Another Non-Financial Conflict Poorly Handled

One of the worst times to create a conflict of interest is in the midst of labor negotiations. This is what has happened recently in San Francisco, where Bay Area Rapid Transit (BART) is negotiating contracts with its three unions. There was a short strike in July, and now there are negotiations with an August 4 deadline.

The conflict involves the company for which BART's labor negotiator works, which is itself a large transportation company, specializing in bus transportation. The company, which has worked for BART in the past, was given a no-bid contract ("awarded under General Manager's authority" according to a March 29 amendment to the agreement, which is attached). This means that the contract did not go through the usual competitive bidding and, therefore, the company would likely not have had to disclose possible conflicts or received training relative to the creation of conflicts.

According to an article on Friday on the KPIX website, when the union striked in July, the company for which the negotiator works brokered a deal that provided BART with buses, what is referred to in the trade as "paratransit vehicles." The union says that this gave the company "a direct financial interest in a prolonged strike." BART insists there is not a conflict because the company received only $500 for its brokerage work.

BART admits there was a conflict, but takes the position that it is a de minimis conflict. Financially, BART is perfectly correct. By insisting that the negotiator's company has a direct financial interest in a prolonged strike, the unions effectively agree with BART that the conflict is primarily a financial one. If it is, then it is indeed de minimis.

But the important conflict here is not financial. The company is being paid $400,000 to negotiate with the unions. There is no reason to believe that it is going to threaten future negotiating jobs by doing a lousy job that prolongs a strike, so that it can make a few bucks brokering buses.

The important conflict is that a company acting as a labor negotiator, supposedly in good faith, played a role in keeping BART functioning during a strike, something that the company and BART should have known would unnecessarily incense the unions and cause them to see the company as acting in bad faith. Not only did the company wear two hats, but it wore the blackest hat it could find. BART should never have asked it to wear the hat, and the company should have refused to wear it.

Now the unions are asking for a new negotiator. They don't expect a negotiator to be neutral. But it is reasonable to expect that a negotiator will be a negotiator, and nothing more.

Here is yet another example of a situation where the narrow belief that a conflict of interest has to be financial in nature contributed to the irresponsible handling of a conflict situation as well as to a poor discussion of what occurred. What will it take to get people to recognize that the "interest" in "conflict of interest" does not mean "financial interest"?

Robert Wechsler
Director of Research-Retired, City Ethics

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