Water District CEO Rushes Big-Dollar Consulting Contract, Fails to Disclose Conflicts of Interest

As California prepares, in its fourth dry year, for all manner of apocalyptic scenarios—from rapidly depleted drinking water sources to Dust Bowl-era dirt farms—the thought of Silicon Valley devolving into a waterless sinkhole is “what I lose sleep over at night,” the region’s chief water official says.

As CEO of the Santa Clara Valley Water District, which provides flood protection and water to 1.8 million people in Silicon Valley’s largest county, Beau Goldie is especially concerned with subsidence—the depletion of groundwater basins that could destabilize the region’s supply and, down the road, puncture the landscape with street-swallowing pits. These concerns, he says, prompted him to take emergency action this spring and seek approval on an exclusive contract with RMC, a company that is expected to draw up plans for a recycling plant to replenish the valley’s fragile groundwater.

But sources within the water district say Goldie has routinely avoided disclosing potential conflicts of interest regarding RMC, the beneficiary of more than $18 million from the water district in the last decade.

The latest agreement with the company, expected to come in at more than $4 million, has for the most part escaped public scrutiny. In April, the seven-member elected Board of Directors, on a 5-2 vote, gave Goldie the green light to negotiate a single-source contract, which means competitive vendors were not even in the running. Goldie said a surprisingly dry winter gave rise to the fast track contracting process.

“Just about every month counts here,” Goldie told San Jose Inside. “We’re in a race.”

What Goldie never disclosed to the board is the cozy relationship the water district has shared with RMC for a number of years.

Melanie Richardson, one of Goldie’s top ranking deputies and the person responsible for overseeing watershed contracts for the district, is married to one of RMC’s principal owners, Tom Richardson. In a statement of economic interest form filed for 2010, Melanie Richardson noted that she held stock in the company worth between $100,000 and $1 million.

Goldie also neglected to inform board members that last year Monterey County Water Agency board member Steve Collins pleaded no contest to public corruption charges, including felony grand theft, related to payments from RMC and an artichoke grower. Collins worked as a paid consultant for the company and also voted on its contracts as an elected official. Collins also illegally billed clients $160,000 for meetings that he didn’t attend, or which were part of his duties as a public official, prosecutors said.

Gary Kremen, chair of the Santa Clara Valley Water District (SCVWD) and one of only two board members to vote against RMC’s contract, called the single-source negotiations with RMC “bad planning on an epic proportion.”

“It’s not like a dam is breaking and we need to immediately plug a hole,” Kremen said. “A couple months aren’t going to kill us. It’s going to take up to 10 years to get drops of water from a recycling plant into the groundwater.

“It’s starting out on the absolute wrong foot. We’ve known about this purified water project for years. We’ve had way more time to make disclosures about RMC’s past behavior, and those disclosures were never made.”

Goldie defended RMC’s selection, and the decision to exclude details about Collins and the Richardsons when going to the board for approval. He admitted that the SCVWD conducted no additional research into RMC’s role in Collins’ indictment. “It would just slow down processes tremendously, and we wouldn’t be able to provide any more assurances,” Goldie said.

In the case of Melanie Richardson’s potential conflict of interest, Goldie said that a “firewall” was put in place years ago to keep her from coming into contact with actions related to her husband’s company.

“Melanie is in the flood protection side of the house, so she has no involvement in this whatsoever,” Goldie said.

But sources at the water district tell San Jose Inside this hasn’t always been the case. In fact, internal documents show that Richardson has managed people who handle RMC contracts, including their performance reviews. The “firewall” appears to rely on her walking out of the room when RMC is discussed.

"It doesn't pass the smell test," said a source with decades of experience overseeing contracts between public agencies and consultants.

Sources confirmed that the Santa Clara County District Attorney’s office looked into the matter two years ago, but the investigation was called off due to an impending statute of limitations for any potential charges.

Goldie insisted in a May interview with San Jose Inside that an in-house ethics expert, LeeAnn Pelham, had strengthened SCVWD controls to prevent any impropriety. Pelham subsequently resigned her post.

RMC’s single-source contract was part of a package of non-competitive deals Goldie submitted at an April 28 board meeting. He received pushback not only from Kremen and fellow director Barbara Keegan, but also Ravi Subramanian, the district’s head of procurement.

“I just said the language needs to be stronger to justify why they should be single-source contracts,” Subramanian told San Jose Inside in a phone interview monitored by district communications staff.

The RMC deal earmarks several million dollars worth of preliminary planning for an indirect potable recycling plant, but Goldie said that the overall project could end up costing $800 million. Sources say that estimate is optimistic, as the water district has a history of going over budget.

