Markkula Center of Applied Ethics

Business as Usual

It looked like business as usual when Parviz Mokhtari arrived at work Monday morning. Although he had been honored Saturday night at a retirement gala, capping his 20 years as a public works director and city engineer, he was back in his office the following Monday as a contractor, providing the city with his services through a newly formed company of which he was the sole employee. In his new position, he oversaw the design, planning, and cost-estimation of public works projects.

Capitalizing on his expertise seemed like a good idea to many at City Hall. Mokhtari's firm was even hired to provide construction management for a major downtown project, a contract awarded without a Request for Proposals (RFP). His strongest selling points were his vast experience, and willingness to provide the service for a percentage of the total construction cost. Only one of the council members, Matt Grocott voted no, citing what he saw as a significant conflict of interest. He also objected to the lack of an RFP.

Although the city attorney advised there was no problem with the process or the agreement, the following year the city issued an RFP for another major project. Written in large part by the public works director/city engineer, the RFP attracted five proposals, including one from Mokhtari's firm. The city manager arranged for each proposal to be evaluated by an independent engineer from the local council of governments to assuage concerns about bias. The recommendation was to grant the bid to Mokhtari. His firm's two lucrative contacts from the city totaled $470,000.

One of the unsuccessful bidders, a local businessman, complained privately to Grocott, who was increasingly concerned about both the appearance of a conflict of interest, as well as the apparent lack of concern about it on the part of the staff and his council colleagues. "I'm not sure where to go with this matter," said Grocott. "I believe wrongdoing has taken place but I am told by staff and the rest of my council that nothing is out of order."

Word of the controversy prompted a front-page newspaper story, which questioned the ethics of the arrangement. But a majority of the council defended the city's decision. "Parviz is not perfect, but he does a fantastic job for the city on major projects," said Councilmember Don Eaton. "It's time for the nitpickers to go away and see the positive things that are going on here. He's saved us money."

Several members of the public contacted Grocott to press him to "do something." He was struggling to understand why the staff supported this arrangement. But he was equally concerned about the effect this had had on his relationship with his council colleagues. "I'm always at the 1 in the 4-1 votes," he said, "It's tough to get things done in that environment."

Questions:

1. Are the arrangements with Parviz Mokhtari proper?
2. Should Grocott continue to raise this issue when he is the only council member who is concerned about it?

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This case has been prepared by Judy Nadler, Senior Fellow in Government ethics, as the basis for class discussion rather than to illustrate effective or ineffective handling of a governmental situation.

Copyright © 2004 by the President and Board of Trustees of Santa Clara University. All rights reserved. For permission to reproduce or post this case on a website, or electronic reserve, please contact ethics@scu.edu.


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