A San Francisco company bidding for work on a planned LAX parking facility has withdrawn amid questions of a potential conflict of interest between the firm and former airports Executive Director Lydia Kennard, the Los Angeles Daily News has learned.
Kennard was still a city consultant to Los Angeles International Airport when URS Corp. was talking with her about joining its board - which she did one day after leaving LAX. Rather than answer questions about that relationship, the global engineering design firm pulled its bid as a subcontractor.
"Questions were raised about a potential conflict of interest, and URS was asked to provide information on their dealings with Ms. Kennard. They chose to walk rather than resolve those questions," a city official said.
Sources said officials questioned whether Kennard - as a city consultant working on airport business - was in a position to enrich the company as a member of its board of directors. Kennard was a city airports consultant from early March to July31. On Aug. 1, she was appointed to the board of URS.
Kennard said nothing improper was done and that the conflict-of-interest questions raised by the City Attorney's Office were disputed by the company.
A URS spokesman said the company withdrew as a subcontractor on the LAX project "at the request of the primary contractor," but he insisted there was no conflict.
"URS continues to believe there is absolutely no conflict of interest, that the law supports our view and the company has complied with all applicable statutes and guidelines."
The spokesman said the company is continuing to pursue a number of other contracts in the region, including a Palmdale airport project. The LA/Palmdale Regional Airport is run by Los Angeles World Airports, which also operates LAX.
Kennard said she became a consultant for the city in early March and as such no longer was a public official. She also said she was not involved in any discussions about URS contracts or bidding.
"It's a huge stretch to suggest an implied conflict of interest," Kennard said.
She emphasized that talks with URS about a board appointment did not begin until after she resigned as Los Angeles World Airports' executive director in late January.
'Abundance of caution'
Kennard served two stints as LAWA's executive director: from August 1999 to November 2003; and again from October 2005 through January.
Kennard said the international company was careful to keep a "firewall" between her and any jobs it was doing in Los Angeles.
She said the multi-billion-dollar company, with 30,000 employees around the world, hired an outside counsel who reviewed the issue and concluded there was no conflict.
Kennard said once the decision was made to drop out of the contract, there was no point in disclosing to the city the private decision-making information about her board appointment.
Kennard was awarded the city consulting contract March5, and she had been paid about $53,000 with an additional $9,000 pending when she suspended it July31, according to LAWA records.
She gave up the consulting contract July31, one day before being appointed to the URS board.
In a July 31 letter announcing her decision to airport executives, Kennard said she was suspending her contract with LAWA "in an abundance of caution."
"Even though there is no apparent legal conflict with dual roles; I would never want there to be any perception of a conflict of interest in either role," Kennard wrote.
In the letter, she said she had sought advice from the city's Ethics Commission and URS attorneys.
The incident is the latest involving URS, which at one time was a primary contractor overseeing the LAX Master Plan with contracts worth at least $22.4 million.
URS no longer is involved in that contract.
In late 2003, URS was at the center of controversy amid possible "pay to play" allegations when the District Attorney's Office opened an inquiry into possible wrongdoing by Airport Commission members, including President Ted Stein, in the awarding of contracts for then-Mayor James Hahn's $9.1 billion LAX modernization.
The inquiry arose after a Los Angeles Business Journal report that claimed Stein sought political contributions from contractors, in one case tying the contract to a contribution to Hahn's campaign against San Fernando Valley secession efforts.
Stein ultimately stepped down from the commission, denying any wrongdoing. While the District Attorney's Office conducted a preliminary inquiry, no charges were ever brought.
Kennard said that despite believing there was no conflict of interest, URS decided to drop the LAX project to avoid any potential negative publicity.
"They don't like their names in the paper in a negative way," she said. "This is so ironic. The discussion was whether or not they should continue to fight the matter, and it wasn't worth (it) to their reputation over not a lot of money.
"It's not worth the aggravation."