The New Order at City Hall: Friction in O'Connor's team started early on

A month into the hospitalization of Mayor Bob O'Connor and 10 days after he fired three top aides, questions abound about how the administration got to this point and where it is going from here. A look at an early tug of war over a health services contra

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Bob Donaldson, Post-GazetteCity of Pittsburgh Mayor Bob O'Connor
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One of the first signs of the power struggle that would claim the jobs of three mayoral cabinet members emerged in March, less than three months into Bob O'Connor's term. That's when the city's longtime health-care consultant Towers Perrin was informed it was being fired.

The decision -- initially supported by intergovernmental affairs director Dennis Regan and later reversed by chief of staff B.J. Leber after she found out about it -- highlights the wide-ranging friction that began early on in the O'Connor administration. It also points to the influence that friends of Mr. O'Connor have tried to wield.

The tug of war over the work performed by Towers Perrin surfaced when its Downtown office was told of its "termination'' and that the city had "retained'' the Downtown insurance brokerage firm Hilb Rogal & Hobbs. Hilb Rogal has ties to longtime O'Connor supporter and fund-raiser William Lieberman, a former executive at the firm who still brings it business.

According to a March 31 Towers Perrin memo obtained by the Post-Gazette, city personnel official Barbara Trant delivered the news to Towers Perrin, which was caught off guard, having done the work since the beginning of the Murphy administration.

Ms. Trant would not disclose who asked her to relay the news to Towers Perrin, but two sources close to the situation said it was done under the orders of Mr. Regan, now Mr. O'Connor's interim chief of staff and a longtime friend.

When asked Friday about the Towers Perrin firing, Mr. Regan claimed there was no plan to shift the work to Hilb Rogal and that the initial decision to tell Towers Perrin the contract could be eliminated was made by the mayor.

Mr. O'Connor "comes from a business background, where you don't assume the price you're getting is the fairest price until you check that,'' Mr. Regan said. "It was really a check-the-price kind of deal."

Ms. Trant confirmed that Towers Perrin is still the city's health-care consultant but would not say why or how the decision to fire the firm was reversed. "All I can say is that it didn't happen," she said.

The disagreement over Towers Perrin appears to be one of the first examples of differences within the new administration, illustrating a split that would explode into the open on July 27 when Mr. O'Connor, hospitalized while receiving treatment for primary central nervous system lymphoma, ousted Ms. Leber, Solicitor Susan Malie and Finance Director Paul Leger by telephone.

The firings were connected to Yarone Zober's appointment to the post of general services director, a decision seen by some as a platform for Mr. Zober to become deputy mayor if Mr. O'Connor becomes incapacitated. Ms. Malie told City Council in a memo that there was no need to confirm Mr. Zober for the post because the department was scheduled for elimination.

The friction between Mr. Regan and Ms. Leber was well-known on Grant Street, with Ms. Leber, in charge of all department heads, not believing Mr. Regan needed to be copied on communications to City Council and Mr. Regan, in charge of relations with council and other government, bringing the complaints of council members directly to department heads without alerting Ms. Leber.

But the Towers Perrin incident points to another area of disagreement -- the hiring of outside contractors or service providers who do work for the city.

When he got the news about his firm's apparent replacement, Towers Perrin principal David Lagnese expressed disappointment, raised concerns about Hilb Rogal's ability to do some of the work and offered to assist with the transitional period, according to the memo.


William Lieberman-- "Absolutely not true" that he tried to influence a contract switch.

He urged the city to "explore" Hilb Rogal's capabilities "carefully."

"We are concerned that HRH may not have the actuarial resources or credentials for this task," he wrote, adding: "Our sense is that [Towers Perrin's city] contract will terminate shortly.''

But the contract did not end. Ms. Leber intervened, as did Ms. Malie and Mr. Leger.

By May, Towers Perrin had been reinstated with a document signed by Ms. Leber, according to a source familiar with the document.

Mr. Lagnese declined comment on the contents of the memo based on Towers Perrin's policy not to talk about relationships with clients.

