By GREGORY N. HEIRES

The Giuliani administration backed away from its final effort to privatize public jobs and decided to keep Local 375 members in charge of the most critical engineering work at Ground Zero.

A storm of protest from DC 37, federal officials and local businesses swept aside the outgoing mayor’s plan to hand over supervision of the $1 billion cleanup to a giant engineering firm.

The union victory means that 60 civil service engineers who work at the Dept. of Design and Construction will continue to oversee the construction companies at the disaster site. The politically powerful, San Francisco-based Bechtel Group was to receive $27.5 million to supervise the job.

“By sticking with union members, who have demonstrated their dedication and expertise on the job, the city is saving millions of dollars,” said Claude Fort, president of Civil Service Employees Technical Guild Local 375.

“The city’s decision is a testament to the tremendous job municipal employees have done overseeing the cleanup,” DC 37 Deputy Administrator Zachary Ramsey said.

“Both the Federal Emergency Management Agency and the Army Corps of Engineers recognized the highly professional work of our members, who are helping bring in the project ahead of schedule,” Mr. Ramsey said.

Critics of the attempted deal suggested that the firm was using its Republican Party connections to get the work. George Shultz, secretary of state during the Reagan administration, is a director, and former Defense Secretary Caspar Weinberger was general counsel.

DC 37 worked with the local media and politicians to highlight the dedicated service of the city workers at Ground Zero and expose Bechtel’s troubling track record and political ties.

The Giuliani administration announced its decision to keep the work in-house one day after the City Council Contracts Committee held a hearing on the plan. The committee, chaired by Kathryn E. Freed, called the hearing at the suggestion of Council member Bill Perkins.

At the hearing, DC 37 Deputy Administrator Zachary Ramsey attacked the Giuliani administration for negotiating the deal in secret and not following procurement procedures required by the City Charter. He cited research by DC 37’s Kate Pfordresher on Bechtel’s history of cost overruns in public infrastructure projects, such as the Boston highway where the price skyrocketed from $3 billion to $14.5 billion.

“We do not need this firm, or other profit-hungry firms with political connections, taking over work that is being done cost effectively and safely by city engineers,” said Mr. Fort in his testimony. Mitchell Feder, chair of the local’s anti-privatization committee, and Local 375 retiree Leon Soffin, an adviser to the local, also testified.

At the hearing, Frank McArdle of the General Contractors Association spoke on behalf of the firms working under the supervision of the Local 375 members. “This has been a public-private enterprise,” he said. “This has worked well.”

After Mr. Giuliani announced his decision to keep the work in-house, Mr. Ramsey said, “The controversy surrounding the city’s possible contract with Bechtel cast doubt upon the wisdom of privatization, which often amounts to a financial windfall for politically powerful businesses without providing savings for taxpayers or improving the quality of work.”