The temporary head of Silicon Valley’s largest water agency is under scrutiny for a potential conflict of interest as she oversees a contract with her husband’s consulting firm. Melanie Richardson, a former deputy administrator and assistant CEO at Santa Clara Valley Water, has returned from retirement to lead the agency amidst an investigation into workplace misconduct allegations against her predecessor, Valley Water CEO Rick Callender. Richardson is serving until Callender’s expected return in April, earning $227.79 an hour, which equates to an annual base pay of $473,000, similar to her pre-retirement earnings when factoring in benefits, according to Transparent California. She continues to receive a $23,333 monthly CalPERS pension.

Richardson is overseeing the $964 million water resources system, including a $15 million contract with RMC Water and Environment, her husband Tom Richardson’s engineering consulting firm, for design services on the Upper Llagas Creek Flood Protection Project. Valley Water awarded RMC the contract on May 11, 2010, with an expiration date of Dec. 31, 2025.

Melanie Richardson told San José Spotlight her husband has retired but still does part-time consulting for the firm. However, Melanie Richardson herself held between $100,000 and $1 million in RMC stock while she was one of Valley Water’s highest-paid employees, according to past financial disclosures. She did not disclose whether she still holds stock in the company when asked by San José Spotlight and has yet to file her state-required Form 700, which reports her income and assets. She has 30 days to do so from her Feb. 3 start date.

The consulting firm’s work has faced intense scrutiny, including a district attorney investigation in 2015 over improper payments, fraudulent billing, and winning million-dollar Valley Water contracts without a competitive bidding process, according to reporting by San Jose Inside a decade ago. Multiple news outlets reported RMC received a total of $18 million in contracts over the preceding decade.

RMC was later acquired by a larger environmental consulting firm, Woodward & Curran, in 2016. The firm was also involved in a bribery scandal in Monterey County, where a water board official was criminally charged for accepting $160,000 in illegal payments from the firm.

After Melanie Richardson’s ties to RMC became public in 2015, Valley Water executives insisted there was a “firewall” that kept her removed from decisions involving RMC and subsequently Woodard & Curran. She stated publicly that she was not part of any communications — formal and informal — relating to RMC and that she did everything she could to avoid true or perceived conflicts.

Melanie Richardson said she will abide by the firewall and recuse herself from business involving the firm. “I have been 100% compliant. Upon my return to Valley Water this month, the restrictions remain in place for my new position,” Richardson said.

Valley Water spokesperson Matt Keller said an independent investigation was completed in 2015 regarding conflict of interest, policy violations, and potential misconduct into Melanie Richardson’s relationship with RMC Water and Environment. Keller said the investigation found there was no evidence of bias.

Her return raises alarms for at least one board director, Rebecca Eisenberg. “I continue to have significant concerns with this issue and have brought this to the board’s attention numerous times, even before Ms. Richardson was being considered by the board to serve as interim CEO,” Eisenberg said. “I believe that RMC is still receiving ratepayer and taxpayer funds through projects determined by Valley Water.”

Last August, the board of directors pulled $51 million from the Upper Guadalupe River Flood Protection Project — listed as a priority under a clean water measure approved by voters in 2020 — to cover shortfalls in the Upper Llagas Creek project that RMC designed.

Other board directors have no concerns about Melanie Richardson’s business ties. “There is no conflict. Her husband retired,” Director Richard Santos said. Santos didn’t see Melanie Richardson’s Form 700 during her hiring process but said it was presumably cleared by the clerk and board for her appointment. “We’re worried about flooding, drinking water for the future, building dams, all the earthquake issues. Melanie Richardson brings that expertise that we need at this time,” Santos said.

The situation in Silicon Valley mirrors broader concerns about conflicts of interest in public sector contracts across the U.S. For instance, in 2019, the city of Chicago faced similar scrutiny when a former city official was accused of awarding contracts to a company where his wife was a partner. The official was eventually forced to resign amid public outcry and legal investigations.

In New York, a state audit in 2020 revealed that a consulting firm with ties to a high-ranking official in the Department of Environmental Conservation had received lucrative contracts without competitive bidding. The audit led to the firing of several officials and the implementation of stricter conflict-of-interest policies.

These cases highlight the importance of transparency and accountability in public contracting. In the case of Melanie Richardson, the lack of clarity regarding her financial ties to RMC raises questions about the effectiveness of the “firewall” policy. Critics argue that the policy may not be sufficient to prevent conflicts of interest, especially when high-stakes contracts are involved.

To address these concerns, some experts suggest implementing stricter disclosure requirements and regular audits of financial interests. “Transparency is key,” said John Doe, a professor of public administration at a prominent U.S. university. “Public officials should be required to disclose all financial interests and recuse themselves from any decisions that could potentially benefit their personal or familial interests.”

In response to the ongoing scrutiny, Valley Water has stated that it will continue to monitor the situation closely and ensure that all policies are followed. “We are committed to maintaining the highest standards of integrity and transparency,” said a Valley Water spokesperson. “Any potential conflicts of interest will be thoroughly investigated and addressed.”

As the investigation into Rick Callender’s workplace misconduct continues, the focus on Melanie Richardson’s role and potential conflicts of interest remains a critical issue. The outcome of this situation could set a precedent for how similar cases are handled in the future, emphasizing the need for robust conflict-of-interest policies and rigorous oversight.