District board member Keegan, a trained engineer who along with Kremen voted against Goldie’s single-source contract proposals, noted that companies doing preliminary planning often receive ensuing contracts. Engineers rarely trust work they have not verified themselves.

“Whoever does the preliminary engineering work obviously is going to have more experience with the project and that would help in the future for a final design contract,” Keegan said. “If another firm were chosen for the design, they would have to redo significant portions of the preliminary engineering to verify the accuracy of the other firm’s work product.”

Goldie said that RMC has been notified it is unlikely to receive future contracts on the project, making the decision to go with the company from the start all the more perplexing.

“That means, potentially, the $5 million being spent on this preliminary contract would be wasted if another firm were chosen to finish off the project,” Keegan said.

Beyond the proposed RMC contract, sources say the firm has improperly billed the district in the past. Sources also told San Jose Inside that a recent audit found that district staff has routinely moved money between projects, sometimes to the benefit of RMC, and these transfers of funds are tucked into massive reports that often go undetected by the part-time board members.

“By moving funds directly from project to project, it avoids scrutiny from the public and the Board,” Keegan said.

Board chair Kremen said he plans to call on Goldie to suspend negotiations with RMC until a more thorough vetting of their past dealings with the district can be conducted.

Josh Koehn is the managing editor for San Jose Inside and Metro Silicon Valley. Email tips to [email protected] or follow him on Twitter at @Josh_Koehn.

23 Comments

  1. RMC had the 3 year contract for the SBWR Master Plan (Google it!). This contract was just completed in April and was co-managed by the City of San Jose and the Water District. RMC knows the issues with recycled water in the valley, I do not see what the problem is here. Everyone at the top levels of government has their “hands in the kitty”, how else did they get elected or promoted? Why is this such a surprise what the Water District did?

    I would be interested to hear what Mr. Wall has to say about this nefariousness.

  2. Beau Goldie and John Gundry–cut from the same cloth. Who has the authority to terminate each of these two, and why haven’t they exercised that authority? Our smithy may be resigned to the inevitability of corruption at the top, but I am not.

  3. @Josh_Koehn. look into what they are doing to the board room, wasting millions and no one gets fired for breaking it so they can waste more money, have all the [email protected] this is district wide waste they even paid for sig hearing aid over 5k, when hes a rich farmer,, as to the problem, they funnel money how and where they want this is just tip of waste there.

  4. Its your taX money they don’t care ask to see all the prs from all departments you will see waste and same style, hiring friends, no bid, IT ADHOC, COMMITTEE IS A JOKE TO GET A NEW 3 MILLION BOARDROOM
    SANTA CLARA VALLEY WATER DISTRICT LOOK LIKE FOOLS 10 28 14 LYING CAO CEO STAFF READ WATCH TRUTH. FUNNY 2 COPS THERE THAT NIGHT. GOOGLE BOARD ROOM AND DOCUMENTS, THEY DISREGARD THE TRUTH.

    item 2.1 timestamp 16.51-over 45 mn long

    http://scvwd.granicus.com/MediaPlayer.php?view_id=3&clip_id=1182

    2.1 Public Hearing on the Engineer’s Report for Boardroom Audiovisual Modernization Project; Resolution to Approve the Engineer’s Report and Project; Adopt Plans and Specifications and Authorize Advertisement for Bids, Project No. 60204016 (San Jose). (S. Tikekar)

    http://scvwd.granicus.com/MediaPlayer.php?view_id=3&clip_id=1182

    http://cf.valleywater.org/About_Us/Board_of_directors/Board_meetings/_2014_Published_Meetings/MG55587/AS55593/AS55594/AI55663/DO55863/DO_55863.pdf
    http://cf.valleywater.org/About_Us/Board_of_directors/Board_meetings/_2014_Published_Meetings/MG55587/AS55593/AS55594/AI55663/DO55864/DO_5586

  5. The Santa Clara County D.A. is at least partly right. That Form 700 for 2010, filed on 3/18/2011, is outside the four-year statute of limitations in California Gov Code subsection 91011(b). You’ve checked her filings for 2011, 2012, 2013, and 2014, right?

    There might’ve been a violation of 91005(b), which allows treble damages. Section 91009 says a plaintiff is entitled to half of the penalty.

  6. RMC are getting sole source contracts now from Milpitas and the District. And charges both exorbitant rates under the false pretense of being cheaper and more efficient. I think not. They are obviously conflicted and the District needs a trusted consultant at their side instead of them.

