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CHA brings in Blagojevich prosecutor for probe of $3.9 million deal

Attorney former federal prosecutor Reid Schar.  |  M. Spencer Green~AP

Attorney and former federal prosecutor Reid Schar. | M. Spencer Green~AP

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Updated: August 9, 2013 6:04AM

T he former federal prosecutor who sent Gov. Rod Blagojevich to prison is leading a Chicago Housing Authority investigation to determine whether the competitive bidding process for a $3.9 million contract to oversee the construction and rehabilitation of hundreds of taxpayer-subsidized CHA apartments was rigged, sources told the Chicago Sun-Times.

Reid Schar heads a team of 11 attorneys from the law firm Jenner & Block who have been examining contract bids the CHA received earlier this year from a group of companies led by McKissack & McKissack that oversaw the work for the past 10 years, and three other bidders, the sources say.

Soon after Schar, who was the lead prosecutor in the Blagojevich corruption case, began investigating, the CHA fired two longtime employees of the public housing agency who had overseen the McKissack contract for several years, working with McKissack employees out of the CHA’s Loop offices.

McKissack — a minority-owned company from Washington, D.C., that also has offices in Chicago — ended up offering the lowest price in its effort to hold onto the CHA contract, the sources say.

But the housing authority instead gave the job to Gilbane Inc., awarding it a $3.9 million contract at a special board meeting June 28. Gilbane is set to begin work Monday.

The U.S. Department of Housing and Urban Development, which is paying for the CHA construction work, issued a written statement in response to questions, saying only, “We cannot comment on an ongoing investigation, but we are confident that CHA is taking every measure to ensure the integrity of their procurement process.”

CHA Chairman Zaldwaynaka “Z” Scott won’t comment.

The former CHA employees haven’t been accused of any wrongdoing. Escorted out of the CHA’s offices

in early April, they were given no reason for their dismissals, according to Kenneth Ross, an attorney for one of the employees.

“The CHA likes to shoot first and ask questions later,” says Ross. “I can tell you that any termination was without merit. CHA had no cause for termination. He was told to leave by the head of human resources. But who made the decision, I can’t tell you that.”

The construction-management contract awarded to Gilbane is part of the housing authority’s massive “Plan for Transformation,” the long-running, $1.6 billion project started by former Mayor Richard M. Daley to demolish Chicago’s notorious high-rise, low-income housing projects and replace them with 25,000 apartments in smaller developments and buildings scattered across the city. The Plan for Transformation is about 86 percent complete.

McKissack was founded in 1990 by Deryl McKissack, an African-American woman whose family has been in the architectural and engineering business for more than 100 years. It has overseen projects across the United States, including expansions of McCormick Place and O’Hare Airport and construction of the Martin Luther King Jr. Memorial in Washington, D.C. McKissack began overseeing the CHA work in 2003. Three years later, she formed a joint venture with two other businesses — the Rise Group and URS Corp. Operating under the name the Partnership for Transformation, the McKissack group won a $16.4 million CHA contract under which it continued to oversee the work. In 2010, the joint venture won a new $9 million contract, extending the deal. That contract expired June 30.

The McKissack group wasn’t initially the low bidder with its proposal to continue overseeing the work beyond that date, according to sources.

They say CHA officials — including the two employees who later were fired — began interviewing representatives from McKissack and the three other bidders. The CHA officials asked the bidders to submit their “best-and-final” offers — a process the CHA repeated twice, ending with McKissack having the lowest bid, according to several sources.

A CHA spokeswoman says: “Gilbane was found to be the highest-rated responsive and responsible bidder. McKissack & McKissack’s bid . . . was found to be non-responsive.”

McKissack couldn’t be reached for comment. URS and the Rise Group wouldn’t comment.

The Rise Group also oversees construction for the Chicago Public Building Commission of government buildings in Chicago including police stations, libraries and schools.

Schar’s firm has put in for more than $135,000 in legal fees, according to bills it has submitted for March and April.

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