BANKING/FINANCE : Peat Marwick Wins Over Minority Firm for Audit of OCTA

The item on the Orange County Transportation Authority’s agenda wasn’t supposed to be a big deal, even though it was a contract for the first consolidated audit of the agency. In fact, the vote to award the contract was on the agency’s consent calendar, which usually takes seconds to approve.

But board members pulled the item from the consent calendar and argued about it for 20 minutes at their April 27 meeting before sending the matter to a subcommittee for further study.

What caused the ruckus was a behind-the-scenes battle between the regional accounting firm of RJ Miranda in Santa Ana and the Big 6 firm of KPMG Peat Marwick.

Miranda, a minority-owned business with strong ties to city and county elected officials, lobbied strongly for the contract, contacting Orange County supervisors for support and submitting the low bid of $61,200.

But OCTA’s staff just didn’t think the company understood the nature of the work and thought the low bid underscored a lack of knowledge about the amount of work involved.

The staff recommended that the job go to Peat Marwick, which bid $81,000. The large accounting firm, the staff thought, not only understood the nature of the work but also had the Big 6 reputation and clout to win a high rating from Wall Street for the agency’s first major bond issue. OCTA plans to float as much as $300 million in bonds to finance Measure M traffic relief projects.

As board member Robert Wahlstrom of Los Alamitos wanted to know: If a Big 6 firm is needed, why was Miranda even considered? Peat Marwick got the nod unanimously at the board’s May 11 meeting--in a consent vote.