Questions over phone chats, after-bid price hikes in airport deals

HOUSTON (KTRK) -- In the wake of the city halting a $1.5 billion airport expansion plan because of "price variations" and potential discussions during the quiet period, abc13 has uncovered additional details and unearthed more questions surrounding how Houston officials picked the winners in the deal.

The airport expansion is a massive project for the city. Parking would be widened, utilities bolstered, and construction crews would expand Terminal D and build out a new Terminal C.

The bids were ready to be voted on in December and nearly a done-deal in the waning minutes of former Mayor Annise Parker's administration until they were halted by then-City Controller Ron Green, who initially noticed "egregious issues" in the procurement process.

New City Controller Chris Brown has recommended that four major construction-related projects in all, as well as a related insurance project, be tossed out and re-bid. Mayor Sylvester Turner agreed. The bids were recently reissued.

Few specifics have been made public on what the problems were in the deal and no illegalities have been found, but abc13 has uncovered red flags in the airport's procurement process.

And when Ted Oberg Investigates attempted to get answers from the Airport Director Mario Diaz, he provided few answers and ultimately walked away from the interview.

Diaz's phone records show multiple communications between the airport director and Ben DeCosta, a consultant on the key winning construction contract during what's known as the quiet period.

City rules say vendors can't call city officials to talk about deals in the period after bids are turned in and before City Council considers them. For the new international terminal deal, this so-called quiet period ran from July 17 to December 22.

And while Diaz said there was only one phone call and a text during that time, his cell phone records obtained by abc13 show at least six calls and a text message from DeCosta to Diaz's cell phone during the quiet period.

Diaz said they did not talk about the airport bid. They spoke about a Federal Aviation Administration audit, Diaz said. DeCosta was working for a law firm that the Houston Airport System had hired to help avoid fines associated with the audit, according to Diaz.

"He was a consultant to a law firm in Washington, helping us defend the case for the city to avoid $10 million in fines," Diaz said. "It happened to overlap with the quiet period with these contracts."

Diaz said he did not know that DeCosta was a consultant for the winner of a major airport bid, Austin-Gilbane, a consortium of expert construction firms that would oversee the construction of the new Mickey Leland International Terminal.

How does the public know if there was zero discussion about the airport deal?

"Because I'm telling you," Diaz said.

Both DeCosta and Diaz previously worked together in upper management at the Atlanta airport, where DeCosta was the former airport director.

And while it's impossible to know for sure what was being discussed, former Controller Green is curious.

"With the phone conversations and the phone records are pretty clear," Green said. "There was communication. If they're not talking about the weather, you have some issues there."

In addition, when he was controller, Green asked Diaz, as well as several other city officials, to sign affidavits and swear to a number of issues in connection with the procurement -- including if there was any conversations with any proposed vendors during the quiet period. The former controller also had questions about DeCosta.

Diaz would not say if he would return the affidavit. Neither have the other city officials, including the former mayor.

DeCosta has not responded to requests for comment.

In negotiations concerning the buildout of the international terminal, airport officials appear to have allowed contractors to negotiate prices up after bids were submitted. For example, in the case of Austin-Gilbane -- the firm DeCosta was a consultant to -- prices went up $265,000 for pre-construction costs and total costs might balloon to $100 million more.

"The resources they were proposing were not sufficient to deliver the scope of pre-construction services," Houston Airport Procurement Chief Justina Mann responded to Green in a December 14 email after he started asking questions about the airport deals.

This email, as well as the others in this report, were obtained by abc13 through the state's Open Records Act.

Green described prices going up after bids have been submitted as "very rare" before work has begun.

"Red flags go up when the prices go up," Green told abc13 in a recent interview. "I can tell you from the controller's perspective, and that as a former controller, we probably should do just the opposite."

In Controller Brown's investigation he noted airport officials allowed price changes not only with just the international terminal construction project, but with all of them.

"Questions have arisen specifically about differences between pre-bid amounts versus contract amounts," Brown said in a recent interview with abc13. "We want to know why those amounts went up. We know that in every instance they went up."

Diaz said that he has no idea why the mayor threw out these bids.

"You'll have to ask the mayor," Diaz said. "The mayor doesn't explain things to me. He says do it and we do it."

The questions surrounding the recent contracts are not the only issues that have plagued the Houston Airport System.

For example, Ted Oberg Investigates last year examined an airport concession deal that was judged behind closed doors, which sparked questions about the perceived coziness between the contract's winners and City Hall.

See that investigation here.

More recently, abc13 obtained a resignation letter penned by former airport manager Alfonso Guerrero.

The letter suggests, at least in some cases, certain airport officials may not want you to see everything that's happening.

Guerrero reported directly to Justina Mann, the airport's chief procurement officer.

Guerrero was only at the airport a short time. He was hired in August and resigned October 19. He didn't work on the canceled airport contracts, but he wrote in his resignation letter that he thought there were some general problems with the airport's purchasing process not following state law.

He said in the letter airport procurement staff "was not conducting public openings" for "bids, proposals and/or qualifications."

You can read the letter here.

"I must immediately resign my position to comply with public procurement ethical standards," he wrote.

And when he pointed out errors to a colleague about the airport's Parking Count and Guidance System solicitation in an email, Mann called him on the phone, he noted in the letter.

"Justina told me not to use emails when addressing errors because they created email trails," he wrote.

He also claimed that Mann accused him of being an auditor and asked who Guerrero was working for.

"I seriously began to question why Justina would accuse me of being an auditor and tell me not to review the solicitations for State Procurement Law compliance and also tell me not to use emails to communicate errors," he wrote.

The Parking Count and Guidance System contract is now "under review," according to the Houston Airport System website.

After abc13 began asking questions about the problems with the recent winning airport bids, as well as other procurement issues, Mann was transferred out of her purchasing job and into a management training program.

"Justina Mann is moving temporarily to the Human Capital Management division in order to assist in the development and implementation of a new Management Leadership program, which is designed specifically for team members with the Houston Airport System," a spokesman told abc13.

Mann is one of the first two people to ever enter the new program, for which there is no application process and for which Mann is assisting in designing the curriculum.

There may be no connection between her new position, the airport bids and her role as chief procurement officer, but airport officials will give no more specifics about the program and there is no record of a transfer or of the program in Mann's personnel file, obtained by abc13.

Ted Oberg Investigates has repeatedly contacted Mann for comment, but she has not returned calls or emails.

Controller Brown said he will continue to watch the rebidding process for the airport expansion closely.

"This is a lot of money and people have questions," Brown said. "Any time there is a lot of money involved, it's going to raise my sense of scrutiny. I have specific concerns. This goes beyond the magnitude of the dollar amount of these contracts."