‘Straight-up collusion’ drives up O’Hare cost overruns, small contractor says

Cristina Beran (left) and her husband, John, say their company, Chicago Voice & Data Authority, is being frozen out of work related to the expansion of O’Hare International Airport. They say the “cheat system” is behind the rising cost of the project, which has been delayed more than five years.

Photo for Crain’s Chicago Business by John R. Boehm. Used with permission.

The devil is in the details.

Before getting lost in the delays and cost overruns at O’Hare International Airport’s expansion project, meet Cristina and John Beran. The couple is not rich, powerful or well-connected. They run Chicago Voice & Data Authority, installing fiber-optic cables.

“I have been in business with this company since 2015,” said Cristina. “A small company, but we’ve been growing a lot and able to hire more people. We’re 70% diverse, women and minorities.”

Not that small — with up to 60 employees, depending on the workload, and some $10 million in revenue, CV&DA has worked on Lincoln Yards and the O’Hare 21 Project’s Terminal 5 expansion.

“We’ve done a large amount of work out there,” said John, Cristina’s husband and vice president of business development, though, “she’s 100% the owner. I work for Cristina.”

The Berans would like to do some of the work installing hundreds of miles of fiber-optic cable at the global hub at O’Hare, should construction ever begin. But that won’t be happening, due to a Catch-22.

“To bid, you have to have a manufacturing partner. But for that partner to approve you, you have to have a relationship with the Chicago Department of Aviation,” said John. “Small diverse companies like Cristina’s don’t have long-term relationships with manufacturers or the CDA.”

The manufacturers are a choke point for the contractors, who, in the Berans’ case, are required to use Corning fiber-optic cable.

“They are using it to allow Corning’s products to be sole sourced non-competitive bid,” said John. “In this cheat system, they make it unduly burdensome to seek equivalent product other than Corning’s and will not approve any other fiber-optics manufacturers. Corning starts stalling us, tells suppliers not to give us pricing.”

Corning, however, replied: “Corning sells through national distributors who set the prices on products. For this project, installers could substitute an approved manufacturer at the time of bid as long as they were certified by the manufacturer. “

I’m not proficient in the murky details of construction bidding. But I told John it sounds to me like the classic Chicago “We don’t want nobody nobody sent.” And the beauty part is that the CDA has found a way to delegate the process of vetting contractors, off-loading responsibility to their suppliers instead of themselves.

“Exactly,” said John. “One hundred percent.”

“It’s their discretion,” said Cristina. “They don’t say we don’t meet the criteria. They don’t say you’re not qualified. They just choose who is allowed into their program. That is a tremendous driving factor, cost increases on this project.”

A cost that was $6.1 billion when the expansion was announced in 2018. Since then, the project “has mostly gathered dust,” according to Crain’s Chicago Business, while prices rise — the estimate clicked up to $7.6 billion in 2022.

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CDA Commissioner Jamie Rhee claims to have trimmed that increase back a billion and that work will start by year’s end.

Of course I reached out to Rhee — nothing.

“The fact that this fraudulent cheat system of specification is being used across the board with zero oversight to cheat the system to violate procurement code,” said John, “this is straight-up collusion.”

Actually, the inspector general has oversight — I contacted Raul Valdez and his office. They coughed into their fist and said nothing.

About a month ago, the couple filed a formal complaint with Ald. Emma Mitts’ (37th) Committee on Contracting Compliance and Equity.

“We’ve met with about a third of the aldermen,” said John. “We have a mountain of supporting documentation, including meeting with the CDA leadership.”

It probably occurs to you, the way it did to me, that the Berans are cutting their throats by complaining — but then, they weren’t getting work before, so this is a Hail Mary act of desperation.

“We’ll probably never work at the airport again,” said John. “We’re falling on that sword. We’re going to take on the CDA and the manufacturer and make a shish kebab.”

Legitimate desperation. Because more than one fiber-optic company risks being frozen out. We all do. Chicago built its city on being a portage, a transfer point — first canoes, then sailing ships, trains, trucks, airplanes, data. To see what happens to a city that mismanages new developments in transportation, look at Galena — a big deal in its day. Chicago’s equal. But we built our railroad, and Galena bet its future on river transport and pushed the Illinois Central away. It picked short-term profits over long-term success, and lost. A lesson we should keep in mind.

“Somebody’s feathering their nest,” said John. “If you’re allowed to charge three, four times the going rate for a product, someone is feathering their nest.”

Editor’s Note: This column was updated after publication to include reaction from Corning inc., which wanted to clarify that the company has no “contractual relationship with specific installers or end customers, nor do we set their prices.”

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