The City Council has a new street cleaning company for the first time in 16 years, after a series of sometimes contentious hearings ended in a split vote.
Representatives of the locally owned CleanStreet, which held the Hermosa contract from 1994 until last week, argued that the contract bids submitted by the new company, Athens Services, were “ridiculous” and in some cases illegal.
Mayor Pete Tucker, Athens’ chief skeptic on the council, described Athens’ successful bids for the new contract “very puzzling” and cast doubt on whether the company will do the work for the prices it quoted.
Athens representatives countered that their contract bids were legitimate, and said their selection as a contractor will save the city money.
In addition to the Hermosa showdown, CleanStreet is challenging Athens in court, with a lawsuit claiming improprieties in its street cleaning for three other California cities.
Inside lane
In June CleanStreet appeared to have the inside track to a new three-year contract, when the City Council met to discuss then-Public Works Director Rick Morgan’s recommendation that the city continue to use CleanStreet to clean streets, sidewalks and the city pier.
City officials had required companies seeking the work to submit “balanced” bids that itemized prices for each portion of the work and equipment such as access mats, in case the council decided to save money by awarding some parts of the contract, but not the whole thing.
Morgan had sent a letter informing Athens that its contract bid was unbalanced. He cited “glaring” examples including a bid six times lower than CleanStreet’s for “by far the largest” chunk of work in the contract.
“It’s a great price, don’t get me wrong,” Morgan told the council. But he added, “There’s no way Athens could honor that bid item if you awarded just that.”
Athens’ total bid was $1.06 million and CleanStreet’s was $1.09 million.
Dennis Chiapetta, an Athens executive vice president, told the council the 50-year-old company serves about 20 cities, saving some of them between $20,000 and $500,000 a year. Athens said all the bids the city received were imbalanced, and convinced the council to reopen the contract for fresh bids, except for Tucker, who cast a lone dissenting vote.
Question of balance
City officials narrowed the scope of the street cleaning work somewhat, and the companies submitted fresh bids Sept. 30. The council met Oct. 12 and considered awarding the contract to Athens, whose bid came with the lowest price tag. But CleanStreet protested Athens’ bid, and the council agreed to study the matter further.
Then on Oct. 26 the council met again, and selected Athens as the new contractor. Athens’ bid for the contract totaled $681,000, which was $233,000 lower than CleanStreet’s bid.
Morgan had retired, and the city’s acting public works director, Frank Senteno, told the council that the fresh Athens bid was properly balanced.
“We didn’t find any huge discrepancies in the individual bid items,” he told the council. “The overall proposal is 30 percent under the city’s budget for street sweeping.”
Tucker remained skeptical, pointing to Athens’ itemized proposal for sidewalk cleaning in commercial sections of town.
“Athens is at $7,800 and CleanStreet is at $80,000, and the next one’s $93,000, and [the one after that is] $122,000,” Tucker said.
“I find it very puzzling that the price difference is that much, because we have a lot of sidewalk to clean,” he said. “Seventy-eight hundred bucks is not a lot of money, and I’m concerned with the quality that we’re going to get.”
Dan Alderman, an attorney for CleanStreet, was even more skeptical.
“The numbers are just startling,” he told the council, taking pains to compare Athens’ first-round bids with their final proposal.
“In the first round of bidding Athens charged on their bid sheet $358,188 to clean the city pier. Athens’ proposal now is $43,683 for the same work,” he said.
“Athens’ May bid was $70,707 to sweep all the streets, now they’re at $336,066. Athens’ previous bid in May to clean the upper Pier [Avenue] was $358,188. Now it’s $33,689,” Alderman said.
“Their numbers are ridiculous,” he said.
“The city rules require that each item, as the mayor stated, must stand alone. And the sidewalk issue, as the honorable mayor said, is a huge matter here,” Alderman said.
Gary Clifford, Athens’ chief operating officer, denied that his contract bid was unbalanced. He said the city’s specifications were changed for the second round of bidding, and that’s why some of Athens’ prices were different in the second round.
City Manager Steve Burrell also said officials reduced the scope of work for the second round of contract bids, and made some additional changes that resulted in significantly different bids in the second round.
