Sunday’s OC Register provided a story seeking more insight than usual on Board decisions. The reporter delves into how Supervisors decide to vote on various contracts.
Yes, we receive campaign contributions from lobbyists. I have a policy of not accepting campaign contributions from public employee unions, for a number of reasons. With lobbyists and their clients, I have one simple rule which I clearly tell them: If you want my vote, submit the lowest, most responsible bid and get the highest score from the rating panel. I am grateful for the contribution and their show of support, but I am not beholden.
There may be other factors that play into the decision-making process. Over the past six years, the nation has endured an historic recession. Parking Concepts Inc. (PCI) is a local, privately owned and operated business. The Board of Supervisors has discussed, on several occasions, favoring the home teams, i.e. Orange County-based businesses, during the procurement process, provided all else is equal. It’s about keeping jobs here in the OC. Aside from PCI, the major bidders in this service category have typically been larger, multi-state, and out of state providers. Standard Parking Corp. (STAN:US), is publicly traded on NASDAQ with headquarters in Chicago, Illinois; they operate over 60 airports in the U.S. LAZ Parking is one of the largest parking operators in the U.S. with its home office in Hartford, Connecticut. Central Parking has its corporate office in Nashville, Tennessee, and also claims to be one of the largest parking services in North America. Another factor to consider is whether a vendor is attempting to low-ball their initial bid, but then raise the annual costs significantly when the contract is renewed or ask for change orders during the term of the contract. To avoid this risk, and to eliminate a difficult transition period, it is sometimes better to stay with an incumbent. However, the big multi-state firms want Orange County as a client and they are willing to be competitive in their bids. The story below aims to understand the process. I wish there were more articles of this nature.
String of parking deals questioned
Company dominates county contracts but isn’t always low bidder. One of its execs is a longtime O.C. lobbyist.
One of Orange County’s most veteran and well known lobbyists is also an executive at Parking Concepts Inc., an Irvine company that county staff recommended this month for a multimillion-dollar parking contract – despite another company’s offer to do the same work for less money.
Since 1998, county records show, the supervisors have repeatedly awarded PCI millions in parking contracts at county beaches, parks, the Civic Center and John Wayne Airport – in at least three cases after county staff recommended another vendor. The contracts have generated more than $10 million in revenue for PCI.
The terms of the soon-to expire county parks contract – which the county’s auditor described in a 2011 report as unusual and missing several key components – allow PCI to keep 41 percent of the total parking fee revenue. Last year, PCI collected $1.4 million as its share of $3.5 million in total fees.
Lyle R. Overby is the vice president of governmental marketing and the registered lobbyist for PCI. Overby has been lobbying the supervisors for more than 20 years and has a host of other clients, including Stanton-based trash hauler CR&R Inc., according to county records.
Over the last two decades, Overby and his political committee, the Committee for Improved Public Policy, have given tens of thousands of dollars to county supervisors’ campaigns, election disclosures show. Campaigns frequently reported receiving contributions from Overby and his clients on the same day.
Overby told county supervisors at their July 16 meeting that he has served as PCI’s contract vice president of governmental marketing for 28 years.
At that meeting, several supervisors questioned the staff’s unexplained recommendation that PCI’s contract be renewed after they noticed that the only other bidder, LAZ Parking, had offered to do the same work for a smaller share of parking fee revenue. LAZ’s proposal would have saved the county an estimated $1.5 million over the life of the contract.
Supervisor Todd Spitzer wanted to know why one of the three anonymous county staffers who evaluated the proposals gave PCI a rating that was three points higher than LAZ’s rating in the price category.
Spitzer said it was an important question because the two companies’ final evaluation rating scores were so close – 40.7 vs. 39.8 – that the single anonymous evaluator’s rating on price was enough to tip the scales in PCI’s favor. “We’re talking about less than a half a point with a million-dollar delta,” Spitzer said during the meeting.
Supervisors also questioned why staff had not interviewed the two companies about their proposals, which is a standard part of the county’s procurement process but is not specifically required under county policy. Rich Adler, the county’s interim deputy parks director, told the board that staff skipped the interviews in an effort to get a recommendation before the board before it expired July 23.
“I am aware that the procurement process on this has been questioned,” Overby told supervisors during the meeting. “I believe any procurement can be picked apart retroactively. You see it all the time. I’ve seen it for years. We’ve all seen it.”
But, ultimately, PCI’s dominance over competitors in Orange County was based on value and performance, Overby said.
In light of their concerns, supervisors ultimately voted 4-1, with board Chairman Shawn Nelson opposing, to extend the current contract to the end of September instead of awarding a new contract as planned. The new contract was slated to expire at the end of 2014, with an option for up to four one-year extensions.
The board directed staff to interview the companies, write up a staff report that better explains their recommendation, and bring the report before the board again Sept. 17.