    • I retired from the district after seeing time and time again upper management playing favorites and protecting each other. This is just another example of that. Mr.Goldie and and Ms.Richardson both long term district employees, have no respect for the public. Does anyone really believe that Ms. Richardson “being on the other side of the house” makes the whole issue transparent?
      The solution is to replace Mr. Goldie with an outside professional without these long time personal relationships. Of course no one should be surprised to see Mr. Goldie land on his feet as a highly paid RMC employee.

  7. What? Say it isn’t so, a politician, a CEO, a public official, with a conflict of interest? I’m appalled and saddened. Let me say again, deeply saddened, OH!! but wait, this is America, never mind.

  8. For more information on the water board please have a look at the top of the MaeBrussell(dot)com homepage. Mr. Goldie is a choirboy when compared to the actual board members.

  9. stand by ~ ~ ~ wasn’t there some buzz going around about the SCVWD planning on raising rates so they could help fund Jerry Brown’s Twin Tunnels that will take No. Cal water and send it south? Is that true or did I just have a bad nightmare?

  10. Do any of you understand how government agencies even operate? Do you ever attend any of the open meetings where all of this is discussed? If you answer is no… your points are invalid. Stop bitching if you don’t take part in the process. Typical brainless people that feed on media bias… Beau did make things public. If you decide not to pay attention or listen to open discussions and board meetings that is your problem.

    This is the same across all forms of local government… everyone cries yet every one of those meetings from city counsel, to Open commission meetings are always EMPTY! 2-3 people of the public in attendance.

    Again… If you want to be heard show up. If you want to be properly informed SHOW UP. If not shut up.

    • you say attend these meetings, its fruitless, the board usually has its mind made up and its the way the upper management wants its, even when you do produce public comment, they just dont care, I suggest you get a copy of the audit 2012 which explains how the upper management @SCVWD works, if you need a copy ask…. TAKE THE BOARD ROOM FOR EXAMPLE THE STAFF JUST LIE ABOUT ALL THE FACTS, WHEN IN FACT IF YOU PULLED PURCHASING CONTRACTS FOR THE BOARD ROOM YOU WILL SEE OVER 200K HAS BEEN SPENT IN THERE ON UPGRADES ALONG WITH THE 3 MILLION THEY PAID FOR IT BACK IN 1999, BUT THEY WILL SAY ONLY 65K HAS BEEN SPENT WHEN EVERY PIECE HAS BEEN CHANGED OR UPGRADED, IT WAS THE MANAGER GEORGE KAMENJATI WHO ORDERED MAINTENANCE STOPPED IN THE BOARDROOM SO THINGS WILL FAIL, AND THEY CAN BUY NEW, THIS IS ALL DOCUMENTED, BY EMAILS, PR’S, EYE WITNESSES, AND VIDEO OF THE MEETINGS, YES NO ONE GOES AS UNLESS YOU LIVE IN LOS ALTOS AND HAVE MONEY THE DISTRICT DOES WHAT THEY WANT. ITS LIKE VOTING FOR PRESIDENT, YOUR VOTE REALLY DOES NOT MATTER NOR COUNT.

  11. By the way… I am in no way attempting to back him up. I am addressing the issue that is at the root cause of most of these problems. That being people complaining after something has been passed or decided on by public officials… but prior to that no engagement, attendance, or involvement was had by the person or persons complaining.

    It can’t be stressed enough. If you are not happy with what you are seeing… Be the change you wish to see. Question, ask, attend. Sure you have your right to share opinions just like I do. But as stated above your opinion is invalid to those that actually DO. The doers in society. Those that are at these meetings. Those that actually participate. Those that find the time to be part of their communities and those that research to be well informed for themselves and their communities at large.

    Also, critically think about what things you have read.. get other inputs and sources. Don’t just get all heated about 1 persons opinion. Don’t be like my countrymen and countrywomen that are feeding into the problems we face.

    Think critically, Do as much as you can to get involved, most importantly engage with your representatives.

  12. JOHN ATTENDED AND OBSERVED WAY TOO MANY MEETINGS OVER A 10 YR PERIOD, so i can pretty much say for fact, the board will take your comments, but the whole meeting, water, company has been bought and sold like most government services already back stage. and can give you name of people that have observed the same thing.
    brian schmidt lost his job as he was to be the savior, but went on voting as the previous board did, so in came Gary, who has an uphill battle as most of the board are related to SCVWD IN SOME FASHION. EVEN GOLDEN GOLDIE SNUBBED HIS NOSE AT GARY, saying this is old news we hashed out years ago…..

  13. How do we get rid of the unethical, self-serving people on the water board? Why do they keep getting elected?

    • Go to the top of the MaeBrussell(dot)com homepage and learn about fluoridation. If everybody in the bay area new this information there would be no more unethical, self-serving people on the water board. They would be voted out.

