Network entrepreneurs turned water service and municipal challenges into a far-reaching business
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The appearance of a $5 line warranty charge on most Pittsburgh Water and Sewer Authority bills in January, and every month since, came after longtime friends and sometime business partners took a competitively bid contract and rewrote it rather than rebidding it.
The warranty contract, which became the subject of lawsuits and the attorney general's scrutiny, went to Utility Line Security, LLC. ULS is one of a group of firms created by government veterans who are no strangers to politics and often operate in spaces where strict competitive bidding isn't required. Praised for their professionalism by clients and others in government, the firms sometimes draw criticism for the ways in which they win the work.
Also born from relationships, rather than a competitive process, is the contract under which Wilkinsburg-based Resource Development and Management runs the Municipal Authority of Westmoreland County. The contracts under which Braddock and Rankin get RDM's advice on their distressed finances, meanwhile, are products of an abbreviated competitive process permitted under state law.
Some of the professionals running those firms left government service and promptly gained roles as government consultants. Their most longstanding business, RDM, is a cornerstone of an informal network of lawyers, developers, managers and financiers who do business with government, and who have been involved in politics. Some of RDM's principals have created other firms, including ULS, which contracts with utilities to provide water and sewer line warranties to households.
A disparate group of Allegheny County government veterans and business people comes together
- PDF: The network
- Laws provide rules, guidance
- The sheriff looks into a mysterious bank account
- Debt, taxes come with new high school
- PG coverage of those in the network
- One network firm underwrote water system while another managed
- Contributions to Westmoreland campaigns modest, frequent
RDM, going on 20 years old, manages the water systems for Johnstown, Sewickley, the Petrolia area, most of Westmoreland and slivers of Allegheny, Armstrong, Indiana and Fayette counties. It has gotten state contracts to advise six distressed municipalities, and to help keep 11 other local governments out of the red. It staffs the Redevelopment Authority of McKeesport and the boroughs of Whitaker and Blawnox.
Pittsburgh Councilman Doug Shields has publicly criticized the process by which ULS got the warranty contract, the year after RDM got a contract to analyze Pittsburgh Water and Sewer Authority operations.
"These folks are making a lot of money on the public," Mr. Shields said. "How is it that RDM has their finger in so many government pies?"
"I think they've done a very good job in how they've managed the municipal authority," Westmoreland County Commissioner Tom Balya said. He fought against the municipal authority's first long-term contract with RDM in the mid-1990s, but now admires the results. "We're proud that the Municipal Authority of Westmoreland County now serves people of five counties."
RDM President Joseph M. Hohman said he has heard criticisms of the ways his firm gets work. He contended that it's not the businessman's job to tell prospective client to first issue requests for proposals, or RFPs, from multiple firms. "[S]peaking from a marketing standpoint, when those opportunities present themselves, I don't say back to the municipality, 'Well, I really think you ought to RFP that.' "
First Published September 14, 2010 12:00 am
