County to Talk to 3 Firms About New Phone System

Two and a half years after a telephone contracting scandal rocked county government, San Diego County supervisors on Tuesday moved a step closer to buying a new telephone system by authorizing negotiations with three firms.

The supervisors rejected Chief Administrative Officer Clifford Graves’ recommendation that the county negotiate only with Contel Page Systems Inc., whose proposal was rated the least expensive in June by a panel of experts.

Instead, the board voted to begin negotiations with Contel and with AT&T; Information Systems for a telephone network that would be completely owned by the county. The county will simultaneously negotiate with Pacific Bell for a system the county would partially own.

Graves said the addition of two companies to the negotiations would “muddy the waters” but not seriously disrupt county government’s effort to find a new telephone system for its internal operations.

“You can do it (negotiate) with two, you can do it with three,” Graves said. “It just means you need one more room.”

Graves said he expects the negotiations to take about two months. The system is expected to cost $12 million to $15 million to purchase and $30 million in current dollars to operate for the next 10 years. Graves said the system should save the county more than $1 million a year.

Tuesday’s action marked the latest step in a process begun in January, 1983, when the county canceled its $24.5-million contract with Anaheim-based Telink Inc. amid what Dist. Atty. Edwin Miller later called “the most massive fraud and public corruption scheme ever perpetrated against the County of San Diego.”

Two corporations and 13 men, including two former county officials, were indicted by a federal grand jury on charges of racketeering, bribery and fraud involving the San Diego County contract and a smaller deal in Fresno County.

In response, county officials here set up an elaborate system designed to guarantee a fair competition the second time around. That process, which included hiring a nationally known management consultant and assembling a panel of outside experts, concluded with Graves’ recommendation in June that the county negotiate solely with Contel Page.

But two of Contel’s competitors objected, contending that irregularities in the process hurt their chances of winning the contract. Pacific Bell officials said the county’s experts had unnecessarily added about $5 million to their company’s bid, while a representative of AT&T; contended that the firm was unfairly accused of violating Federal Communications Commission regulations.

Lincoln Ward, San Diego vice president for Pacific Bell, said the changes made in his firm’s bid reflected the county’s bias in favor of buying and operating its own telephone system rather than continuing to lease a system from private industry.

“I don’t think there was any hanky-panky,” Ward said before Tuesday’s hearing. “I think the process worked. It was squeaky clean and thorough. But when they got to the end of the process, they put together a group of people who leaned toward having their own empire.”

Graves countered that the additions to the Pacific Bell bid were made only for the purpose of comparing it with the other proposals. Pacific Bell did not follow the county’s guidelines asking for a bid on an all-new system, suggesting instead that some of the company’s existing equipment could be used, Graves said.

But supervisors, mindful of the county’s experience with Telink and aware that Contel’s two remaining competitors have extensive San Diego-based operations, were reluctant to open talks only with Contel, which is based in Fairfax, Va.

Supervisor Paul Eckert praised the county’s staff for its work and said, “If it weren’t for the political decision, I’d be supporting it (the Contel recommendation) all the way.”

Supervisor Susan Golding said she feared that negotiations with just one company might keep the county from finding the best deal.

“If we negotiate with Contel Page and we find out there is relatively little savings, then where are we?” she asked. “My objective is to get the best possible system at the lowest possible price.”