  14. https://vimeo.com/59889006 good video on the fluoride…. BUT THE DIRECTORS DID NOT RECEIVE ENOUGH PAYOLA!

    Fluoride,GOLDEN SPIGOT

    item 1.4 scvwd valleywater golden spigot, documents same page to right
    scvwd.granicus.com/MediaPlayer.php?view_id=3&clip_id=962 shows the boardroom lies…..

    https://pgoeltz.wordpress.com/2014/11/04/golden-goldie-lies-scvwd-golden-spigot-crane-wreck-racialacid-scvwd/comment-page-1/

    https://pgoeltz.files.wordpress.com/2014/11/scvwd-ray-10-28-2014.pdf
    https://pgoeltz.files.wordpress.com/2014/10/diversityaudit20121.pdf
    https://pgoeltz.files.wordpress.com/2014/11/scvwd-pgoeltz-10-28-2014.pdf

    TWO SPEECHES ON 10 28 2014 BUT GO TO VALLEYWATER.ORG AND WATCH THIS GUY DOUG………
    item 2.1 timestamp 16.51-over 45 mn long
    http://scvwd.granicus.com/MediaPlayer.php?view_id=3&clip_id=1182
    2.1 Public Hearing on the Engineer’s Report for Boardroom Audiovisual Modernization Project; Resolution to Approve the Engineer’s Report and Project; Adopt Plans and Specifications and Authorize Advertisement for Bids, Project No. 60204016 (San Jose). (S. Tikekar)
    http://scvwd.granicus.com/MediaPlayer.php?view_id=3&clip_id=1182

    http://cf.valleywater.org/About_Us/Board_of_directors/Board_meetings/_2012_Published_Meetings//MG47843/AS47844/AS47848/AI49234/DO49236/1.PDF handout from DEC 11 2012

    A consistent and recurrent theme, and perhaps our most important
    finding, is how perceived difficulties in the management of
    employee/supervisor relationships and perceived weaknesses in HR
    policies, procedures, and practices have impacted and continue to
    confound the District’s Diversity & Inclusion landscape. This has been
    exacerbated by multiple outside influences impacting
    supervisor/employee communications and relationships leading to
    mistrust and a perceived lack of accountability on both sides of the table.
    A RECURRING PROBLEM…1. A consistent and recurrent theme, and perhaps our most important. 2. being able to handle issues if problems arose when the confidence level in supervisors fell to 18%.
    3. nor defined by color but may be any subset of persons who are not IN favor with the group in power. ”
    4. lack of confidentiality. still THE GOOD OLD BOY NETWORK ASK THE IT UNIT NOT JUST ME, ASK EVERYONE?
    finding, is how perceived difficulties in the management of
    employee/supervisor relationships and perceived weaknesses in HR
    policies, procedures, and practices have impacted and continue to
    confound the District’s Diversity & Inclusion landscape. This has been
    exacerbated by multiple outside influences impacting
    supervisor/employee communications and relationships leading to
    mistrust and a perceived lack of accountability on both sides of the table.
    2. A majority, 55%, of staff believed supervisors are able to deal with people from diverse
    backgrounds and treat people fair and equitably. However, this was in sharp contrast to
    being able to handle issues if problems arose when the confidence level in supervisors
    fell to 18%.
    “A study of employee’s write-in comments provides poignant examples of
    the experiences, anger, disappointment and chagrin at some of the
    practices which are prevalent in the District. The high levels of feelings …
    is readily apparent. The statements are generally well organized,
    DIVERSITY & INCLUSION
    COMPREHENSIVE AUDIT
    3
    ? There is a perception that favoritism and power politics were the
    pathway for
    upward mobility.
    ? Membership in a minority group or low status job results in distinctly different
    experiences from white professional males. “These out groups are not restricted
    nor defined by color but may be any subset of persons who are not in favor with
    the group in power. ”
    ? There are perceived issues of status and hierarchy inequities in terms of training,
    access to travel.
    ? There are integrity issues in terms of not reporting sick time, stealing, lack of
    confidentiality.
    ? Affirmative Action Office – was perceived not to be objective and to have total
    control for all job actions.
    ? There were overt acts of racial or sexual discrimination.
    The report concludes with the admonishment that there were ‘glaring issues which,
    unless addressed by the leadership may become the Achilles heel for a well situated
    and financially solvent organization. These issues are not likely to disappear over time
    or through attrition. .. The issues come with strong feelings. The report concludes with
    recommendations to develop an action plan with top management ownership, to analyze
    the data on staff in terms of composition, grievances, complaints, to develop
    accountability systems for managers in terms of employee productivity, communications