [another] female while talking to her.” Graw had also allegedly suggested that one man might advance his career better in another department — and that man happened to be black. We are talking major stuff, here.
The most interesting thing is that when MTA Inspector General Arthur Sinai, who is looking into the case, subpoenaed Graw’s personnel file, Sinai’s staff noted that “it contained no disciplinary documents such as counseling documents or letters of reprimand.” Nor any of Brouwer’s allegations.
But there was one genuine incident on Brouwer’s hit list — even if Brouwer falsely represented it. Two weeks before his firing, Graw spoke out on the change-order problem, the extent of which the MTA staff had apparently concealed from the board. At a “September  1996 board meeting, [Graw] appeared totally unprepared and made statements that were not factually true,” Brouwer scribbled.
But Graw’s fateful utterance that day was absolutely factual, and Graw was, if anything, too well prepared. Graw spoke openly of a problem the MTA was trying to deny: Construction contracts were being augmented by tens of millions of dollars without MTA-board authorization. The MTA’s own consultant, Arthur Anderson, and an in-house staffer had in fact just made this finding. But the MTA staff was afraid to admit it to the board, presumably because the problem benefited so many well-connected MTA contractors.
Let’s take just a moment with this one. While the Alatorre roofing deal that the suit alleges was done in return for a $65 million Metro East contract was singularly rancid, chronic undocumented contract change orders may have cost the MTA even more over a far longer period. The MTA staff had the figures on how bad the problem was — but guess what? At that September 11 meeting, only Graw dared to tell the board.
It’s easy to see why: According to an in-house July ’96 audit, there had been 2,152 construction change orders between May of 1994 and July of 1996. All of these were supposedly for emergency-type cost upgrades, but in fact, the audit noted, most “were issued after 30 days,” meaning that there was plenty of time for the MTA board to approve them. But it seldom got the chance. Meanwhile, tens of millions of dollars annually oozed out of the MTA into contractors’ pockets.
At this meeting, Graw was actually asked by another MTA staffer, Joel Sandberg, to explain the problem after then–MTA board member Nick Patsaouras demanded incisive answers. Graw explained the idea of “incrementalization.” To get around a rule that all change orders over $200,000 had to be approved by the board, big cost hikes were broken down into under-$200,000 “increments” and slipped through, one at a time. This, Graw stated, “to a point where the change builds up to a very large dollar value.” Thus, according to other testimony before the board that day, 175 “incrementalized” change orders resulted in nearly $15 million worth of extra charges (and that doesn’t account for the other 1,900 change orders). Graw called this “an inordinate number” of change orders.
These, apparently, were the statements Brouwer later singled out as being “factually untrue.” What one presumes Brouwer, and his boss Joe Drew, who ordered Graw’s firing, really meant was that they were true — but Graw wasn’t supposed to say such things.
Which brings one to a problem that appears to lie deep in the MTA culture. At least some staff members apparently felt they had a duty to deceive board members. At minimum, the order of the day to MTA staff was to stonewall the members. According to the deposition of MTA personnel official Gwen Williams (who prudently refused, by the way, to help compile documentation for Graw’s firing), MTA staff routinely held rehearsals in advance of board meetings that were up to Equity Waiver standards — complete with likely questions and presentable, predetermined answers. “We had a dry run on that session in terms of what we were to present, and when [Graw, at the subsequent board meeting,] said that [change orders were a problem], it shocked us,” Williams said. Honest answers about change orders just weren’t in the script that day. Or any day.
It wasn’t until late 1997 that Drew’s replacement as CEO, Julian Burke, managed to turn off the change-order hydrant. Now, the official MTA line on change orders has itself changed, retroactively. At this month’s federal court hearing, MTA attorney Tom Malcolm tried to get stricken from the suit the allegation that Graw had, in part, been discharged for his September 1996 contract statements. He couldn’t have been, Malcolm contended, because the problem was known at that time.
Indeed, Malcolm assured U.S. District Judge Dean Pregerson that the change-order problem was so commonly known that in his September 11 statement, Graw “was merely paraphrasing statements made by his own superior.”
Supposing Malcolm is correct, where are the statements of Graw’s “superiors” on contract overruns? How can Graw’s statements be “factually untrue” if they only paraphrased the statements of his boss?
Actually, the complete story of just how much the MTA lost in the change-order shambles is probably still unknown. As is which contractors most benefited.
Graw volunteered, during the course of that September 11, 1996, meeting, to come up with more information on the problem, vowing to return to the board with more answers two weeks later. According to his attorney, Graw planned an oral presentation at the September 25 meeting.
An hour before that meeting, according to his deposition, Graw was called into the office of his immediate supervisor, Stan Phernambucq, and told he was, as of that moment, fired. No reasons for the termination were given in the short letter he was handed.
That, apparently, was because Brouwer and Phernambucq were still busy thinking them up. Did I mention that, according to Brouwer’s memo, Graw’s “office space was cluttered”?
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