Traffic School Contract Is Called Wrong Turn : Government: Detractors say O.C.’s exclusive-rights pact with firm being sued in Santa Clara County for overbilling is ill-advised.

Rival traffic schools on Friday criticized Orange County for giving an exclusive three-year contract to a competitor being sued in Santa Clara County for overcharging drivers.

The contract with the National Traffic Safety Institute was awarded Oct. 10 by a panel of county and court officials and was not reviewed by the Board of Supervisors, which usually approves such contracts.

“It’s an awfully odd process,” said Phillip Schwartze, a spokesman with the Improv Traffic School, which had a lower cost bid than NTSI. “I think the Board of Supervisors has a responsibility to review each and every contract.”

Orange County Supervisor Marian Bergeson agreed, saying she thinks the issue “deserves the scrutiny of the board.” She said she may ask that the contract be brought before county supervisors for review.

Supervisor William G. Steiner said he would “expect a competitor to have an ax to grind so I’m not sure their motives are pure. I’m not sure that if the contract did come to the Board of Supervisors that the outcome would not be exactly the same.”

Other supervisors could not be reached for comment late Friday.

Schwartze and other traffic school officials claim the county has been bamboozled by NTSI. They contend they could provide traffic school services to Orange County drivers better and cheaper. A couple schools have filed formal protests with the county, but their complaints have been denied.

Jim Brierly, regional director of NTSI, said his competitors are complaining only because they didn’t win the contract. He also said his office is independent of the branch in Northern California, where overbilling charges have been made.

Brierly said county officials were made aware of the company’s troubles in Santa Clara before the contract was awarded. “There was total and full disclosure,” he said.

Furthermore, Brierly said the firm has taken internal steps to ensure that overcharging could not occur again.

Robert Griffith, director of the county’s General Services Agency, acknowledged that some schools were less expensive than NTSI but said they were also of poorer quality.

He said a contract review panel composed of the court and county officials concluded that NTSI is the best provider, despite its legal problems in Santa Clara County.

Although it’s “rare” that a contract is not brought before the Board of Supervisors for approval, Griffith said the panel of county officials was authorized to award the job because it did not involve the expenditure of taxpayer money. Students pay the schools, which in turn hand over a portion of the fees to the county.

However, this apparently is the first time the board has not approved the contract, officials said.

Santa Clara and Orange counties are the only large urban counties that allow a single traffic school provider to essentially have a monopoly over all of the county’s court-directed traffic school business.

The traffic school market is highly competitive, with scores of operators seeking each year to sign up the hundreds of thousands of traffic violators who are allowed by the courts to attend the schools to expunge a ticket from their driving records. Santa Clara officials, who recently ended a longtime contract between their courts and NTSI after allegations of overbilling surfaced, said they were surprised that Orange County officials would enter into a contract with the traffic school.

“I think the courts here felt that there had been at the very least some negligence in the handling of the books and accounting,” said Steve Woodside, Santa Clara County’s chief counsel. “In light of our experience, I would suggest that anybody contracting with [NTSI] have some very clear audit standards and provisions.”

Attorney Kenneth R. Van Vlech, who is representing more than 100,000 Santa Clara drivers in a class-action lawsuit over alleged overcharging, was more critical of Orange County’s contract: “Hold on tight because they are going to take you for a ride like everybody else.”

According to an independent audit conducted in Santa Clara, NTSI may have overcharged students as much as $1.2 million over a five-year period. However, NTSI officials counter that they did not take advantage of tax breaks that could have reduced that figure to less than $400,000.

Griffith defended Orange County’s contract with NTSI, saying the troubles encountered in Santa Clara could not occur here. “The type of contract that we have is substantially different,” he said. “Part of the trouble up there was in the way Santa Clara wrote the contract.”

Instead of limiting the firm to a 10% profit margin--as Santa Clara did--Orange County officials set a flat fee that the firm could charge to all traffic school participants.

Griffith said the county received five traffic school proposals ranging from $46 to $50.50 per student. NTSI’s bid came in at $49 per student. The profit margin for the traffic schools ranged from $10 to $14.50 per student, Griffith said. NTSI will receive $13 per student. The county receives $10 for every student.

The fee NTSI charged in Santa Clara was $33 per student.

Under the terms of the Orange County contract, which becomes effective Nov. 1, the county will be able to renew the three-year contract for two additional years.