Part 2 of a 4-day series
Cactus Towing was on the brink of losing its exclusive contract in Mesa until company lobbyist David Udall made a phone call to City Hall. The call lasted less than a minute. But it set off a chain of events that consistently broke in favor of the Mesa company and its politically connected owner, Lee Watkins.
Cactus had not been the low bidder when Udall called then-deputy city attorney Joe Padilla about February 2004. It finished third and was in danger of losing the city’s towing contract, which it had held for almost eight years.
But within days of the phone call, the city staff threw out the first round of bids. By the time the contract was awarded more than a year later, Udall’s behind-the-scenes work included obtaining confidential city documents not available to other bidders on two occasions. His efforts led to allegations of collusion and bid rigging from a disgruntled competitor and a former City Council member. Those accusations were investigated by the state attorney general’s office, which was critical of the city’s bidding practices but did not conclude any laws were broken.
The City Council finally split the towing contract into four zones in July 2005.
Cactus won two of them.
“I had no information that our staff or Mr. Udall or anybody associated with Cactus Towing had done anything wrong,” Councilman Tom Rawles says. “But what I did know is that there was a perception that something had been done wrong. And that’s why I (didn’t) want to continue down a path that is perceived as being tainted.”
HISTORY OF PROBLEMS
Charges that Cactus and Watkins received favored treatment from Mesa officials were nothing new when the exclusive towing contract came up for renewal in late 2003.
Trish Bradley, the Mesa police supervisor who oversaw the contract in 1997, says she was so concerned about complaints of overcharges and thefts from vehicles stored in the Cactus lot she suggested running an undercover sting on the company.
Bradley made that suggestion to Mike Whalen, then an assistant police chief and now a City Council member. Bradley told the Tribune recently her plan was never acted on. She never received an explanation as to why.
Whalen says he doesn’t recall Bradley’s suggestion to run a sting.
Bradley says Watkins frequently went over her head to Whalen.
Watkins did have his cell phone number, and was not shy about calling, Whalen says. But he denies he ever gave special treatment to Cactus.
The same concerns raised by Bradley are at the core of a Maricopa County Sheriff’s Office investigation into Cactus Towing, launched about the same time the Mesa contract was languishing. Sheriff’s investigators have documented more than $100,000 in past overcharges related to the Mesa contract since their raid on Cactus’ headquarters in March 2005, according to agency reports.
City Council members say they were unaware of Bradley’s concerns or complaints about Cactus when bids for the new contract were opened in late January 2004.
Cactus was not the low bidder. It ranked third, with a proposal almost $29,000 per year higher than the low bid submitted by URS Southwest Inc., one of the state’s largest towing companies.
That’s when Udall called Padilla.
REVERSAL OF FORTUNE
Within days, the first round of bids was canceled. Why is not clear.
Padilla says now he did speak briefly to Udall about the towing contract, but that the conversation had nothing to do with the decision to cancel the bids. Padilla says he told Udall he could not talk about the contract and that he ended the call in less than a minute.
It was Sharon Seekins, the city’s purchasing director, who made the decision to scrap the bids, Padilla says.
City records say otherwise.
Seekins has given several explanations as to why the bids were thrown out.
Shortly after they were canceled, Seekins sent an e-mail to a subordinate, saying the reason was a critical provision setting the price of storing abandoned vehicles had inadvertently been left out of the original request for proposals.
“This is an argument Council will buy,” Seekins wrote. “Thirty years of experience tells me they will buy it.”
At a July 2004 council meeting, Seekins was grilled by several council members upset the first round of bids was thrown out over what they viewed as a trivial issue.
Seekins later told the council it was what amounted to a clerical mistake that forced the cancellation. She also said rebidding the contract made it possible to ensure the city was not overcharged for having its fleet vehicles towed.
In a recent interview with the Tribune, Seekins stuck with her original explanation that the provision on storage fees was critical. Seekins says she did not realize that provision was omitted from the original bid requests until Udall pointed it out.
She also maintained canceling the original bids was her decision.
“The only thing about the phone call from Dave Udall is it caused me to go back and take a second look at the procedures and everything that had happened,” she says.
However, city documents contradict the assertions by Seekins and Padilla that it was Seekins who made the decision to throw out the bids, and that Udall’s phone call had nothing to do with it.
Seekins told a member of her purchasing staff in a February 2004 e-mail that it was Padilla’s decision to cancel the first round of bids.
The staff’s report to the City Council recommending Cactus in July 2004 said the bids were “rejected upon advice of the City Attorney’s Office.”
Even Udall told the council at a July 2004 meeting that “the city attorney did rule the original bid to be inappropriately cast, and it was thrown out.”