The supervisors’ handling of lucrative parking contracts linked to an official who has funneled campaign contributions to them for more than a decade is notable because of growing criticism that the supervisors encourage a “pay to play” environment in Orange County government. The Orange County grand jury and other critics have suggested that could amount to public corruption; the supervisors deny that and say they strive to follow all ethics and campaigning rules.
The Fair Political Practices Commission has said it is examining county supervisors’ votes on its CalOptima health plan to see if there are conflicts of interest; an FBI task force is also scouting for public corruption in Orange County.
Overby and his clients have waved off their campaign contributions in the past, saying they are a legal part of the process and follow state and county contribution rules.
“These tiny amounts of dollars don’t buy anybody,” Overby told The Watchdog last year when we examined contributions from his PACs and a trash hauler to city council campaigns.
In an interview Thursday, Overby said that the supervisors’ decision to kick back PCI’s proposal for interviews and a second look was evidence that his influence as a lobbyist is limited – and, also, maybe, that LAZ has a pretty good lobbyist, too.
Overby said that county staff recommended PCI for the contracts because the company’s proposal offered a realistic price, with line- by-line cost breakdowns that showed insulation against risks, and a deal for the county that was good – but not too good to be true. And that’s it.
“You come to this and say, ‘Obviously it’s Lyle; he’s been around so long,’ but I have nothing to do with it,” Overby said. “My skill, if I had one, is to articulate to people: ‘Do the math.’ ”
Chris Handlos, general manager for LAZ Parking in Orange County declined, “out of respect for the county’s selection process,” to comment on the county’s decision . He said LAZ had presented to the county a “fair, detailed and well researched price proposal.”
Records of the board’s handling of previous parking contract bids show several instances where a contract was awarded to PCI despite lower bids or recommendations from staff that another firm be hired.
In 2005, supervisors voted to continue a contract with PCI for two years after the agreement expired and would normally go out to bid, according to county records. County staff asked supervisors to extend the contract without taking other offers because they wanted to consolidate that contract with another, also held by PCI, and then put the new, consolidated contract out to bid.
The county requested proposals for the combined contract in 2007 and, after evaluating the proposals, recommended Central Parking Systems for the new, multimillion-dollar contract, according to county records. The supervisors instead chose PCI.
In 2008, JWA staff recommended contracting with Standard Parking to provide valet parking at the airport for up to five years, according to county records. Supervisors chose PCI instead on a 4-1 vote, with Supervisor John Moorlach opposing.
“We had someone that bid better, and staff recommended it, and my overriding philosophy is that I want to let the managers manage,” Moorlach said Thursday of that 2008 vote. “So when staff made the recommendation to go with the other firm (Standard Parking), based on the scoring, that made sense to me.”
Adler, the parks official, said in an interview Tuesday that one evaluator gave LAZ a lower score on price because he questioned whether the company could really do the work it proposed for so little money.
Adler also said there was nothing suspicious about staff’s recommendation to award the contract to PCI despite its higher price.
“When you do a request for proposal you can look at more than just the cost; you can look at quality and qualifications of the bidders and their cost proposals,” Adler said. “Thirty percent of the weight was for cost where 70 percent was for experience and operations. So it isn’t always just the lowest price.”
Moorlach asked during the meeting July 16 whether it was possible that PCI’s dominance as a parking vendor in Orange County was hurting competition for contracts. He asked Adler why he thought it was that, of the 10 vendors who attended the county’s bid meeting for the parking contract, only one “decided it was worth taking it on,” and submitted a proposal to compete with PCI.
“If I had to speculate, I’d say it’s a tough environment to come into Orange County,” Adler responded.
CONTACT THE WRITER: mcook
FIVE-YEAR LOOK BACKS
KPCC 89.3 FM had a piece on the proposed ballot measure in “OC Supervisors to consider putting pension measure on ballot.”
Moorlach wants voters to weigh in on the pensions of 19,000 county workers. Unions representing county workers are expected to fight such a measure.
Money Management Letter had a lead story, “OC Regulators, OCERS Scuffle Over Board,” dealing with a new appointment I made while Chair of the Board of Supervisors.
John Moorlach, chairman of the county’s board of supervisors, chose to replace [Thomas] Lightvoet because he felt the board member’s relationship with the Association of Orange County Sheriff’s Deputies was a conflict of interest, said Mario Mainero, Moorlach’s chief of staff.
Lightvoet had a contractual agreement with the union to provide investment advisory services for its medical trust plan and has been doing so for over 15 years.
Daily Pilot Editor William Lobdell, in his weekly “Editor’s Notebook” column, titled “Rocky and his friends: a whael of a quiz for locals,” provided several true or false questions. Here is one of them (don’t ask me why I was mentioned, but it was very flattering):
True or false? One of the three announced candidates (Huntington Beach City Council members Jim Silva and Linda Moulton-Patterson and Huntington Beach businesswoman Haydee Tillotson) for the 2nd Supervisorial District seat – which includes Costa Mesa – will win the election.
