Orange County Transportation Authority (OCTA) managers secretly lowered performance standards for a bus contractor with a history of late buses and missed trips, effectively making the contractor look better in monthly performance reports.

That’s according to the results of an internal audit released last week, which also found management waived $16,000 in fines for the contractor, First Transit Inc., without adequate documentation.

OCTA spokesman Joel Zlotnik said the agency takes the audit “very seriously” and that “employees directly involved are no longer with OCTA.”

According to the audit, in February 2016 staff changed a standard for whether buses are on time, from five minutes to five minutes and 30 seconds, a change which resulted in a two percent improvement in the contractor’s results. Staff never disclosed the change to the Transportation Authority’s Board of Directors, or to the public at meetings or in monthly and quarterly performance reports.

The change to the performance metric also helped the company avoid $13,000 in fines, according to the audit.

According to the audit, staff justified the change by saying the added 30 seconds were to account for scenarios in which a bus stopping prior to the intersection could depart on time, but be flagged as late if it got stuck at a red light.

“This rationale does not appear reasonable,” the audit states, arguing that the reverse would also be true for bus stops located after an intersection, which is “three times more common.”

Zlotnik declined to disclose the names of employees involved or whether any other disciplinary action was taken, saying it is a personnel matter.

“While there are areas that clearly need to be improved, this is exactly why we have an internal audit department, which we are not required to have,” Zlotnik said. “OCTA’s management and the board believes strongly in continuously examining how we do business.”

Zlotnik said it was CEO Darrell Johnson’s decision, along with the Internal Audit department, to look at the First Transit contract, “because of its size, scope and complexity, as well as the importance of the service that First Transit provides.”

This isn’t the first time the agency’s board has been kept in the dark about issues involving First Transit.

Cincinnati-based First Transit began operating outsourced bus routes for OCTA in June 2015 and soon after came under fire for failing to hire enough drivers, leaving hundreds of riders stranded when their buses did not show up for scheduled stops.

In Oct. 2015, days after the contractor missed ten trips that stranded nearly 400 riders, a Transportation Authority official warned the company in a letter that failing to fix the situation would jeopardize the company’s contract.

Yet the next month, a report to the board’s transit committee didn’t mention the dispute and painted a rosy picture of the company’s performance, claiming customer complaints for the outsourced routes remained well below the acceptable rate of 3.93 complaints per 20,000 boardings. That complaint rate is nearly four times the allowable ratio for in-house services, five complaints per 100,000 boardings.

Staff said at the time they didn’t bring problems with First Transit to the board because most of the crisis took place in October, and their quarterly report covered only July through September.

The Transportation Authority has outsourced an increasing number of bus routes in an effort to cut costs. In 2009, they outsourced six percent of bus services, which has grown to nearly 40 percent today.

At the same time, OCTA has seen the worst decline in bus ridership among Southern California transit agencies, with ridership falling by more than 30 percent since 2008.

The agency is trying to change that trend by overhauling bus routes, a strategy which generally has cut service in south Orange County and shifted those resources to busier routes in north and central parts of the county. That strategy appears to be improving ridership along those busy routes and exacerbating ridership declines among those with cuts.

Since the start of the contract, First Transit has been fined $482,300 for late buses, missed trips and excessive complaints, according to Zlotnik.

Despite the problems, Zlotnik said the contract is saving taxpayers money.

“The contract with First Transit is saving taxpayers $11 million over four years, dollars that go directly into bus operations,” said Zlotnik.

First Transit won the contract after submitting a bid $11 million less than the bid from the previous contractor, MV Transportation.

When the contract was awarded to First Transit in March 2015, board director Miguel Pulido, who is also the mayor of Santa Ana, remarked that he hoped bus riders would not see serious service problems like they did when OCTA outsourced buses for disabled riders to Veolia Transport.

“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 at the time.

Contact Thy Vo at or 415-484-9286. Follow her on Twitter @thyanhvo.

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