LIPA switches law firms for internal probe, as Quanta continues challenge to PSEG contract award
Quanta Services is seeking to stall the final award of LIPA’s grid management contract to PSEG. Credit: Newsday/John Paraskevas
As Quanta Services returned to court Wednesday seeking to stall the final award of LIPA’s grid management contract to PSEG, LIPA confirmed it has switched law firms to conduct an internal ethics probe after a now-fired senior official complained of improprieties in LIPA’s bidding practices.
The confluence of chaotic events follows months of turmoil at LIPA after its most senior officials spent a year reviewing candidates to take over management of the electric grid after PSEG Long Island’s contract expires Dec. 31. Despite a strong internal recommendation to award the contract to Quanta, LIPA’s board of mostly Gov. Kathy Hochul's appointees voted 6-0, with two abstentions, to reject Quanta, then to cancel the procurement altogether.
LIPA is now moving forward with an extension of PSEG’s existing contract, and has already submitted it for a required approval from the state attorney general.
In court Wednesday, acting State Supreme Court Justice Philippe Solages said after hourlong arguments that he would rule on Quanta’s request for a temporary restraining order blocking the PSEG extension at an unspecified later date.
Brendan McGuire, a lawyer for LIPA, argued that the LIPA board’s decision to reject Quanta was final on April 30, starting a four-month statute of limitations for Quanta to file a court objection, but that Quanta missed it and doesn’t get a "do-over."
Quanta attorney David Kahne, calling LIPA’s procurement process "deeply unfair and flawed," argued that the start date for the company’s Article 78 lawsuit was actually May 22, when LIPA formally canceled the procurement, and pointed to an email from LIPA’s general counsel, Bobbi O’Connor, saying the procurement for which Quanta had been selected by an internal review committee "remains an active procurement."
Meanwhile, LIPA, in response to Newsday questions on Tuesday confirmed that it had retained Arlo Devlin-Brown to conduct an internal investigation, prompted in part by former senior vice president Billy Raley in response to his charges that he’d been pressured to lower bidding scores for Quanta on five separate occasions during the active procurement process. Raley told Newsday he’d also been told by a top LIPA official that he was "in the crosshairs" to be fired because he resisted the pressure to change scores.
Asked to comment on the allegations and other claims, Ken Lovett, a spokesman for Hochul, on Tuesday said the governor "expects everyone at the authority to follow all legal and ethical standards, and if anyone is found to have violated laws she will ensure they are referred to the appropriate law enforcement authorities."
Sources close to the authority said LIPA decided to fire a law firm originally hired to conduct its internal ethics probe, Holland & Knight, after the firm’s lawyers pointedly questioned some trustees about their deliberations and votes.
Holland & Knight didn’t respond to a request for comment, but LIPA spokeswoman Jen Hayen confirmed the switch in an email.
"Regarding your questions about Holland & Knight, LIPA takes this matter with the utmost seriousness," Hayen said in the email to Newsday. "We have retained Arlo Devlin-Brown, from the firm Treanor Devlin-Brown, former chief of the Public Corruption Unit at the U.S. Attorney's Office for the Southern District of New York, to ensure this investigation is completed thoroughly, professionally, and without delay."
Raley, in an interview on Wednesday, said he’d also been advised of the change by his lawyers.
One area of investigation by both the internal ethics investigators and the inspector general, according to Raley and multiple people who have been interviewed by both, is material presented to LIPA trustees at a closed-door meeting in late April.
Multiple copies of thick folders containing dozens of articles and other information describing problems with the Puerto Rico grid and suggesting the problems were tied to Quanta, were distributed to trustees at the meeting, according to Raley and others familiar with the probes. The distribution came after PSEG and Quanta had filed their last and final bids in the procurement, and just days before the board voted to reject Quanta.
Raley, who said the inspector general is aware of the packets based on his four-hour interview with investigators, said he was made aware of the folders because he and another senior LIPA official went to work after the closed-door meeting to vet the information, most of which he said turned out to be misleading.
LIPA declined to comment on the folders.
"Regarding your additional questions about trustee sessions and outside investigations, we will not comment on ongoing investigations or internal trustee deliberations," LIPA said in an email.
Lovett, the spokesman for Hochul, said in an email: "We cannot comment on pending litigation or personnel matters. The governor is clear that any solicitations by state agencies or public authorities be conducted impartially and comply with all applicable laws."
Mark Harrington, a Newsday reporter since 1999, covers energy, wineries, Indian affairs and fisheries.
