A federal complaint filed Tuesday alleges Orange County supervisors were biased in favor of their campaign donors and violated federal requirements for airport contracting when they chose a company that was ranked fifth for a major lease at John Wayne Airport.
The complaint was filed with the Federal Aviation Administration (FAA) by Signature Flight Support, a multinational aviation company that was ranked first by the county’s bid evaluation panel but was passed over last week in favor of fifth-ranked ACI Jet.
“Through the [bidding process], it was determined that Signature was the most qualified firm and awarding a lease to Signature would be most advantageous to the Airport,” Signature wrote in its complaint.
“The Board of [Supervisors] disregarded this finding and instead awarded the lease to ACI Jet because of the Board’s bias towards its campaign donors, including [ACI General Manager] Joe Daichendt.”
It cites what it says is over $23,000 in contributions to supervisors’ campaigns in recent years from Daichendt and other people who signed a letter he sent in July to the Board of Supervisors encouraging them to include a local vendor for the contract.
“Aside from the bias which infiltrated the County’s process, the Board also improperly and illegally ignored its own bidding procedures,” the complaint states.
And, it claims, supervisors violated federal rules that require airport owners to choose contractors on “reasonable terms without unjust discrimination,” as well as a federal requirement that the county not take any “arbitrary action” when choosing contractors for the airport.
Signature’s complaint requests a formal FAA investigation into the situation under a lawsuit-like process known as Part 16. If the FAA determines the county indeed violated federal contracting rules for airports, it can require county officials to correct the situation or face the loss of key federal grant money.
The four supervisors who voted to award the contract to ACI – Shawn Nelson, Andrew Do, Todd Spitzer, and Michelle Steel – didn’t return phone messages seeking comment.
Carrie Braun, the county’s chief spokeswoman, said it “does not comment on pending litigation.” She referred a reporter to a county statement last week, which said:
“The Orange County Board of Supervisors has the right and responsibility in any procurement process to make the decision that is best for the County and its residents.
“While many factors play a part in procurement evaluations, ultimately the Board is responsible to make the selection that best meets the needs of the service required. While those who do not compete favorably in a procurement process may disagree with the final selection, this does not make it illegal nor does it render it outside the County’s standard protocol.”
Signature has held the contract in question for over 20 years, which is a lease to run general aviation services at the airport – everything from corporate jets to small propeller planes. And, with its lease now long expired, Signature was competing in a field of six companies for the contract and the airport’s other lease for general aviation operations.
The county’s evaluation panel for the leases ranked Signature first and ACI Jet fifth, with airport staff recommending Signature for one of the leases.
But when it came up for a final vote last week, supervisors voted 4-1 to instead award the lease to ACI Jet, with the other lease going to second-ranked Atlantic Aviation. Supervisor Lisa Bartlett was the sole vote against choosing ACI.
Supervisor Shawn Nelson and several Signature tenants have said at recent board meetings that Signature overcharged customers at John Wayne Airport with fuel prices that far exceed market rates. Signature disputes the claim, saying it gave discounts to almost all of its customers.
None of the supervisors have explained why they chose the No. 5 firm instead of a higher-ranked company.
Signature says supervisors had a clear preference for choosing one national firm and one locally-based firm for the leases, in alleged violation of federal rules requiring open and fair competition.
“It became transparent through the process that the Board of Supervisors was determined to ensure that a local contractor was one of the winners,” said Katie Thomson, a former chief counsel of the FAA who now works as an attorney for Signature, in an interview with Voice of OC.
Federal law prohibits the county from restricting competition for airport contracts in such a way, she said.
Signature and Atlantic are both large national companies, while ACI is a far smaller firm based along California’s Central Coast, in San Luis Obispo County.
Thomson also called the fuel prices claims a “red herring,” saying supervisors “placed great weight on it without having any reliable information” that could inform their opinion.
“There was no effort from the board to even seek information from the parties about it or even expert opinion” about determining reasonable fuel prices.
It’s now up to FAA officials to determine whether supervisors violated the county’s airport contracting obligations, known as grant assurances.
If the FAA chooses to investigate, the agency’s director of airports reviews written arguments and evidence from both sides of the dispute, and has the option of requesting documents and deposition interviews.
If at the end of that process, the FAA’s airports director determines that the county indeed violated the rules, he or she can order the county to correct the alleged violation.
The county would have the option of appealing the decision to higher-ranking FAA officials, and ultimately federal court. If it loses the appeals, county officials would have to either comply with the FAA order or face a potential loss of federal grant funding for airport improvements.
A Voice of OC review of campaign filings found that supervisors collected thousands of dollars in contributions from people who work or advocate for the companies vying for the lease.
And as the lease decision was approaching in the second half of last year, ACI and its supporters outspent Signature by 2-to-1 in contributions to supervisors, records show. ACI’s supporters contributed $7,700, while Signature’s supporters spent $2,750.
Spitzer received $4,300 from ACI supporters and $1,250 from Signature supporters, Do received $1,900 from ACI supporters and $250 from Signature supporters, and Nelson received $1,000 from ACI supporters. Bartlett – the only no vote against choosing ACI – received $500 from ACI supporters and $1,250 from Signature supporters.
Signature’s attorneys say they will continue to investigate why supervisors took the action they did.
“We see a number of very serious violations of law and we’ll continue to evaluate what the company’s options are and pursue those options as we deem appropriate,” said Thomson, who is also a partner with the firm Morrison & Foerster.
“We’re just getting started,” said William V. O’Connor, another Morrison attorney who works for Signature. “This is based on our investigations so far. And we expect there’s more to learn.”
Nick Gerda covers county government and Santa Ana for Voice of OC. You can contact him at firstname.lastname@example.org.