Businesses question HBA bid processAround the City Thursday, October 18th, 2012
Contract canceled after conflict, contract violation allegations
Amid allegations of a conflict of interest, exclusion of their own members from a contracting opportunity and violations of a contract with the City of San Diego, the Hillcrest Business Association (HBA) has rescinded a bid award for the Hillcrest Light Canopy.
The Hillcrest Business Association issued a bid award to Berg Electric, an Escondido contractor, to construct a sweeping canopy of decorative street lighting across University Avenue adjacent to the Hillcrest sign. That decision caught the attention of local electrical contractors, including Mat Wahlstrom, general manager of Roberts Electric and HBA member.
First, there were some ethical questions concerning the bid award. Berg Electric owners, employees and associates have contributed over $26,000 to mayoral candidate Carl DeMaio’s campaign and the Republican Party. DeMaio’s life partner, Johnathan Hale, sits on the board of the HBA.
“I think it’s interesting that suddenly, after (Berg Electric) having donated only a few hundred dollars to the Republican Party, then in the last year or so that number has jumped to tens of thousands of dollars. Then there’s this … contract awarded to (Berg Electric) … and it’s all hush-hush until someone notices,” said Wahlstrom.
Ben Nicholls, HBA executive director, denies the notion that anything unethical has occurred or there was any favoritism to DeMaio’s generous donor. “In fact, Johnathan Hale isn’t even on the Beautification Committee,” Nicholls said, adding, “he is on the Executive Committee, which approved the final decision to award the contract.”
Most boards require members to reveal any potential conflicts of interest when voting on issues that might enrich them, their family members or business associates.
Wahlstrom has requested an inquiry by the City of San Diego Economic Development Corporation’s Office of Small Business into potential violations of conflict of interest laws. LGBT Weekly contacted Meridith Dibney Brown, at the Economic Development Corporation’s office, but had not received a response by press time.
This is not the first time the HBA has had Request for Proposal (RFP) issues with its members. Last year, there was an issue concerning the sale of the old Hillcrest sign that was not offered to the entire community for bids. Under pressure, the HBA eventually did have a bid process to dispose of the sign which will reputedly be displayed in the new Obelisk Bookstore.
The second issue is the HBA is required to get five bids for all contracts that exceed $10,000 but are less than $50,000. The request for bid for the Hillcrest Light Canopy was only issued to three contractors in direct conflict with the contract that the HBA has with the city.
As a contractor of the City of San Diego, the HBA is a private organization that receives a $150,000 annual grant from the city. With an annual budget of $750,000, the City of San Diego represents 20 percent of HBA’s annual revenues. Therefore, the city has a litany of requirements that must be met for the HBA to continue to receive funding.
Ben Nicholls, the Hillcrest Business Association executive director, responded to the allegation that he was required to get five bids. Nicholls stated, “That’s a big issue in non-profits these days. It’s far from settled and we are far from being the only private, non-profit organization to feel that we should have, and that we do have more, latitude when we’re doing request for proposals on a project that’s being funded with private money – probably not the only non-profit association operating in this city facing the same issue on this particular day. It is something that everyone in this business is struggling with.”
The contract with the city states the HBA does not have that latitude. LGBT Weekly has requested the names of the other two bidders for the contract but has not received them. Wahlstrom has expressed skepticism that the other bidders even exist.
The third issue with the bid award was members of the Hillcrest Business Association were not contacted to bid on the decorative lighting opportunity. “When I heard that Berg Electric was being awarded the contract, I was surprised,” said Wahlstrom. “We were never contacted. We never saw an RFP. I thought, ‘Why is this going to an out-of-town contractor? Isn’t the idea of a business improvement (association) to grow business in the local community?’ ”
Other HBA members, Beck Electric and Eaton Electrical had mixed responses to being left out. Martin Beck of Beck Electric and Data Service in Hillcrest said, “We have been contacted by them (HBA) in the past, but not for a couple of years. I have no idea what is going on.”
Tom Eaton of Eaton Electrical stated, “Yes, we are members, but for some reason they did not ask us to submit the first time around.”
Eaton further said, “We found out about the company in Escondido getting the contract from Roberts Electric. We were surprised and kind of upset. We thought they (HBA) wanted local businesses to get the work.”
There has been additional confusion about the request for proposal due dates and deadlines. In fact, Eaton Electric is not sure they will even bid on the third go-round with the HBA after the second RFP was also canceled.
The HBA’s Ben Nicholls offered some candor and introspection about this developing story, “Do I wish we had done something differently? Probably. That’s why I see this as an opportunity to not only do it differently, but also to refine the RFQ and address some of the permitting issues that will come up later.”
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