“We have already established the fact that your staff has told you the bid checks out. It’s not unbalanced,” Clifford said.
“If staff thought there was something wrong with this bid they would tell you. They work for you. And trust me, I hear it loud and clear…if you don’t like the service, I know right where you’re coming. You’re coming to me and my peers,” Clifford told the council.
“We did an outstanding job of coming down here and giving you a competitive bid. We spent a lot of time on this, we looked at every element. Everything stands alone. As you know, we’re very diligent in the scope of work we’ve done,” he said.
Under pressure
Alderman said the commercial sidewalk-cleaning portion of Athens’ bid violated a state unfair-competition law by offering a service below cost.
“It’s basically $7 an hour for what needs to be done. The cost of fuel is $15 an hour — that doesn’t pay for labor, overhead, anything. They’re telling you they can do the pressure cleaning, the sidewalk work, for less than it costs,” he said.
Clifford said the commercial sidewalk-cleaning bid was proper.
“It certainly doesn’t cost us $100 an hour to clean the sidewalks. We have extensive experience,” he said.
“What it costs our company to clean your sidewalks is in here, with an appropriate profit for us…We came in here and gave you a competitive bid that stands alone, for the second time,” he said.
“We have state of the art equipment that is going to clean your sidewalks as clean or even better than they’ve ever been done,” he said.
Athens’ website leans more heavily on street sweeping and trash hauling than on pressurized sidewalk washing, and Clifford acknowledged to the council that the five cities listed as references in his second-round bids use Athens for street sweeping but not sidewalk washing.
Turning to 13 other cities used as references in Athens’ first round of bidding, the company does perform pressurized sidewalk washing for the City of Sierra Madre, according to city officials there. Officials of six other cities on the list said Athens sweeps the streets but does not wash the sidewalks, and officials of the remaining six cities did not respond.
“We’re a family-owned business that’s been around for 50 years, and we have great relationships with many municipalities,” Clifford said. “We’re very highly rated, and [have] great recommendations.”
“CleanStreet’s been doing this work for the city for 16 years now,” Alderman said. “Jere Costello, the owner of CleanStreet, lives in Hermosa and he cares tremendously about this city. He does a great job as everybody will tell you.”
Costello told the council he began street sweeping in 1973 with a contract on the Palos Verdes Peninsula.
“Our pricing is completely transparent,” he said. “It’s fair, it’s competitive.”
Decision time
Tucker predicted Athens would wind up asking the city for more money; the contract allows “minor changes” up to the dollar amount the city budgeted.
“I’ve been in the construction business, and when I see bids like this I know something’s wrong, and I don’t want to pay for it,” Tucker said. “…I think you goofed, and I don’t want you coming back to me and saying hey, I need some more money. And you can sit here and tell me that’s not going to happen, but it probably will.”
Councilman Howard Fishman countered that city contracts contain clauses allowing them to be canceled if the contractor does not perform the work.
Councilman Michael DiVirgilio said he liked Athens’ prices but wanted to look further into the companies’ pricing.
The council voted 3-2 to award the contract to Athens, with Tucker and DiVirgilio dissenting.
Even after the vote, Tucker continued to question Athens’ ability to perform the contracted work.
“I’ll believe it when I see it,” he shrugged.
From the court
CleanStreet also is taking on Athens in court, claiming in a July lawsuit that Athens has violated state law by cleaning streets for free and improperly bundling street sweeping contracts with trash hauling contracts.
The lawsuit accuses Athens of providing free street cleaning to Glendora, Temple City and South Pasadena “in an attempt to persuade cities to agree to an improper tying of services in violation of California anticompetitive laws.”
“In addition, Athens, by offering street sweeping services for free, is encouraging cities to pay an illegal tax for street sweeping on citizens by including and hiding in the cities’ property tax bills, under garbage collection, charges for street sweeping,” the lawsuit alleges.
“The cities, in essence, are passing the costs of street sweeping from the city budget to property owners by disguising such charges as taxes for garbage and waste collection,” the lawsuit claims. “These taxes are imposed without the consent of citizens and are in violation of Proposition 218.”
The lawsuit cites state laws barring unfair business competition and restraint of trade. ER
