ST. LOUIS • The contract to build the Deer Creek tunnel was one of the largest the Metropolitan St. Louis Sewer District had awarded in years. Two big firms were competing hard in 2017 to land the $150 million project.
Sewer district staff recommended awarding it to the low bidder, a joint venture led by an out-of-town firm, Jay Dee Contractors. The district board’s practice, almost without exception, was to approve the professional staff’s recommendation.
This time would be different.
SAK Construction, a St. Charles County company that was competing with Jay Dee for the business, mounted a lobbying effort with district staff and board members.
The company’s concerns reached St. Louis County Executive Steve Stenger’s office, which appoints three of MSD’s six members on its Board of Trustees. A top aide to Stenger met with two key trustees to discuss the matter, the Post-Dispatch has learned.
After the meeting with Stenger’s aide, one of those two MSD trustees switched his vote, and SAK ultimately won the contract. The board member did not explain why. And the controversial vote — which garnered headlines at the time — quietly receded from public notice.
Then, not a month after that vote, SAK executives did something they’d never done before: They began pouring money into Stenger’s campaign.
A review of campaign disclosure records by the Post-Dispatch shows that SAK, its executives, their family members and companies associated with them have since given at least $88,000 to Stenger. Executives of a subcontractor on the bid, Goodwin Brothers Construction, gave at least $65,000 more. Together, the donations account for more than 3 percent of Stenger’s record haul of almost $4.8 million during his successful 2018 reelection campaign.
His spokesman, Cordell Whitlock, said many companies donated to the county executive’s campaign and referred questions about SAK’s donations to the company.
An SAK executive, reached at his home in Lake Saint Louis last week, declined to say why he and his company have donated to Stenger.
“I’m not going to comment,” SAK President Jerry Shaw said Wednesday. “We didn’t do anything wrong there. We don’t have a contract with the county.”
Other SAK executives also declined to comment. A statement from the company pointed to a St. Louis Circuit Court decision on a lawsuit related to the contract. The court said the MSD board has broad discretion over awarding contracts.
The office of the county executive is now embroiled in a federal investigation. In an April 4 letter, Assistant U.S. Attorney Hal Goldsmith asked the county to prioritize the location and production of certain records in the county’s response to a federal subpoena. Goldsmith then listed almost two dozen companies and organizations, most of which were both county contractors and Stenger donors.
There is no suggestion that sewer district contracts are part of the federal investigation. An MSD spokesman said the district had not received a subpoena nor been contacted by the U.S. attorney’s office.
Construction industry leaders first raised red flags about the Deer Creek contract two years ago. They worried that the decision was political.
“For any public entity that has an ongoing program — whether it’s MoDOT, MSD, the city of St. Louis, down to the smallest municipality — consistency in that process is king,” said Len Toenjes, president of the Associated General Contractors of Missouri, which does not represent SAK. “And having a fully open, transparent, consistent process, it’s good business, it’s good for the public and it’s good for our construction industry.”
‘I have my reasons’
In 2012, a judge approved the settlement of a federal lawsuit against the sewer district, requiring $4.7 billion in work to clean up local rivers and streams and prevent backups into basements and yards. The district estimates it will spend more than $1.5 billion on 25 miles of sewer tunnels alone.
The Deer Creek project was one of the biggest in recent years: construction of a 4-mile-long, 19-foot-diameter tunnel stretching from Clayton to Shrewsbury.
In May 2016, MSD advertised the project. By September, it had bids in hand, including one from Detroit-based Jay Dee for $145.3 million, and from SAK, from O’Fallon, Mo., for $147.7 million.
MSD staff recommended the low bidder. SAK immediately protested, arguing to MSD staff that some of Jay Dee’s minority subcontractors weren’t qualified, and that one, local company A.L.L. Construction, couldn’t do the work it was hired to do. Months before, A.L.L. had been removed from a different MSD program for small contractors after MSD staff flagged some alleged performance issues.
But MSD staff denied SAK’s protest and still recommended Jay Dee’s bid with A.L.L. as a subcontractor. SAK appealed the denial, and MSD CEO Brian Hoelscher rejected the appeal, too, which sent the contract to the MSD board for final action.
In the meantime, SAK had been contacting board members. At least one trustee, attorney Annette Mandel, refused to meet.
“John, I would be happy to meet with you and or your brother, but in light of the protest of award filed by SAK, (I) feel it would be more appropriate once that issue has been resolved,” Mandel wrote to John Kalishman, brother of SAK CEO Tom Kalishman.
Mandel declined to comment for this story.
At least one board member did meet with SAK executives, days after MSD staff denied SAK’s formal protest and before the board voted to award the contract.
Trustee James Singer, a Stenger appointee to the MSD board, met with Tom Kalishman, SAK President Jerry Shaw and Jack Boatman, SAK’s senior vice president of government affairs, according to notes Singer took of the Nov. 11 meeting. The executives spent most of that meeting listing what they saw as A.L.L.’s lack of qualifications and job-site problems, the notes said.
By December, despite staff’s recommendation, five MSD board members voted against the Jay Dee contract. It was a rare move by trustees.
