MAWC revises disputed contract

For the third time in two years, Municipal Authority of Westmoreland County board members has hired Resource Development and Management Inc. to run the water company.

The contract approved Thursday guarantees RDM $8.25 million through 2013 to oversee the authority, which has more than 112,000 customers in five counties.

Unlike two previous deals, RDM will now be an independent contractor instead of an authority employee. That move, officials believe, corrects a flaw that led a county judge last month to invalidate the current pact.

'The proposed agreement addresses the concerns raised by the court. Because of the existence of the court order and because of the cloud of invalidity, it is my opinion that the authority adopt a written agreement that clarifies the relationship between the authority and manager,' said Solicitor Al Gaudio.

After a spirited and sometimes heated debate, authority board members voted 3-2 to retain RDM. Chairman Donald Ruscitti, Leonard 'Skeets' Paletta and Robert Miner voted for the revised contract; Art Boyle and A. Keith Staso opposed it.

RDM will be paid $750,000 a year through 2009. Over the final four years, the contract will be adjusted for inflation.

Boyle and Staso had each asked for new management proposals before the vote.

'We have an opportunity here to start clean. Let's go out for bid,' Boyle said.

Ruscitti shouted back, 'The main issue here is power.' Boyle challenged Ruscitti earlier this year for the authority's chairmanship.

Ruscitti first voted to hire RDM as a consultant in 1991 to help wean the authority from 50 years of being privately managed.

It was Boyle's lawsuit that prompted board members, at Ruscitti's request, to refashion a July 2000 deal with RDM. Boyle successfully challenged the legality of the contract.

Last month, Judge Gary Caruso found that because RDM was the authority's employee, its long-term contract violated state law. Contracts between authorities and their employees must have a termination clause allowing the deal to be broken without cause.

The revised contract includes no such clause.

The authority can only terminate RDM for failure to perform its duties. Then it would have to pay RDM 75 percent of the money the company is still owed.

The revamped deal nearly mirrors the contract approved last summer after Boyle raised legal concerns.

Staso, who was not on the board then, said the company should take on additional liability such as guaranteeing bonds and water quality.

'I would like to see sound business judgment to protect the customers and do what's in the best interest of the authority as a whole,' Staso said.

RDM President Joe Hohman consented to the contract change yesterday, but opposed altering the deal as suggested by Staso.

'If you want those indemnifications, there would be a cost to that. Our price would go up,' Hohman said.

When the authority hired RDM in early 1999, it reviewed no other proposals. Miner said yesterday he felt comfortable with RDM because it had worked for MAWC since 1991.

Miner's business ties with RDM co-owner James Dodaro was questioned by Boyle.

Boyle said Miner's vote might be a potential conflict of interest. Miner's company, Donegal Construction, works on the Pennsylvania Turnpike, and Dodaro sits on the Pennsylvania Turnpike Commission.

'Bob, don't vote. I'm only trying to save you from yourself,' Boyle said.

Miner said his company does no direct work for the turnpike commission and confirmed he was subcontracted to work on the toll road.

Gaudio advised Miner that he had no conflict of interest.

Boyle vowed to continue his efforts to void RDM's deal.

Majority board members said they would appeal the latest court ruling. The authority has spent nearly $90,000 to fight Boyle's lawsuit, and Ruscitti, Paletta and Miner voted to authorize paying additional legal fees.

Boyle and Staso abstained.