Mr. Regan disputes Towers Perrin's contention in the memo that the plan was to give the business to Hilb Rogal, and he also denied that the contract was a source of friction between himself and Mr. Leber and Ms. Malie. "Not that I know of. That would be news to me."

As for Mr. Lieberman, the former Hilb Rogal partner claims he played no role in the Towers Perrin back-and-forth, even though the president of Hilb Rogal's local office, Steve Leone Sr., said that Mr. Lieberman pursued the work on his firm's behalf.

Mr. Lieberman still shares office space with his former firm, in the 55th floor of the U.S. Steel Tower, and he still brings in business for Hilb Rogal as an independent contractor, receiving a fee or part of a commission.

He also remains a local investor in the slot casino team of Forest City Enterprises and Harrah's Entertainment that hopes to get the license for Station Square, part of a group of prominent business figures all with stakes in the partnership -- including local investor and Democratic fund-raiser Charles Zappala and Reed Smith attorney Glenn Mahone.

When asked about Towers Perrin, Mr. Lieberman said it was "absolutely not true" that he tried to influence a contract switch and he had no knowledge of the work being moved to Hilb Rogal. "I wish it was true. I'd like to have the business," Mr. Lieberman said Thursday. Mr. Lieberman said he has a revenue-sharing arrangement with many firms, not just Hilb Rogal.

His comments did not jibe with Mr. Leone's recollection. "I was told Bill [Lieberman] was working on getting the benefits [contract] for the city." Hilb Rogal already does the same for Allegheny County. "But we didn't get it." Asked why it didn't happen, he said, "I have no clue. ... We were going to get it and nothing happened."

Some observers wonder if people close to Mr. O'Connor will have better luck going after city business now that the friction within the administration is gone.

"Those who are tight with O'Connor are going to have a good time of it in the coming months," said SMC Business Councils President Cliff Shannon, a former chief of staff to U.S. Sen. John Heinz. There is a concern that the mayor's absence may create the conditions for "cronyism and political patronage," he said.

"The city literally can not afford to have that happen,'' Mr. Shannon said. "With the mayor on deck, you run that potential risk in the minds of many people in the business community."

Many of Pittsburgh's business elites privately have expressed outrage at the recent turn of events at City Hall.

On the day of their dismissals, Ms. Leber, Ms. Malie and Mr. Leber sought refuge in the Downtown offices of the Allegheny Conference on Community Development, a group chaired by the city's top executives, philanthropists and educators.

Having lost their access to city-issued transportation, the three staff members walked to the Regional Enterprise Tower -- the former Alcoa Building that is home to many prominent economic development agencies -- and took the elevator to the 11th floor, where they spent several hours using the phones and a conference room provided by the conference. (Mr. Leger is a former employee. He once worked for the conference-controlled Pennsylvania Economy League.)

Not long after the firings on July 27, Allegheny Conference Chief Executive Officer Michael Langley met with John Verbanac, an informal adviser to Mr. O'Connor in last year's mayoral campaign and a consultant to Forest City and Harrah's on the casino bid.

Mr. Verbanac "said he was there on behalf of the mayor and he wanted to reaffirm the mayor's commitment to working with the business community on a number of issues," according to conference spokeswoman Catherine DeLoughry.

Mr. Verbanac, however, denied that the visit was part of a campaign to reassure the business community about the recent changes on Grant Street, saying he was there as a board member of the nonprofit Institute of Politics and there to reassure Mr. Langley that an institute-led discussion about merging certain city and county functions would continue despite the mayor's illness.

"I have been a huge supporter for Bob and continue to be a huge cheerleader while he is going through treatment," said Mr. Verbanac, who said he spoke to the mayor recently by telephone. "To the extent people know I have a relationship with the mayor, I am communicating as positive a message as I can about our mayor."


Dan Fitzpatrick can be reached at dfitzpatrick@post-gazette.com or 412-263-1752. Rich Lord can be reached at rlord@post-gazette.com or 412-263-1542. Timothy McNulty can be reached at tmcnulty@post-gazette.com or 412-263-1581.


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