Seekins also told a disgruntled competitor in a recorded phone call that “Joe Padilla did it to save the city from embarrassment,” according to documents from the attorney general’s investigation.
When pressed during that call by Daryl Raab, owner of Daryl’s Towing, as to what embarrassment Padilla was saving the city from, Seekins responded:
“I’m not real sure. But one of the other bidders wasn’t happy about something. You’ll have to ask Joe Padilla.”
The other bidder was Cactus and the person who was unhappy was Udall, Seekins said during the call.
Raab, whose company finished ahead of Cactus in the first round of bids, turned the recordings over to attorney general’s investigators.
Udall did not respond to repeated requests for an interview.
CONCERNS OVER FAVORITISM
Concerns about favored treatment toward Udall and Cactus were first raised by council members at their July 2004 meeting. The second round of bids had been opened. Cactus had dropped its price and was now the low bidder. Seekins recommended giving the company the contract.
But council members balked. Rawles, Kyle Jones and thencouncil member Janie Thom all made it clear they were not satisfied with Seekins’ explanations as to why the first set of bids had been canceled.
“It just does not seem to be fair to me to have a request for bids, and when the desired results are not received, then it goes out for another bid,” Thom said during a July 2004 council meeting.
Thom, who left the council in 2006, contacted attorney general’s investigators with allegations of “bid-rigging, collusion” and “other illegal activity in Mesa,” according to agency documents. She refused to be interviewed by the Tribune, but would not say why.
By the time the second set of bids reached the council, a new irregularity surfaced. Again, Cactus was the beneficiary.
Seekins added a new requirement that companies submitting proposals needed to have a storage lot in Mesa. URS, the first round’s low bidder, did not have a lot. Because of the new requirement, URS no longer qualified.
URS did not bid in the second round. John Wicke, general manager of URS in Phoenix, refused to comment as to why.
Former councilman Rex Griswold, now running for mayor, says the storage lot provision didn’t make much sense and likely stifled second-round bidding competition.
“Those were the things that I thought that were just unbusinesslike that we did,” he says. “I don’t think it was under the table. People weren’t driving Rolls Royces in the purchasing department.”
Rawles says that at that point the entire procurement process had been so badly botched that he was unwilling to go along with the new recommendation to award the towing contract to Cactus. He wanted it to go to URS, the original low bidder, but was told by Seekins and Padilla that would not be possible.
The council ended up rejecting the second set of bids and ordering the staff to come up with an entirely new proposal.
“Best all around would have been if they hadn’t thrown out the first bid,” Rawles says. “The second best would have been that we were able to reinstate the first bid. We were told we couldn’t really do that. So, the third scenario was ‘a plague on all your houses. We’re starting over — a clean slate.’”
SECRET DOCUMENTS BARED
The city started with a clean slate. Cactus did not.
Udall and Watkins continued to work behind the scenes, and even more allegations of favoritism by Seekins would arise.
Bruce Baker, a towing industry lobbyist, told attorney general’s investigators he was at a meeting of the Mesa police committee in November 2004 when he noticed Udall and Watkins sitting in front of him, passing a document back and forth.
Udall briefly left the meeting, carrying the document, and made some phone calls in the lobby, according to Baker. When Baker left the meeting a short time later, a police officer in the lobby handed him the document, which Udall had apparently dropped.
It turned out to be a confidential draft of the new contract specifications from the city’s purchasing department.
Baker said he confronted Seekins the following day. She told him there were only five copies of the document in existence, and that her copy was missing, according to Baker.
“Her response was that Mr. Watkins had been in her office and they had disappeared from her desk,” Baker said in an e-mail to attorney general’s investigators. “She responded that it could have been only him as all the other copies were accounted for.”
Baker refused to be interviewed by the Tribune.
Baker was sued by Watkins in 2005 over statements he made about the incident in a towing industry newsletter. That case is still pending.
As with the storage fee issue, Seekins has given multiple explanations.
In a written statement Seekins filed with the city shortly after Baker’s statements were published in the newsletter, Seekins said it could not have been Watkins who obtained the internal document.
It must have been someone from Daryl’s Towing, one of the companies that turned in a lower price than Cactus in the first round of bids, Seekins wrote.
“I never met with Lee Watkins and he was never in my office,” Seekins wrote in that undated statement.
Seekins did acknowledge Watkins had contacted her about the time her copy of the document disappeared. But she insisted Watkins only wanted a copy of the city’s ambulance contract, which he picked up at the front desk, she wrote.
Mesa visitor logs show Watkins visited the purchasing department for about 20 minutes on Sept. 7, 2004, about two months before the police committee meeting.
“I do not know how it got out to this date,” Seekins told the Tribune in a recent interview. “Lee Watkins came to my office to request a copy of the ambulance contract. I gave it to him. He got no farther than the receptionist’s desk. He was never in my personal office. Dave Udall was not in my personal office.”
