Affirmative Action Derailed

With Prop. 209 looming, an airport contract battle shows how S.F. has failed to keep faith with minority business

What Williams reported seeing when he opened the HRC's certification files is less than reassuring. According to one of his memos, an HRC staffer had certified B & F Concrete as a bona fide independent, local MWB in August 1994, even though the listed minority owner, Jeffrey Otani, had no equity in B & F Concrete. Instead, Otani and another man, Robert Aquirre, bought $31,500 of shares each in July 1994, using a promissory note. Other shareholders, Vincent Ippolito, Eldor Lien, Thomas Lien, and Robert Lien, all whites, also happened to own Casey Fogli Concrete Contractors, the outfit ADtranz's Terry Sanders noticed listed in the Yellow Pages at the same Hayward address as B & F Concrete. Though B & F Concrete claims an S.F. address, 2211 Quesada Ave., it is a warehouse occupied principally by the Perche No! Gourmet Italian Ice Cream Co. A "B & F Concrete" sign is fixed against the building's exterior, but Williams found that a two-room office that the ice cream company employees identified as belonging to B & F Concrete was uninhabited on Nov. 4. (It turns out that B & F Concrete was recently dropped from eligibility for affirmative action under a program of the S.F. Redevelopment Agency, which is run separately from the city's program.)

With regard to the other Mitsubishi contractor, Metalset, which was certified by the HRC in March 1996, Williams noted that the agency's certification file was missing the required tax, lease, and utility bill documentation. Of his inspection of the S.F. address that Metalset listed with the HRC, Williams wrote, the company's office is within the fenced operations yard of another outfit, Sheedy Trucking, Crane, and Rigging Co. Metalset apparently had designated a portable trailer as its place of business -- another red flag under HRC regulations. "Outdated plan drawings and office furnishings are arranged to give a feeble appearance of an active office environment," Williams wrote. "However, it appears unused and inactive."

Reached by telephone, Metalset's owner, Ricardo Rosales (no relation to the deputy city attorney), recently declined comment. Otani of B & F Concrete, whose telephone is answered by the offices of Casey Fogli, defended his firm: "We are legitimate. We had gone through certification. They [the HRC] are trying to drag up anything they can because they have egg on their faces."

There's clearly blame aplenty to go around. But it isn't likely to help B & F Concrete's case. Williams' recommendation to Bamba on Nov. 6 was decertification of B & F Concrete and Metalset from the city's affirmative action program.

How does Mitsubishi Heavy Industries America end up signing on the likes of B & F Concrete and Metalset as MWB subcontractors -- and, for that matter, doing so under penalty of perjury?

Turn back the calendar to 1995. The airport had just launched a $2.4 billion expansion. In the works for the air travel and shipping hub were a new international terminal complex, new highway ramps and circulation roads, and the automated light-rail train to move passengers and employees around the entire facility.

Beginning the light-rail project, which is to be the linchpin of the expansion, airport management started by engaging industry in a discussion about the state of the art in light-rail technology. The staff arrived at a set of specifications for its train system, estimated to cost up to $165 million. As an affirmative action measure, the project was then parsed into components that might reasonably be carried out by MWBs. Finally, an MWB participation goal of 12 percent was established and the project advertised in February 1996.

The deal caught the eye of a New Yorker, Gino Antoniello, of Sumitomo Corp. Antoniello pitched Mitsubishi on a partnership. The plan Mitsubishi ultimately blessed entails Sumitomo acting as the consultant responsible for assembling the bid, with Mitsubishi serving as the general contractor that will actually deliver and install the train system.

When it came to hiring second-tier contractors and subcontractors, however, Antoniello was at a disadvantage, compared to Sanders of ADtranz. Sanders had been in the Bay Area since 1972. Where Sanders was familiar with local players, Antoniello leaned heavily on intermediary contractors with S.F. profiles to recruit certified, second-tier MWB subcontractors. A team materialized, nonetheless, and a bid was delivered by the June 10, 1996, deadline.

At the airport, the sheer magnitude of work seems to have contributed to the failure to detect the stark shortcomings of B & F Concrete and Metalset earlier in the game. As of the close of 1996, the airport had already awarded more than $1 billion in contracts related to the expansion -- major projects that would carry MWB-hiring goals. Yet, under an arrangement whereby the airport paid to have HRC compliance officers on staff at the facility, only two officers were requested, leaving little leeway for thorough examinations of minority- and women-owned businesses tapped by big contractors. Accordingly, compliance reviews were limited to a check merely to see whether a sub appeared in the HRC's database of certified MWBs, and whether they held the proper licenses for the job they'd been designated to carry out.

Complicating matters on the light-rail contract, a senior compliance officer who was familiar with the contract specifications was on leave in August and September when Mitsubishi was due for its compliance review. A junior staffer, Richard Norton, then cleared Mitsubishi -- and sent airport management a memo advising them of the outcome.

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