False. The winner – whomever he or she will be – comes from Costa Mesa and hasn’t yet announced. Why? Because the three candidates already in the race will badly split the Huntington Beach vote and a hopeful who emerges from Costa Mesa – such as Mary Hornbuckle, Peter Buffa or John Moorlach – will have a clear shot to the Hall of Administration in Santa Ana. However the price tag will be close to $500,000, which may explain no on has stepped forward yet.
The OC Register’s “Orange Grove” was my submission, titled “Give voters a say on county pensions,” which provided my position for the Board’s vote that day.
Six years ago the voters of Orange County approved Measure V, converting us to a charter county. It was poorly constructed, but we now have the opportunity to allow the voters to add provisions to the Charter that instruct the County’s Supervisors on how to proceed on financial and business matters.
At today’s Board of Supervisors weekly meeting the Board will vote on whether to put such a charter amendment before the voters on the November 4 ballot.
It may surprise many of you that the funding level of the County’s traditional defined benefit pension plan is near that of the City of San Diego. Why this city has suffered more embarrassment over this fact is that they failed to disclose their large benefit debt in official bond issuance disclosure statements.
The City of San Diego has had to endure investigations by the Securities and Exchange Commission, the United States Attorney’s Office, the Internal Revenue Service and their County’s District Attorney. They’ve even received the moniker of "Enron by the Sea" by the New York Times.
As one of the City’s responses to their pension funding crisis their Mayor put a measure on the ballot that would require the City’s voters to approve an increase in future employee retirement benefits. It passed with 70 percent of the vote. Orange County’s voters should do the same.
Why are we pursuing such a remedy? Recently approved 50 percent pension plan benefit increases have turned our fully-funded retirement plan into one that is only 73 percent funded.
Although we have enjoyed average investment earnings of some 10 percent per year over the last 15 years, you still owe the retirement system $2.7 billion. This works out to about $875 per resident. And we’re paying 7-3/4 percent interest per year on this growing debt. Our annual contributions to the retirement system are
30 percent of payroll for this next fiscal year!
How did this happen? The Board of Supervisors negotiates with its employee bargaining units in secrecy. Closed session meetings are utilized to instruct county staff on how to proceed during the negotiations. Once the negotiations are completed the contract is voted on in a public meeting, but without much input from the taxpayers. This is because there is little time between the public disclosure of the agreed to salary and benefit increases and their approval by a majority vote of the Supervisors.
We have some 50 years of empirical data that shows that public employee unions have been successful in getting their candidates onto local elected bodies. This means that they literally negotiate with themselves.
The power of public employee unions should not be underestimated.
They raise a considerable amount of money for political purposes through their dues assessments. Their leadership is politically savvy. They recruit volunteers to put up candidate signs, walk precincts and man phone banks. And they are very clear in their communications to elected officials: "Vote for our salary and benefit increases or we will run someone against you or not assist you in your next run for another office." This makes it too easy for elected officials to capitulate to the demands of public employee unions.
What is the downside for an elected official to vote for retirement benefit increases? None. Due to term limits they can give away the store and let their successors worry about paying the bills. They’ve moved on to another office or oblivion with no concerns about future accountability.
What would a union leader tell future successors of these elected officials to do when they cannot afford the benefits? "Raise taxes. The benefits were negotiated fair and square and now you have to pay them."
The proposed charter measure we will be discussing will allow you, the voter, to approve any negotiated increase in retirement benefits. The public employee union leaders will have to convince you to approve a ballot measure to grant the increase. This is not as easy as only convincing a Board majority (three County Supervisors), but it is achievable. This method has worked satisfactorily and successfully in the County of San Francisco. In fact, their pension plan is fully funded.
Our current Board of Supervisors should put this measure on the November ballot and you should vote to approve it. Your wallet is already taking enough hits during this recession. Wait until you see what happens to our annual pension plan contribution after this difficult investment cycle. It will go up. It just went up $400 million because our employees are retiring earlier and living longer. And you will have to pay for it, and your children, and your grandchildren. We need to stop the hemorrhaging from increasing. One way we can try do it is with this ballot measure.
Disclaimer: You have been added to my MOORLACH UPDATE communication e-mail tree. In lieu of a weekly newsletter, you will receive occasional media updates, some with commentary to explain the situation, whenever I appear in the media (unless it is a duplication of a previous story).
I have two thoughts for you to consider: (1) my office does not usually issue press releases to get into the newspapers (only in rare cases); and (2) I do not write the articles, opinions or letters to the editor.
This message should appear at the bottom of every e-mail you receive. If these e-mails should stop arriving in your mail box, it will be because your address has changed and you did not provide a new one. If you do not wish to receive these e-mails, then please e-mail back and request to unsubscribe.