Bus Contractor at Center of Ethics Accusations Loses Out on Recommendation

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A company whose lobbyist was recently accused of unethical behavior failed to win a recommendation this week as the preferred firm for a massive contract to run outsourced public bus service in Orange County.

On Thursday, the Orange County Transportation Authority’s transit committee agreed with staff’s recommendation of a different contractor, Cincinnati-based First Transit, Inc., for the outsourced fixed-route bus services.

The new four-year contract, which is slated to go to the full board for approval later this month, would boost outsourced service from 28 percent of routes to 40 percent.

Officials at the OCTA alleged that a lobbyist for MV Transportation, Susan Withrow, improperly tried to obtain confidential information during the bidding process for the new contract.

Attempting to obtain that information during the scoring process was “highly irregular and unethical” and violated both federal and local contracting guidelines, OCTA CEO Darrell Johnson wrote in a letter to the firm.

MV Transportation’s president has denied the allegations.

First Transit was recommended unanimously by the transit committee for the $143 million contract after agency staff ranked the firm higher than MV.

The contract, which comes out to a little under $36 million per year, would have First Transit start taking over MV’s work in June and extend the outsourced service northward into OCTA’s Anaheim bus base.

As part of a policy borne in the economic recession, the OCTA has been gradually outsourcing its bus drivers to private companies, where employees receive lower retirement benefits that, officials say, allows more bus service to be kept online.

For years, that contractor has been Dallas-based MV Transportation, which now runs over a quarter of OCTA’s fixed-route bus service, largely in South County.

First Transit’s proposal came in $11 million lower than MV’s, which committee members cited in their support of the firm.

“MV has done a great job for us…but this is simply cost.  That’s the only issue that we face here is the cost,” said committee member Greg Winterbottom.

Winterbottom, along with the rest of the committee’s eight members, serves on the full OCTA board that will have final say on the contract.

“The bottom line is we’re trying to save money for our agency” and taxpayers, said committee Chairman Al Murray, who also serves on the Tustin City Council.

Other committee members expressed concerns, but ultimately joined their colleagues in recommending First Transit.

Committee member Steve Jones, who is also a Garden Grove councilman, noted that OCTA’s staff presentation compared costs between the two potential contractors, but didn’t show what the cost would be if services weren’t outsourced.

If there was a third column for doing it in-house, “what would that look like?” asked Jones.

OCTA staff didn’t directly answer his question, instead saying that money will be saved through reduced costs for employee retirement benefits.

“We do this to save money. Our direct employees are in the public pension system” where the benefits cost 60 cents on the dollar, said Virginia Abadessa, OCTA’s director of contracts administration.

“And that’s where we’re really saving” the majority of the money, she added.

Voice of OC followed up on Jones’ request and asked OCTA spokesman Joel Zlotnik whether in-house figures are available, among other questions.

OCTA spokesman Adam Raley said the agency’s finance team was preparing answers, which would be available Friday morning at the earliest.

Other concerns were raised by committee member Miguel Pulido, who said public comments to the board by First Transit’s president regarding were inaccurate.

The firm’s president, Brad Thomas, had said each contract evaluator on OCTA’s panel ranked First Transit higher in every category, Pulido said.

But if you look at the actual scoring sheet, that’s “not the case,” Pulido said.

Indeed, the sheet shows that First Transit was ranked lower than MV in two of the individual scores and the same as MV in four.

Pulido, who is also the mayor of Santa Ana, said he hoped bus riders don’t experience serious service problems like they did when OCTA outsourced disabled bus service to Veolia Transport.

In that case, drivers were often late picking up passengers and unsure of where they were going, leaving some passengers to arrive more than an hour late, according to the Los Angeles Times.

That prompted “numerous complaints from disabled riders who have missed appointments or been left waiting at hospitals, medical centers and shopping plazas,” the Times wrote.

“It is not fun to have a bunch of folks in the front row…saying that they’re not getting picked up, or that they’re waiting too long,” Pulido said Thursday.

Committee member Andrew Do, who is also a county supervisor, raised a series of pointed questions about how MV, which had been ranked first, was demoted after oral interviews and final price offers.

“I think the process opens itself up to a question that we can reverse engineer our decision,” Do told staff.  “That’s a very…deep flaw in the system if that’s the case.”

OCTA staff responded that their initial grading that put MV ahead was very preliminary, and that verifying aspects of their proposal was a crucial step in the process that led to a different outcome.

“I think what we would not want to do is to take written proposals at face value,” and officials should ask questions and check the firms’ references, said Johnson, the transportation authority’s CEO.

“I do believe our evaluation process is a best practice,” he added, saying it’s received high marks from the Federal Transit Administration, which oversees much of OCTA’s federal funding.

While outsourcing efforts, which generally result in lower compensation for workers, often draw vocal criticism from employee unions, that’s not the case here.

Representatives of the bus drivers’ union, Teamsters Local 952, attended Thursday’s discussion but didn’t speak during public comments.

In an interview with Voice of OC, union leader Pat Kelly said the proposed vendor has committed to honoring existing employee contracts.

First Transit “has agreed to work with us and take our people and accept our contract,” said Kelly, the secretary-treasurer for Teamsters Local 952, which represents OCTA’s directly-employed drivers as well as the outsourced bus drivers.

“We don’t have an issue with this…they’re getting the same wages and benefits of the current outsourced workers,” said Kelly, adding that he hopes to see more directly-operated service in the future.

Under the proposed deal, First Transit would provide 396 full-time and 34 part-time drivers, as well as 79 maintenance workers.

About 95 percent of existing workers whose jobs are impacted are expected to be transitioned to First Transit, according to Abadessa, the director of contracts administration.

According to OCTA figures, First Transit would make a $7.7 million profit over the four-year deal.

The committee’s recommendation now goes to a vote by the full board, which is slated for March 23.

You can reach Nick Gerda at ngerda@gmail.com, and follow him on Twitter: @nicholasgerda.