Lobbyists, Contracts, & Lawsuits

When it comes to lobbying the D.C. government, Bell Atlantic–Washington, D.C. has taken its own TV commercials to heart. The ads feature actor James Earl Jones putting down other mobile phone services by warning: “What good is it if the call doesn’t go through?”

To make sure that its calls get through to D.C. officials, the local phone monopoly has hired some of the biggest lobbying guns in town, including David Abramson, the image-maker instrumental in Mayor-for-Life Marion S. Barry Jr.’s rise to power in the 1970s and ’80s, Pauline Schneider, Barry’s chief lobbyist during his second term and now a partner with Hunton & Williams law firm, which just won a major city contract despite suing the District for $80 million, Willie Leftwich, another Barry confidante, Louanna Peters, the Barry-sponsored chair of the convention center board; and Daryl Avery, former D.C. Public Service Commission (PSC) attorney .

Political guru Ivanhoe Donaldson, a former Barry administration official, has also made calls to D.C. officials thanking them for their help in Bell Atlantic’s fight against the telecommunications reform bill now pending at the D.C. Council. Administration sources say Donaldson claimed to be calling on Abramson’s behalf, a sleight of hand that may insulate him from liability under the District’s lobbying laws. Under those laws, all lobbyists must register with the Office of Campaign Finance (OCF). Abramson has registered, but Donaldson has not. Bell Atlantic spokesman Michel Daley says Donaldson is not one of the firm’s hired lobbyists.

Written by At-Large Councilmember John Ray, the measure is designed to bring about competition in the local phone industry by allowing companies like MCI and Sprint to market local telephone service without regulation by PSC. (Bell Atlantic would fall under PSC’s purview until competition reached “a level playing field.”) Although the bill would eventually end Bell Atlantic’s D.C. phone monopoly, the company has yet to unleash its high-wattage lobbying team on the council. Instead, William Freeman, the head of Bell Atlantic-D.C., and faceless Bell Atlantic employees have manned the front lines of the company’s lobbying campaign.

“A lot of what we do is rely on the lobbyists’ expertise to guide us,” says Daley. “It doesn’t mean they have a presence down there. They serve as our coaches.”

But Bell Atlantic might be thinking it’s time to change coaches. The firm’s strategy for the past year of trying to block the telecommunications bill from coming up for a vote in the council has blown up like an overloaded switchboard.

Even the clout of Schneider, Avery, Leftwich, Peters, and Abramson/Donaldson couldn’t convince the Barry administration to block the reform bill on Bell Atlantic’s behalf. The mayor, according to one aide, is willing to back changes favorable to Bell Atlantic but won’t use his muscle to kill Ray’s bill. After losing the bigger battle, Bell Atlantic has now been forced into a series of skirmishes with Ray, pushing for the removal of provisions that the company views as highly favorable to one of its main competitors, MCI. David Wilmot, another Barry intimate, is spearheading MCI’s lobbying blitz.

Bell Atlantic is not the only firm throwing its weight around the District’s halls of government. D.C. First, the firm headed by brash boxing promoter Rock Newman, is also making quite a racket. D.C. First was part of a team headed by Denver-based JMM Operational Services that landed the $13.9-million contract to overhaul the city-owned Blue Plains waste treatment plant.

But the D.C. financial control board last week struck down the contract after determining that Newman didn’t know squat about sewage. D.C. First stood to reap hundreds of thousands of dollars for simply selecting the firm that would actually do the engineering work on the plant.

This is the contract that LL, along with members of Congress and some industry officials, suspected had been wired for the Chicago-based Waste Management Inc., the nation’s largest waste disposal firm and current Blue Plains contractor. But according to industry sources, Newman’s services were shopped to more than one firm bidding on the contract. The fact that JMM won the contract after signing Newman and D.C. First on as its subcontractor smelled too much like business as usual for the control board.

While the worlds of sewage management and telephone lobbying may appear worlds apart, LL suspects a link. D.C. First’s only registered lobbyist is the same Daryl Avery who is part of the Bell Atlantic dream team. Still, D.C. First also reported that it was working for Bell Atlantic on the telecommunications bill and made no mention at all of the Blue Plains work. Bell Atlantic’s Daley said he had never heard of D.C. First.

Newman told the Washington Post last week that he had called Ward 5 Councilmember Harry Thomas, who oversees Blue Plains matters, and control board Vice President Stephen Harlan to save his endangered contract. But even though Newman is president of D.C. First, he is not registered to lobby on its behalf. Newman’s calls prompted government watchdog Marie Drissel last week to file a complaint with OCF, which has launched an investigation. OCF’s Michael Simpson said Newman would not need to register unless he was paid specifically to lobby for the contract.

Last week Newman took his fight to the mass media, inking an op-ed in the Post decrying the control board’s “kangaroo court” approach to killing city contracts.

Newman’s high-profile MO could not contrast more starkly with Donaldson’s. Since his return to the local business scene in 1989 after serving three years in prison for embezzling $190,000 from the Department of Employment Services, Donaldson has been careful not to leave any footprints. But political insiders speculate that Donaldson continues to make a living by brokering business with the city, just as he did under the administration of former Mayor Sharon Pratt Kelly.

Donaldson is a frequent visitor to the mayor’s office and, according to an administration source, has come calling on behalf of District hospitals—especially Howard University Hospital—and other health care concerns.

