Tri-Rail’s half-billion dollar, single-proposal deal raises questions

On Friday, the South Florida Regional Transit Authority will consider awarding a deal to run the state’s largest public commuter railroad, Tri-Rail — worth up to $511 million — after tossing all competing bids, including some asking far less money.

The SFRTA’s board of trustees is being asked Friday to award Tri-Rail’s operations and maintenance contract, which could be good for as long as 10 years with extensions, to the only qualified proposer left, Herzog Transit Services Inc., of Texas, after the agency’s staff disqualified all five other proposals.

Some rejected bidders, including Tri-Rail’s current operator, Maryland’s Transdev Services, are fuming and challenging. This month, Transdev went to court to block the award; initially getting a temporary restraining order.

Two other disqualified bidders, Bombardier Mass Transit and First Transit, joined in. But after a hearing last Friday, Circuit Judge Barbara McCarthy of Broward County lifted her order Monday.

The issues the challengers have raised questions on how much latitude the agency’s staff has in deciding whether a proposal meets requirements, how staff members can make judgment calls and assumptions that go beyond stated prices, and how they do so without contacting the bidders for clarification.

In depositions filed in the Transdev court case against the transit authority and obtained by FloridaPolitics.com, the agency’s procurement director Christopher Bross testified that he had the power to accept the bid prices at face value, but chose instead to interpret that some bidders had included conditions on their pricing; so he disqualified them.

Bross did so, he testified, without asking the bidders to clarify.

Transdev argued in court that the bid price was, as the law required, clearly stated and not conditional, and would not have been changed as Bross had testified he assumed to be a prospect. The company argued that too much is at stake for the public agency and the public for the process to wind up with a more expensive contract this way.

“We have never seen a process in which five of six bids were thrown out because of a staff member’s interpretation. We certainly have never seen a bid of this size in which no questions were asked of proposers and no interviews conducted,” Transdev Executive Vice President Richard Alexander said in a statement to FloridaPolitics.com.

“Then to find out the remaining bids were $35 to $100 million lower than the one remaining bid raises questions of whether this decision is in the public’s best interest,” Alexander added.

Transit Authority spokeswoman Bonnie Arnold declined to comment Thursday, saying that, as required by law, the whole procurement process is under a “cone of silence” until the board acts.

The contract would take effect July 1, combining four functions now covered by four separate transit authority contracts: operations, equipment maintenance, station maintenance and dispatching.

Tri-Rail runs 50 commuter trains on weekdays and 30 trains on weekends along 72 miles of track through Palm Beach, Broward and Miami-Dade counties, with 18 stations, while averaging about 14,000 riders a day on weekdays. The line, the largest, busiest and oldest commuter line in Florida, includes state and federal tax dollars among its revenue.

At 9:30 Friday, the SFRTA board meets in Pompano Beach to consider awarding the operations-maintenance-dispatching contract to Herzog for seven years with options for three annual extensions. The seven-year award is for $344 million. If all three renewals are executed, the total comes to $511 million.

Bombardier’s proposal reportedly was for $269 million for seven years and $396 million for ten years — $115 million less. Transdev’s was for $318 million for seven years and $473 million for 10 — $38 million less. No information was available for the other companies that made pitches, First Transit, Amtrak and SNC-Lavalin Transit.

As is normal, the proposals covered far more than just money, and the price only accounted for 20 percent of the agency’s judging on the bids. Eighty percent of the judgment was to be on the technical merits.

On Monday, after McCarthy lifted the injunction, the SFRTA board’s evaluation committee awarded Herzog all 20 points on pricing, because it was the only proposal considered, and 68 points on technical merits. The other five proposals were not evaluated.

McCarthy’s court ruling concluded that the transit authority, under its rules, had the right to determine entirely on its own that the proposals from Transdev and the other challengers were “conditional,” and then to reject them.

In his deposition, Bross had testified the conditional determinations were made based on reports he received from the transit authority’s technical and commercial committees in December. Those committee meetings and reports were not public.

In Transdev’s case, that condition appeared to be interpreted from the company’s statements in its proposal that it had not yet received or priced insurance, and that it could not know yet the condition of the trains or how much maintenance they might initially need, according to court documents. Bross testified that he interpreted those statements to mean Transdev’s stated bid price could be changed, once the insurance and train maintenance costs were better known.

But Bross also testified that, as procurement director, he had explicit discretion to refuse any and all requests from a winning bidder, to change prices and to hold them to the stated bid price.

The deposition and other court documents do not make clear why the other four proposals also were found to be conditional.

But McCarthy suggested it doesn’t matter.

“SFRTA only conducts competitive procurements pursuant to its own Procurement Policy. Thus, the RFP provided: ‘SFRTA, at its sole and absolute discretion, reserves the right to reject any or all proposals and reserves the right to make an award based solely on the written proposals as submitted,'” she wrote.

She also cited minutes from a pre-proposal meeting in which the agency warned companies that “SFRTA reserves the right to reject any or all proposals including proposals that are conditioned.”

Yet McCarthy also cited timing as a factor in her decision Monday. She noted that there are only just over five months before the new contractor must take over four different duties, all with public safety involved; contract extensions to buy more time might not practical for the transit authority. So she cited public safety of rail passengers as a consideration for no further disruption of the contract process.