News Article - December 22 2006

PHL contract to change hands
  A Houston-based company has lost $56 million worth of work at Philadelphia International Airport - work it won five years ago with the help of the mayor's brother, T. Milton Street Sr., who is now facing federal criminal charges in connection with that deal. As of March 1, Philadelphia Airport Services (PAS) will be replaced by a rival firm headquartered in Northeast Philadelphia, the Elliott-Lewis Corp., which submitted a lower bid to take over repairs to elevators and escalators, as well as other maintenance work for the next four years at the city-owned airport.

   The award - Elliott-Lewis received word of its victory in the mail last week - would appear to be the final act in a prolonged bid to renew a politically tinged contract that aroused the interest of federal investigators in 2003. The nature of investigators' interest came to light last month when prosecutors indicted Milton Street, accusing him of failing to pay taxes on $2 million worth of consulting income he earned from PAS - income for which they say he did little or no work. Two former PAS employees who allegedly worked closely with him were also indicted. Street has pleaded not guilty.

   The controversy surrounding Street and PAS played no role in the decision to award the work to Elliott-Lewis, City Solicitor Romulo L. Diaz Jr. said. "There was no implication that PAS had engaged in any wrongdoing," he said. Rather, he and other city officials said, Elliott-Lewis received the contract because its bid was $145,000 lower than one submitted by PAS, and because it met city standards for increasing the amount of work and money directed to minority- and women-owned businesses at the airport.

   Elliott-Lewis last held the airport's lucrative maintenance contract in 2000. It had done the work for the 11 years prior, too. But in 2001, the company lost the bid to newcomer PAS, then consisting of a subsidiary of the former Enron Corp., as well as to two firms with ties to city GOP leader Michael Meehan and former City Controller Thomas Leonard, among others. That was also when PAS hired Milton Street, keeping him on year after year in the belief that he would help them retain the contract, say prosecutors.

   Last year, Elliott-Lewis thought it won the maintenance work back when it submitted a bid that was $2.3 million less than PAS' bid. But Street administration officials criticized its minority-business plan as insufficient and rejected the bid. This week, however, Elliott-Lewis received accolades from two city officials who helped evaluated the company's current minority-participation plan, under which $3.6 million a year would go to 12 minority and female firms. That equates to almost 26 percent of the contract's annual $14 million.

   "It was the quality of the participation we were after, not so much the quantity," said senior city attorney Michelle Flamer. The other approving official was Carolyn Nichols, head of the city's Minority Business Enterprise Council. For the first time on a major municipal contract, the city decided not to set specific numeric goals for subcontract work that should be directed to minorities and women. Instead, Elliott-Lewis had to demonstrate its "good-faith effort," predominantly by hiring minority subcontractors to do at least 75 percent of the work in 10 specific jobs areas, from roofing and landscaping to fire-protection systems.

   Elliott-Lewis did so, the city said. "At the end of the day, doing it this way does put more teeth into a minority-subcontracting program," said Jim Gentile of Elliott-Lewis. A breakdown of the minority-subcontracting work shows the firms are expected to earn from $21,000 to $670,000 a year, depending on the work.

   Nichols conceded that the city's new approach was met with skepticism from some minority- and women-owned firms. "When you say 'good-faith effort' it doesn't sound strong. It sounds like you are back-pedaling," she said. But Nichols said the city called each of the 12 subcontractors Elliott-Lewis plans to use, and confirmed that each one had committed to the job, lessening the likelihood that a subcontractor would be performing the work in name only - often a problem in minority subcontracting. Referring to the new good-faith approach, Nichols said: "I'm hopeful we can show that we can make this work."

Source - Philadelphia Inquirer