U.S. Bars Funding for OCTD Computer : Federal Agency Says ‘Unfair’ Bidding Procedures Were Used

Citing “unfair” procedures used by Orange County Transit District board members, federal officials Monday barred federal funds for a $1.65-million district computer system unless the project is rebid.

The system is being sought to computerize OCTD’s maintenance, accounting and purchasing records.

The ruling by the Urban Mass Transit Administration highlights recent friction between OCTD board members and staff members. The action is the toughest the federal agency is empowered to take in such contract disputes.

Explanation of Ruling

The ruling means that OCTD must either reopen the bidding process, abandon the project or use non-federal funds to pay for it.

A five-page opinion signed by UMTA regional administrator Brigid Hynes-Cherin in San Francisco stated that “the Orange County board’s conduct . . . does not meet the standards . . . and the procurement as carried out so far is not eligible for federal support.” The opinion said the board disregarded the written bid specifications given to the vendors who competed for the contract.

For example, the board allegedly ignored a bid requirement that a significant number of contract personnel would be from the Orange County area.

Hynes-Cherin said Monday that “the board’s conduct was unfair.”

OCTD General Manager James Reichert, who had been severely criticized by OCTD board members for his handling of the contract, saw the UMTA ruling as a vindication for him and his staff and a slap at his board critics. Reichert had recommended that the project be rebid and opposed the board’s decision to award the contract to Arthur Andersen.

“We’re pleased with the UMTA decision because we feel it upholds our (staff’s) procurement process,” he said.

But Reichert said because the dispute is eight months old, he will seek a review of the district’s needs before recommending that the project again be put out for bid.

The UMTA ruling upheld a protest filed by Long Beach-based Lorien Systems. The firm had complained that after being picked by the OCTD staff for the first phase of the anticipated $1.65-million computer services project--and after signing a contract with the district--it was bypassed by the board, which awarded the contract last November to Arthur Andersen & Co., a firm rejected by the OCTD staff during earlier bid evaluations.

Lorien officials, unavailable for comment Monday, had also complained that the award to Arthur Andersen had violated federal and district affirmative action policies favoring companies owned by members of minority groups, women or the disabled. Lorien is owned by women.

However, UMTA’s Hynes-Cherin said the Lorien ruling was based on other questions of fairness, not the affirmative action issue.

Just before the contract award to Arthur Andersen, Supervisor Roger Stanton, an OCTD board member, had accused the district’s staff of being “slanted” the bid evaluations in favor of Lorien.

Stanton had cited the OCTD staff’s failure to tell the board of Arthur Andersen’s bid--$265,000 lower than Lorien’s--before placing the contract on the board’s agenda as a so-called consent item--one supposedly needing no discussion.

Stanton, also unavailable Monday, had complained that OCTD staff members had improperly told the Andersen firm months before that it was no longer being considered for the contract. And Stanton became angry when The Times disclosed that Lorien’s key personnel previously worked at the same firm that had supplied OCTD with two people who had advised the district’s bid evaluators.

In addition, Stanton had alleged that an OCTD official had come to Stanton’s office, virtually demanding that the contract be awarded to Lorien and saying that OCTD employees would not work with Andersen.

At the same time, the OCTD staff had stated that Andersen’s bid would actually turn out to be more costly than Lorien’s later on, during a second phase of the computer project, an assessment that Stanton disputed because it was based on informal conversations and not written, submitted proposals.

OCTD Called Well-Run

Stanton’s allegations prompted the Orange County Grand Jury to investigate OCTD staff and management practices. Earlier this year, the grand jury concluded that the OCTD was well run, but it cited loose contracting procedures and lack of information provided to board members as areas for improvement to avoid serious “misunderstandings” with contractors.

The UMTA ruling cited the confusion about bid procedures and costs and said the board erred by not renegotiating with both companies before making a final decision.

OCTD’s Reichert said his staff disputes UMTA’s finding that it should have negotiated a proposed contract with both firms simultaneously.