Greising: O'Hare Is a Cleanup Challenge for Our Reform-minded Mayor
BGA President David Greising writes a regular column for Crain's Chicago Business.
Whether we know it or not, as Chicagoans, O'Hare International Airport is one of our best friends.
The former apple orchard appended to the Northwest Side of Chicago is a veritable engine of economic activity. Last year, 80 million passengers came through O'Hare. Two million tons of cargo, too. Landing fees and other sources generated $1.3 billion in revenue for the city.
And over the next few years, according to plans laid by former Mayor Rahm Emanuel, O'Hare is set for an $8.5 billion makeover. There will be dozens of new gates, a relocated international terminal, a completed "people mover" and more.
For Mayor Lori Lightfoot, confident in her ability to clean up corruption and waste in city contracting, perhaps no other opportunity can match O'Hare.
Lightfoot during the mayoral campaign boasted that she knows where the bodies are buried in city contracting. She once worked in the city's procurement department, where she helped revise the minority and women-owned business certification and compliance program.
The city's aviation commissioner, Jamie Rhee, a holdover from the Emanuel administration, will be responsible for unearthing those bodies as the airport makeover moves forward.
A recent report about the history of waste, fraud and mismanagement of O'Hare, by my colleagues at the Better Government Association, gives a glimpse of the heavy lifting Lightfoot and Rhee will face.
The BGA report found that construction companies sometimes continue to get lucrative contracts at O'Hare, despite past accusations of minority contracting fraud. It showed how lobbyists like former mayoral candidate Gery Chico and disgraced former Daley insider Victor Reyes have raked in millions from airport clients like American Airlines, Enterprise Rent-a-Car and billboard advertising firm JCDecaux Group.
One contractor, R.M. Chin & Associates, has maintained contracts for the airport's chronically troubled people mover for a quarter century—despite a nearly unbroken record of disappointment and delay. Chin and its consortium partners have won no-bid contract extensions five times. The group's 2012 contract, originally set at $115 million, twice has been extended without competing bids, for another $190 million in revenue—and the people mover still does not work.
Part of the extra cost pays for buses to shuttle people between terminals that the people mover was supposed to serve.
Rhee has an admirable reputation. As head of the city's procurement office before Emanuel moved her to O'Hare, Rhee made progress in certifying minority, women-owned and disadvantaged businesses. Her department decertified more than 100 firms between 2009 and 2018.
Even so, O'Hare's troubles tend to touch even those with enviable track records.
As general counsel to the $8 billion O'Hare Modernization Program in 2005, responsible for all legal matters for Mayor Richard M. Daley's ambitious expansion program, she was on the job when the city awarded a $75 million O'Hare modernization contract to F.H. Paschen even though the construction company was facing city allegations that it filed false documents relating to the city's minority contracting program. To lock in the huge new contract, Paschen merely fired an employee who allegedly forged a document and put other safeguards into effect.
It was a too-small penalty with such a big bite of O'Hare business on the line.
Rhee said she was unaware of the Paschen contract at the time—awarding the contract was the procurement department's job. This is the sort of silo problem the city should fix as the O'Hare project moves forward.
She also said she plans to double down on compliance and high standards as the O'Hare modernization program proceeds.
"This is an $8.5 billion program. We need more protections in place. Compliance is an everyday challenge," Rhee told me. "If 3 p.m. is when (aviation department) people leave, 3:30 is when the tomfoolery happens."
Likewise for Mayor Lightfoot, the work of fixing the city's procurement policies—and to leverage the potential to use procurement as a tool for economic development and equity—will never end.
In one of her first acts as mayor, she established a City Council Committee on Contracting Oversight and Equity, with a particular focus maximizing opportunities for minority and women-owned contractors.
These are laudable goals. The history of troubles with O'Hare contracting gives a glimpse of just how challenging it will be to meet them.