Draft investigation report: Tri-Rail did not follow rules in $511 million, one-bid deal

When the public agency that runs the Tri-Rail commuter trains in South Florida dumped five less-expensive proposals and awarded a ten-year, $511 million, operations and maintenance contract last winter, the agency followed rules spelled out in that particular proposal but they conflicted with the agency’s standing internal procurement rules, a draft state investigation report concludes.

The transportation authority’s action last January boiled into major controversy spilling into the 2017 Florida Legislature Session. Gov. Rick Scott and key lawmakers, notably Sen. Jeff Brandes, expressed outrage that the agency essentially awarded a one-bid, ten-year contract worth a half-billion dollars, while five other train companies were crying foul. Brandes called for the state investigation.

Six months later, Florida Department of Transportation Inspector General Robert Clift concluded, [according to a report that is only in a draft stage but has been shared with other agencies in Florida,] that the transportation authority’s actions may have followed rules set forth for that specific project, but did not follow the agency’s standing procurement rules, which were different from what was outlined in the request for proposals. The agency’s rules would have required all six proposals to be evaluated by a selection committee, and that did not happen, Clift observed.

Clift did not make any recommendations that would affect the Herzog contract, but he did recommend several more state controls, including a call for a new state law requiring all state transportation authorities to adhere more closely to state procedures for bid protests, requiring bidding procedures to be stopped, and for disputes to go to the Florida Department of Administrative Hearings for final orders.

POLITICO Florida first reported on the inspector general’s draft report and Clift’s observations earlier Wednesday.

In his draft report, Clift also observed that the authority’s own rules would have required it to follow a “competitive negotiated procurement process,” but that never happened either.

Clift also cited Gerry O’Reilly, the FDOT District Four secretary who is a member of the SFRTA Board who voted against the contract in January, as saying that the new ten-year contract for Tri-Rail operating and maintenance appeared to be almost $10 million a year more than the transportation authority previously had been paying for the same services. O’Reilly raised concerns with Clift that the authority could not afford to pay that much more without seeking more revenue, though SFRTA officials told Clift they saw efficiency opportunities to make ends meet.

Clift sent a copy of the draft report to the South Florida Regional Transportation Authority on Aug. 8, and FloridaPolitics.com obtained a copy as a public record Wednesday. The final report, which would include the SFRTA’s response and other addenda, is not set to be completed until October.

A spokeswoman for the transportation authority said the agency would not comment on the inspector general’s observations and recommendations until the final report is out.

On Jan. 27 the SFRTA Board voted 6-2 to award a contract based on the only bid presented to the board, from Herzog Transit Services. Five other proposals, from Amtrak, Bombardier, First Transit, Inc., SNC-Lavalin, and Transdev Services, Inc., all had been rejected by staff weeks earlier for what staff had said were “qualified” pricing proposals, which the companies later denied. All the other bids reportedly were lower, as low as $396 million, but those proposals were never reviewed. Three of those companies went to court to try to force the board to consider their proposals, but lost in court, based on the requirements spelled out in the request for proposals.

Scott; Brandes, who chairs of the Senate Appropriations Subcommittee on Transportation, Tourism, and Economic Development; state Sen. George Gainer, who chairs of the Senate Transportation Committee; and the Florida Department of Transportation all raised strong criticisms of the deal and threatening to cut Tri-Rail’s $42.1 million in state money if the agency did not rescind the Herzog deal and rebid the contract. However, they backed down in favor of a new law, House Bill 695, which tightened state control over the agency.