Fight for Army Base Jobs Linked to Audit Issues

By J. Douglas Allen-Taylor

One of the key issues in Oakland City Auditor Courtney Ruby’s recent Non-Interference in Administrative Affairs Performance Audit involves a contract to demolish a structure known as Building 6 at the Oakland Army Base.

The contract was originally awarded by staff to Turner Construction of Oakland in 2009 following a competitive bid.

But according to The Oakland Post, the Turner contract was thrown out after intervention by Oakland developer Phil Tagami, who was negotiating to become the Master Developer of the Oakland Army Base project.“(We) must insist that the bid solicitation be rejected and the process significantly revised with our direct involvement before being re-started,” wrote Tagami in an email dated Oct. 15, 2009 to Walter Cohen, then director of Oakland’s Community and Economic Development Agency.

Following Tagami’s selection as Master Developer for the project, the Building 6 demolition contract was awarded to Top Grade Construction company of Livermore by city staff on a no-bid basis. Top Grade was reportedly Tagami’s choice for the job.

City staff has said that the dropping of the Turner contract and the reopening of the Building 6 demolition contract was required because the “scope” of the demolition changed following the contract award.

But asked by then-Councilmember Jane Brunner at a Council Community and Economic Development Committee meeting in mid-October of 2011 why the revised contract went out on a no-bid basis, Redevelopment Agency staff member Al Auletta admitted that “We were working on that on the spirit of working together with the Master Developer. We’ve been told and we now understand that this was an incorrect way to handle it.”

The no-bid Top Grade Building 6 demolition contract went to Council Rules Committee in the summer of 2011 to be scheduled for discussion at the CED Committee—the first step for possible full Council approval—but after a meeting between Reid and staff members of the city’s Community and Economic Development Agency (CEDA), the Top Grade contract was dropped by staff and never revived.

Instead, at that October 2011 CED meeting, Brooks and Reid introduced an ordinance to reopen the Building 6 contract to open bid, but with new rules that would mandate that only Oakland-based firms with an existing workforce that was 33 percent Oakland residents could bid, with the further stipulation that the winning firm would have to employ 50 percent Oakland residents to work on the actual Building 6 demolition.

That Oakland-firm/Oakland-hire Building 6 demolition contract ordinance was eventually passed by the full City Council in the fall of 2011 by unanimous vote. The contract went out to bid and three Oakland companies qualified—Turner Construction, JH Fitzmaurice, and Downrite Corporation—with staff eventually picking Downrite and the full Council approving.

The Non-Interference audit lists only two instances alleging that Councilmembers Reid and Brooks improperly interfered with city staff in the Building 6 demolition contract negotiations.

Phil Tagami

The first allegation is listed at an unspecified date or dates in the month of June, 2011, during the time the Council Rules Committee was putting off discussion of the Top Grade contract.

The audit alleges that Reid and Brooks told staff that the Top Grade contract would not clear Rules, and that Brooks said she was “negotiating a portion of the contract with Turner Construction.”

The second allegation is listed as taking place between July and September of 2011, after the Top Grade contract died, when Reid and Brooks are said to have directed city staff to work with Turner Construction “to establish a bid proposal for the project.”The audit produces no documents to support the allegations, stating only that they occurred “according to” the Redevelopment Agency staff handling the contract.

No improper interference in favor of Turner Construction by Brooks or Reid in the Building 6 contract was alleged in the audit after mid-September, when the two Councilmembers first introduced the proposed new Oakland-firm/Oakland-hire procedures for the Building 6 demolition project.

Instead, when the full Council first considered the proposed new procedures in November of 2011, Brooks introduced an amendment that would reopen the contract bidding to non-Oakland firms if no more than two Oakland firms qualified in the first round of bidding, thus making it more likely rather than less likely that Turner Construction would have sufficient competition in the bidding.