By December 2004, city officials were looking to split the Mesa towing contract into two zones because of council resistance they had met to awarding an exclusive contract to Cactus.
Cactus executives were again seen with internal city documents not available to other prospective bidders, according to city records.
Tom Dorn, a lobbyist for URS, saw Cactus general manager Todd DeMasseo with a new draft of the proposed contract specifications at a December 2004 council meeting, according to a statement Dorn made to the council.
According to what Dorn told the council:
Dorn asked DeMasseo for a copy.
Dorn asked DeMasseo where he’d obtained the document.
“The city purchasing department,” DeMasseo replied.
Dorn complained to the council at its Dec. 16 meeting.
“The bottom line: one vendor, the current contractor, Cactus Towing, has a copy of the draft RFP (request for proposals) and is able to respond to it and talk to council members four days prior to a review,” Dorn told the council.
Dorn refused to comment when contacted by the Tribune.
After Dorn complained, Mike Hutchinson, Mesa’s city manager at the time, took the blame for Cactus getting an advance copy of the city’s RFP. Udall had tried to get a copy from the purchasing department, but was refused, Hutchinson told the council.
Udall obtained his copy when it was inadvertently attached to a packet of information that was to be sent to the council, Hutchinson says. Since documents sent to the council are public records, Hutchinson says his office gave it to Udall.
The same document was made available to other towing companies after Dorn
complained to the council.
“I didn’t fall on my sword,” Hutchinson recently told the Tribune. “I made a mistake. It was not done with the intention to favor anybody.”
By the time the final version of the new contract reached the council in July 2005, the council had split it into four zones. The staff recommended Cactus be awarded all four. In the end, it got two.
In a deposition related to his lawsuit against Baker, Watkins insisted city politics ended up working against him. Mayor Keno Hawker told him Cactus could not get all four of the towing zones because there was too much political heat, according to Watkins’ deposition.
After the council vote, Hawker warned Watkins not to appeal, according to Watkins.
Hawker “informed me that if we were to appeal, that he would lead the fight against us before the council because he wanted this thing to end, that there had been enough political controversy, that he wanted it to go away,” Watkins said.
Hawker told the Tribune he does not recall any such conversation.
The attorney general’s office concluded last month no legal action would be taken by the agency as a result of its twoyear investigation of the Mesa bidding process.
Nancy Bonnell, antitrust chief for the agency, noted the council ultimately “took corrective action to remedy the alleged improprieties.” She suggested in the future the city not allow its staff members to have private conversations with bidders, and that documents be distributed to all bidders simultaneously.
Debbie Spinner, Mesa city attorney, said it was a mistake by city staff to allow Cactus to obtain documents not available to other bidders.
“You learn from the mistakes and say, ‘Hey we made a mistake here,’” Spinner said. “We always do what we can to prevent these kinds of things from happening.”
Padilla and Seekins no longer work for the city. Seekins retired after 30 years, and Padilla now works as an assistant city attorney in Scottsdale.
Both say their decisions in the Cactus bidding were never influenced by Udall, Watkins or anyone else associated with the company.
“That’s nonsense,” Seekins says. “What did I have to gain? I was retiring in months when all this was happening. I had absolutely nothing to gain.
“I had the kind of career that was well documented to be above board. Frankly, I resent anybody implying that there was anything going on.”
Timeline of Cactus Towing events
June 1996: Cactus becomes the exclusive contractor for Mesa’s police and nonemergency towing.
May 7, 1997: Mesa police Lt. Trish Bradley writes a memo documenting multiple violations of Cactus contract with city.
Jan. 20, 2004: Bids tabulated for city’s nonemergency contract. Cactus’ was the highest.
About February 2004: David Udall, Cactus’ lobbyist, calls Joe Padilla, deputy city attorney, to complain about the bid process. The bids were tossed out within days.
Feb. 17, 2004: Jim Ruiz, the city purchaser working on the tow contract, argues the bids shouldn’t be canceled. His boss, Sharon Seekins, responds that the city attorney’s office made the decision.
July 12, 2004: Cactus is the low bidder in the second round of bids. City Council refused to accept the new proposals after charges of bid rigging by a Cactus competitor.
November 2004: Udall is seen passing a confidential draft of the new towing contract specifications back and forth to Cactus owner Lee Watkins.
Dec. 15, 2004: Cactus officials were given an advance copy of the city’s bid documents for the new contract, which had not been made available to competitors.
March 31, 2005: Cactus offices are raided by Maricopa County sheriff’s deputies investigating allegations the company had overcharged customers.
July 2005: Mesa City Council splits the city into four towing zones and awards separate contracts for each. Cactus wins two of them.