An Interesting Three-Headed Potential Conflict

Here's an interesting potential conflict. Chicago's Civic Federation, a "non-partisan government research organization working to maximize the quality and cost-effectiveness of government services in the Chicago region and State of Illinois," is asked by the city council to evaluate the city's 2016 Olympics bid, to make sure that Mayor Daley's Olympic committee has a reasonable financial plan, according to an article in the Chicago Tribune.

Most of the work on the Civic Federation's report was done by L.E.K. Consulting. The report's conclusion was "that the operating budget provides adequate protection for taxpayers, but the development of the Olympic Village exposes the City of Chicago to continuing real estate risks that must be managed." In other words, the report essentially approved of Chicago's Olympic bid.

According to the Tribune article, L.E.K. Consulting is "bidding on a city contract at O'Hare International Airport that will be decided by the Daley administration." The Civic Federation's president is quoted as saying that he does not believe this constitutes a conflict of interest.

The Writing on the Wall blog disagrees. The contract L.E.K. is bidding on is a $33 million concession contract in the airport's International Terminal, and there is no doubt that its concessions revenue will increase substantially if the Olympics come to Chicago.

The Writing on the Wall blog asks three reasonable questions, recognizing the three heads of L.E.K.'s potential conflict:

Would a company that is bidding for city business while evaluating the Mayor’s #1 priority reasonably feel that a negative evaluation would impact its bid?

Would a company that is seeking to run the International terminal at O’Hare believe that harming the Olympic bid also harms their own business interests?

Would a company that wants to bring international visitors to Chicago be predisposed to thinking the Olympics is a good idea, regardless of whether there is an overt conflict of interest?

Unlike many one-sided blogs, the Writing on the Wall blog also asks two questions questioning the possible conflict:

1. Is L.E.K. large enough and decentralized enough that some of its employees can critique the bid while others work on projects that would gain from the bid?

2. Was L.E.K’s role in the study large enough that their potential conflict of interest would color the Civic Federation’s analysis?

It bothers me that the Civic Federation and L.E.K., although mentioning L.E.K.'s contract bid in the report, dismiss the potential conflict so easily, and that the council, Mayor Daley, and the press appear to have no concerns. By dismissing the conflict without considering the above questions, the Civic Federation also dismisses the possibility that the information and analysis it depended on could have been colored by the conflict.

The consulting company should not have been selected to write the report, but once this had been done, its work product should be questioned, as difficult as that might be under the circumstances. Its potential conflict was not handled responsibly at the start, nor is it being handled responsibly now.

Robert Wechsler
Director of Research-Retired, City Ethics

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