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Firehouse Blues 

Firefighters are wondering why the renovation of two stations was awarded to a contractor with a history of construction problems

Wednesday, Nov 7 2001
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The mood was somber, indeed, at Fire Station No. 32 a few weeks ago. And not only because of the tragedy in New York City. Bill Ferguson, a 26-year veteran of the San Francisco Fire Department, was helping his comrades remove six decades' worth of memorabilia from the walls of their beloved firehouse, a narrow building near Holly Park in Bernal Heights. The firefighters were boxing up stacks of plaques commemorating feats of bravery; yellowing photographs of long-dead firemen; and the company's most recently acquired wall decoration: the New York Times poster that memorializes the dead heroes of Sept. 11.

Devoid of inspirational relics, the walls were revealed to be an ugly brown color pocked by great swatches of peeling, lead-based paint. The 70-year-old firehouse is overdue for remodeling. Recently, the city awarded a $1.2 million construction contract to install sex-segregated accommodations for female firefighters and to paint the interior of the firehouse.

You'd think the firefighters would be happy. But they are not; they are worried -- worried that Robert Chiang, owner of C.M. Chiang Construction Inc., will screw up the firehouse job, the way he has screwed up other city jobs. Ferguson contacted SF Weekly after reading an investigative story on how Chiang's city contract to build the Martin Luther King Jr. Pool in Bayview-Hunters Point came in a year behind schedule and $1.5 million over budget and was rife with construction problems and strange payments, such as $100,000 to a politically connected dentist (see "Dirty Pool," Aug. 8, 2001). Recently, Chiang was also late and over budget on another big city contract, at the Richmond District Community Center and Gymnasium. Despite Chiang's poor track record, a high-ranking city official intervened in the bidding process for Fire Station No. 32 to ensure that Chiang was awarded the contract -- an action that other officials involved in the process have dubbed "revolting" and "mysterious."

In 1992, the voters approved spending $41 million in bond money to upgrade three dozen firehouses. There are only five left to do, and most of the money has been spent. In February, the Department of Public Works, which oversees construction contracts for city departments, put separate contracts for Fire Stations No. 32 and No. 13 (in the Financial District) out to bid. The Fire Department, with the approval of Public Works, set the budget for each station at about $1 million.

C.M. Chiang Construction -- a city-certified, minority-owned business -- won both contracts with the lowest bid. Its price for No. 32, however, was nearly a quarter of a million dollars -- or 24 percent -- more than the Fire Department had budgeted. Its bid for No. 13 was 10 percent over budget.

Chiang's bids were so high that the Fire Department told Public Works in April to reject all the February bids and start over, in the hope of finding a cheaper contractor. The next day, however, Harlan Kelly, deputy director of Public Works, in a highly unusual action, overrode the Fire Department's decision. Kelly ordered that the contract for Fire Station No. 32 be awarded to Chiang.

Yet Kelly allowed the bids for No. 13, which Chiang had also won, to be rescinded. That decision also benefited Chiang, because his winning bid suffered from a normally fatal problem: It did not meet the minority-hiring goals for subcontractors mandated by the Human Rights Commission. According to public records, Chiang's bid for No. 13 was in danger of being thrown out, which would have allowed the next lowest bidder to win the contract. After Kelly ordered the contract for No. 13 to be rebid, Chiang cleaned up his technical problems and won the rebid contract with a price that was $50,000 higher than his previous bid. In May, C.M. Chiang Construction was awarded contracts for both No. 13 and No. 32.

Kelly's intervention angered the Fire Department. Capt. James J. Lee, who oversees the fire station projects for the department, characterizes the way city officials determined the winner of the contracts as "revolting." The project manager for the two fire station contracts, Peter Wong, says he was forced to dip into "contingency funding" to meet the extra costs.

Kelly's interference also distressed the city's contract administrator, Gordon Choy. Choy's division at Public Works is staffed by permanent civil servants, who follow strict guidelines designed to insulate the bidding process from political pressures and influence. Kelly is a political appointee. He serves at the will of the mayor. Choy wrote to Public Works' finance director about Kelly's action: "Contract Administration is confused about which directives to take action on. On two fire station projects (#13 & #32), the director's office intervened after the Project Manager issued directives [rejecting the bids]. ... The process ... creates many questions from the bidders and gives an appearance that the department is doing things under mysterious circumstances."

The mysteries did not end with Kelly's decree. (Harlan Kelly did not return repeated telephone calls seeking comment.) To satisfy a requirement by the Human Rights Commission that 4 percent of each firehouse job be subcontracted to woman-owned businesses, Chiang listed OWA Steel Inc. and Hoi's Construction Inc. as subcontractors on his bid forms. OWA Steel is owned by Chiang's wife, Lori Chiang. San Francisco's administrative code prohibits minority contractors from using their spouses' businesses to satisfy S.F.'s race and gender quotas.

That law was strengthened last year, says Deputy City Attorney Catharine S. Barnes, because several contractors -- Chiang, in particular -- had been circumventing the intention of the city's affirmative action laws, which is to spread the wealth as broadly as possible to "economically disadvantaged" companies. Some contractors transferred the titular ownership of companies they controlled to their spouses and children. They then listed these companies as minority- or woman-owned subcontractors in their bids; the profits, however, were kept within one family. The law was rewritten to eliminate that practice.

In the end, the Human Rights Commission did not allow Chiang to use OWA Steel to meet his gender quota for the firehouses, but it did allow him to use Hoi's Construction, a tile and concrete subcontractor, even though the company was not eligible to be certified as a woman-owned subcontractor.

Veronica Ng, acting director of the HRC, says the agency will not disqualify Chiang, because it is the HRC's fault that Hoi's Construction was mistakenly listed in its database of woman-owned businesses. That mistake was rectified when Hoi's Construction was decertified as a woman-owned business a few days after Chiang was awarded his fire station contracts.

About The Author

Peter Byrne

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