OCTA to End Practice of No-Bid Consulting Contracts : Government: Next year the agency will take bids on pacts for financial and bond-sales advice.

In the world of Wall Street moguls, Jeff Leifer isn’t even on the map.

But the Santa Monica-based Leifer has parlayed an initial $25,000 contract awarded in 1991 as financial adviser to the Orange County Transportation Authority into fees totaling $815,000--in just two years.

All but the first agreement with OCTA came without competitive bids.

OCTA officials say Leifer, a former chairman of the state’s Financial Advisory Commission, has saved the agency at least $2 million by obtaining lower than prevailing interest rates for OCTA’s borrowings.

But Leifer’s case is being used by some OCTA board members to preclude no-bid, open-ended consulting arrangements in the future.

OCTA Chairman Gary L. Hausdorfer said all of the agency’s major financial consulting contracts will be put out to bid again in 1994, including the contract for legal advice on bond sales, now held by the prominent law firm of Nossaman Guthner Knox and Elliott.

Not, however, before the OCTA board on Monday approved another $100,000 for Leifer, and raised its own lawyers’ pay by $10 an hour to a new maximum of $165.

“We should be vigilant,” said Supervisor Gaddi H. Vasquez, an OCTA board member who urged his colleagues to shop around for the best price among available, qualified law firms.

OCTA lawyer Kennard R. Smart reminded the board that it has the power to terminate his firm’s contract at any time.

Asked Hausdorfer in jest: “Noon?”

Referring to Leifer, Supervisor William G. Steiner said the board should re-examine all of the agency’s “exclusive relationships” that exist “without the benefit of competitive bid.”

But Supervisor Roger R. Stanton, who also sits on the OCTA board, defended Leifer and pointed out that the agency’s contract with bond lawyers at Nossaman Guthner Knox and Elliott hasn’t been rebid either.

The law firm has strong political ties to OCTA board members, through direct campaign contributions or by raising funds from others.

Complaints about the no-bid contract extensions and amendments surfaced last summer in a letter to Hausdorfer from Keith Curry of Public Financial Management Inc., a rival of Leifer Capital Inc.

OCTA, Curry wrote, “continues to pay among the highest financial advisory fees in the state. I am confident that this would not be the situation if a true, open competitive process was followed.”

The letter attacked Leifer’s lack of experience with transportation agencies before getting work from OCTA. And it alleged that similar work by Curry’s firm for other clients had produced far better results.

In an interview Friday, Curry declined to elaborate on Leifer’s performance, citing the anger his letter of complaint provoked among some OCTA board members.

One person who has not been silent is Orange County Treasurer-Tax Collector Bob Citron, a friend and ally of Leifer, and the person who recommended that OCTA hire him. Citron has used Leifer’s services on hundreds of millions of dollars’ worth of county bond sales over the last 11 years.

In a letter to the Board of Supervisors, Citron wrote, “Instead of going out to bid each year to select a new financial team, because of our experience with Mr. Leifer, we have found that his expertise has resulted in the county receiving not only the lowest (interest) rate . . . but most often the lowest costs involved. . . .”

In an interview last week, Citron attributed the attacks on Leifer to unhappy competitors and the internal politics of the bond underwriting community. “They know how to play hardball,” Citron said, “And Jeff has upset many of them with his tenacity--he’s brought down their rates.”

Some government agencies have bond underwriters pay the fees of financial advisers. But OCTA believed that this poses a possible conflict of interest, so it paid Leifer directly, according to Stan Oftelie, the agency’s chief executive officer.

James Kenan, OCTA’s chief financial officer, said last week that Leifer’s fees appear higher than his competitors’, but really aren’t. “It’s apples and oranges,” said Kenan, who explained that Leifer had done much more work than a typical financial adviser by training several people on Kenan’s staff, among other things.

Meanwhile, Oftelie said future contracts for financial advisers would be smaller and less likely to provoke controversy, since there would be less of a learning curve for his agency. “During the past two years we’ve financed more than $600 million,” said Oftelie. “Before that, we had no experience . . . Jeff Leifer provided what we needed just when we needed it.”