In April, the Washington Business Journal revealed that Donaldson was trying to help the Chicago-based Stein & Co. win the coveted contract to oversee construction of the city’s new convention center. The Journal reported that Stein & Co., with local developer Stephen Goldberg as a partner, was considered the front-runner because of Donaldson’s well-known links to Barry, his political protégé.

Thus, more than a few eyebrows were raised when JBG Cos., headed by local businessman Ben Jacobs, was awarded the contract, even though its $13-million bid exceeded by $3 million the Stein-Goldberg bid. Still, the Stein-Goldberg group has refused to go away.

Last week, the council held a two-hour, closed-door session to hear Stein-Goldberg’s complaint that JBG exaggerated its qualifications to oversee $500 million in contracts to build the new convention center. In spite of the stink raised by Goldberg, the council then voted 11-1 to endorse the JBG award. Even Ward 2 Councilmember Jack Evans backed JBG, despite the involvement of his fund-raiser, Kerry Pearson, and campaign contributor Goldberg in the losing bid.

Evans later explained that he voted for JBG because it promised to finish the job early and under budget. “And they laid out a game plan that clearly addressed every possibility that could go wrong,” said Evans. The other bidders were not as convincing in their presentations, he added.

But these contract follies look like misdemeanors next to the joint decision by the District and the control board to hire Schneider’s Hunton & Williams firm, and the New York–based firm of McKenzie, McGhee and Harper to oversee collection of $65 million in back property taxes.

The award was considered unusual for a number of reasons: Hunton & Williams sued the city for $80 million on behalf of Richmond-based Dominion Energy after D.C. officials refused to approve construction of a cogeneration power plant on the Georgetown University campus. Councilmembers complained they had been misled by both Georgetown and Old Dominion. The pending lawsuit also named cogeneration opponents Evans and Ray, who were subsequently removed from the case. Many states—including Maryland, Massachusetts, New Jersey, and New York—prohibit issuing contracts to companies that have brought suits against them. But not D.C.

(Fans of irony might note that an irate Evans called it “unethical” for the city to do business with Hunton & Williams while the lawsuit is pending. Evans must not have noticed that JBG, which he supported on the convention center contract, is suing the city in an $11-million dispute over the assessment of its Watergate hotel/office complex.)

In choosing these two firms, D.C. officials rejected a bid involving the celebrated Wall Street firm of Brown & Wood. “They turned down Brown & Wood, who have done all the major deals, including New York City, and they pick Hunton & Williams, which has zero experience in this area,” noted a local attorney with disbelief.

Hunton & Williams’ Schneider says her firm has had an office in the District for 30 years and has acquired valuable experience in D.C. regulations and rituals that other firms lack. “I’ll stack our public finance record up against anybody’s,” Schneider said.

“It is true that we haven’t previously done a tax lien deal,” she said, “But it is also true that there aren’t a lot of firms that have.”

The contract was awarded by Assistant D.C. Corporation Counsel Nancy Hapeman and control board Deputy General Counsel Marguerite Owen without involvement by the control board members. A third member of the contract selection panel, Department of Finance and Revenue employee Ron Davis, did not participate in the decision because he suddenly stopped coming to work and was fired, according to District Chief Financial Officer Anthony Williams. According to sources, control board Vice President Harlan said he first learned of the contract award on the evening of May 10 from Hunton & Williams attorney Schneider.

“The control board is not in control,” said a source familiar with the situation. “It’s the staff who are in control, and they don’t know where the bodies are buried.”

Schneider confirmed that Hunton & Williams and McKenzie, McGhee & Harper did not bid as a team. Instead, control board staffer Owen “married” them in the bidding process. The minority-owned New York firm, with ties to former New York City Mayor David Dinkins, has been struggling to survive since its founding partner was sent to prison in December for federal income-tax fraud. The firm’s struggles have been documented in recent issues of the Bond Buyer.

There are other oddities about this contract award, but you get the idea.

Local businesses have long secured fat-cat city contracts with the help of high-paid lobbyists hard-wired to powerful politicos. And there’s no reason to believe that the control board, the city’s newly anointed arbiter of contracts, won’t be swayed by the pressure. That, warn skeptical congressional staffers, may have happened in the Hunton & Williams deal and is likely to happen again.


D.C.’s Democratic Party changed its rules this year and will choose its delegates to the 1996 Democratic National Convention at a caucus this Saturday, June 1, instead of at the ballot box. Elected officials, not surprisingly, have lost interest. Only two councilmembers, Evans and Thomas, are vying to be delegates to the Chicago confab.

But judging from the May 15 forum conducted by Ward 8 Democrats—the one and only forum endorsing convention delegates this year—1996 may not be a good year for local pols. Evans got only two votes from the 75 or so Democrats present. (Thomas was not present because he is running as a delegate representing Wards 1, 3, 5, and 7. His wife, Romaine, is also running for a convention delegate’s spot. It’s a family thing.)

In pursuing convention votes, perhaps Evans should have spoken out more harshly against the control board. City employee Lawrence Guyot won the Ward 8 endorsement after pledging convention approval of a resolution to abolish the control board. Ward 8 Dems also endorsed former council chair Arrington Dixon and former Barry campaign treasurer Carrolena Key because they both live in the ward. The final endorsement went to laborite Sybil Williams, primarily on the strength of her articulate presentation. CP

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