“In the five years preceding December 2016, MSD’s Board of Trustees ratified every single notice of award given by MSD staff for projects in excess of $10,000,000.00 — with the lone exception of Jay Dee,” according to a lawsuit A.L.L. filed against SAK late last year.
Staff told Jay Dee to remove A.L.L. from its bid and submit a substitute. SAK objected again, arguing changing a subcontractor amounted to changing a bid. MSD staff again recommended approving the Jay Dee contract, this time without A.L.L.
In February 2017, the board voted 3-2, with one member absent, to send the contract to a final vote. County trustee and union official Michael Yates introduced the measure and voted for the Jay Dee contract.
Two months later, on April 13, the board considered it for a final vote.
And, at that meeting, Yates voted against Jay Dee.
“I have my reasons, and that’s all I’m saying,” he told the Post-Dispatch after the meeting.
This month, Yates again declined to explain why he changed his vote. But in a sworn statement taken as part of a lawsuit Jay Dee filed against MSD in May 2017, Yates said he introduced the contract because “I believed that it was appropriate to learn more about (Jay Dee).”
Jay Dee’s inclusion of A.L.L. in its bid, however, “left me with some doubt.”
“I did not believe they were as able to easily line up minority contractors and workers as they had suggested,” Yates said in the sworn statement. He said he decided shortly after the February meeting to oppose the contract in April.
That summer, Gary Elliott, former business manager of the Eastern Missouri Laborers District Council, urged MSD to give the contract to SAK, telling trustees that the laborers had a strong working relationship with SAK and that it was “the most qualified contractor” for the Deer Creek tunnel.
By July 2017, MSD staff decided that rather than rebidding the whole project, it would select the next-lowest bidder: SAK.
A few months after that April vote, the county executive recommended Yates for another high-profile board — MetroLink operator Bi-State Development Agency. The recommendation went to Gov. Eric Greitens in August 2017; Greitens resigned nine months later without having made any appointments to the Bi-State board.
‘Not the kind of guy’
Yates, who was appointed to the MSD board by then-County Executive Charlie Dooley, said no one in Stenger’s administration contacted him about his vote.
“No. That’s been so long ago,” Yates said this month. “I had my own reasons for voting no.”
He refused to elaborate.
But MSD board chairman and city appointee Jim Faul said he attended a Clayton meeting with Yates and Stenger aide Tom Malecek during deliberations on the Deer Creek tunnel. Malecek asked why the county executive’s office was getting calls about the contract.
Faul, who voted for Jay Dee, said he felt no political pressure to change his vote in favor of SAK — nor did he witness any pressure being put on Yates.
“Michael is not the kind of guy who is going to do what he doesn’t want to do,” Faul said.
He said he could not recall the exact date of the meeting.
Singer, who voted for SAK throughout the process, also said no one in Stenger’s camp asked him to. But, in an interview with a Post-Dispatch reporter, Singer refused multiple times to say whether Stenger officials had contacted him about the contract, referring the Post-Dispatch to MSD spokesman Sean Hadley. Hadley said Singer told him he had no meeting with Stenger or his aides about the contract — but did meet in March 2017, just before the board rejected Jay Dee, to talk about his reappointment.
Whitlock, Stenger’s spokesman, said Malecek didn’t recall the meeting with Yates and Faul but that he was “often in contact with MSD on issues pertinent to the county.”
Whitlock said Stenger’s office did not ask Yates to change his vote.
While both SAK and its subcontractor, Goodwin Brothers, had given tens of thousands of dollars to support campaigns for MSD bond issues, neither had been prolific donors to politicians. SAK gave $5,000 to Dooley, the former county executive, in 2013.
Goodwin is based in south St. Louis County and its CEO, Larry Goodwin, was an early supporter of Stenger’s first run for county executive. A trust in his name gave $1,000 in 2013 and $1,000 in 2014 to Stenger’s campaign. In 2016, the company and Larry Goodwin gave another $2,000 to Stenger.
But after the critical vote, in April 2017, when the MSD board rejected Jay Dee’s bid, the checkbooks opened — and Stenger was the biggest beneficiary.
On May 6, 2017, SAK gave the Stenger campaign $2,500, the first donation by SAK to the county executive, according to a Post-Dispatch review of Missouri Ethics Commission data. Around the same time, an executive at Goodwin Brothers gave $2,500 as well.
In September 2017, just after the August vote in which the MSD board officially awarded SAK the Deer Creek tunnel contract, Goodwin executives and Larry Goodwin’s trust gave $27,500 to Stenger. Including subsequent donations through 2018, campaign contributions from Goodwin executives totaled more than $65,000. Goodwin Brothers did not respond to a request for comment.
During the same time period, May 2017 through 2019, business entities tied to SAK and its executives gave more than $88,000 to the county executive’s campaign, including $15,000 from the company, $15,000 from an affiliated limited liability company, and $15,000 from Shaw’s wife, Cindy.
Jerry Shaw, SAK’s president, said he didn’t know his wife had donated. Cindy Shaw could not be reached for comment.