Stanton Says High Bidder Nearly Got OCTD Contract

The Orange County Transit District nearly awarded a lucrative computer services contract to the highest bidder--rather than the lowest--last week because district staff “slanted” the selection process toward one company, Supervisor Roger R. Stanton has charged.

Stanton, who represents county supervisors on the OCTD board, sent a letter late Friday to James P. Reichert, general manager of the district, demanding explanations for the way the bids were handled. The letter asks Reichert why district staff members never revealed to the board--until Stanton asked--that a second proposal had been submitted and that its cost was $265,000 lower than the first.

He also demanded to know why the lower bidder was told--before the board had reviewed the matter--that it would not get the contract.

“This episode obviously raises questions about the objectivity and professionalism of staff recommendations,” Stanton’s letter said. “. . .They (staff members) are thwarting the prerogative and authority of the public.”

Stanton sent copies of the letter to fellow supervisors and the four other transit district board members.

Reichert could not be reached after The Times obtained a copy of Stanton’s letter. However, when questioned about the contract earlier, he strongly denied any wrongdoing by him or his staff and attributed Stanton’s actions to “misunderstandings.”

And officials of the company that submitted the high bid maintained last week that the lower bid was for a plan that did not comply with the county’s bid specifications.

The project involved in the dispute is the design of a computer system that would be used to handle the transit district’s accounting, purchasing and maintenance records. Bids for the first phase of the project were solicited earlier this year, and two firms submitted proposals.

Lorien Systems of Long Beach submitted a bid of $589,000 for the first phase of what is expected to be a $1.65-million project to develop the computerized maintenance, accounting and purchasing management system. Arthur Andersen & Co. submitted a bid of $324,000.

The transit district staff recommended accepting the Lorien Systems bid without mentioning the Arthur Andersen bid to the board. But after questioning staff members and learning of the Arthur Andersen bid, Stanton persuaded the board on Nov. 3 to accept that bid. The vote was 4 to 0.

Lorien Systems President Sandy Steers said Friday the vote was improper, and that her firm has filed an appeal with the board. She contended that the Arthur Andersen proposal did not comply with the specifications of the district’s request for bids. She also said Lorien Systems had received assurances from transit district officials that it had won the contract.

“The voting process was flawed,” Steers said. “We were 100% sure that we would get it because of OCTD’s representations made to us. We went out and rented office space next door to OCTD, we notified several of our key employees to leave other job sites in order to start work on the OCTD project on Dec. 1, and we had already completed preliminary work involving interviews with some of the (computer system) users at OCTD.”

No Comment From Counsel

Officials at Arthur Andersen could not be reached for comment.

Lorien’s appeal will not be heard by the board for at least two weeks. Kennard R. Smart Jr., the transit district’s general counsel, said he could not comment on the controversy because he had not yet studied the appeal or the district’s request for bids.

The staff recommendation urging the board to accept Lorien Systems’ bid came last month from a bid evaluation team headed by Gretchen Waltzman, the district’s manager of information services.

Waltzman did not return phone calls to her office by a Times reporter over a three-day period last week.

According to a transcript of a tape recording of the Nov. 3 board meeting, Waltzman and Reichert argued that Lorien Systems had received a higher point score from the bid evaluation team partly because two consultants on the team from Boston-based Prime Computer Systems Inc. had strongly favored the firm.

Steers, Lorien Systems’ president, said that she and other key employees of her firm formerly worked for Prime Computer Systems.

But she said she had never heard of the Orange County Transit District, Waltzman or other district officials until her firm was invited by the district to submit a bid.

Stanton Cites Irregularities

Stanton complained angrily Friday that transit district board members should have been told of the former employment connection between Lorien Systems’ personnel and Prime Computer Systems Inc.

Irregularities cited by Stanton in his letter to Reichert include:

- A transit district staff request at the regular Oct. 22 district board meeting that the contract be awarded to Lorien Systems without any indication to the board that there was a lower bid, the amount of that bid or who it was from.

- An attempt by the transit district staff to have the contract contain an additional $910,000 for phase two of the project even though neither firm submitting proposals had bid on that phase.

- Waltzman’s admission that she never asked for a bid on the second phase of the project and drew up second-phase cost estimates for each company herself, based on informal discussions with representatives from each firm about the relative amount of effort each anticipated.

- Smart’s disclosure at the Nov. 3 board meeting that the transit district staff had secured the signature of a Lorien Systems official on the proposed contract before any vote by the board authorizing such action.

- A transit district staff decision several months ago to inform Arthur Andersen & Co. that it was not going to get the contract, before the matter had been brought to transit district directors.

- Reichert’s suggestion at the Nov. 3 meeting that the phase one contract be rebid, after Stanton introduced a motion to award the contract to Arthur Andersen instead of Lorien Systems.

- Waltzman’s alleged statement to Stanton aide Kathleen Branda that she wanted Lorien Systems selected and that her subordinates would not work with Arthur Andersen.

‘They Were Fine’

Reichert said Friday, however, that before the Nov. 3 board meeting Waltzman assured him that there would be no problem if Stanton got the contract switched to Arthur Andersen & Co.

“She had recommended them for another job they’ve been doing for us,” Reichert said, “and she said they were fine.”

Stanton referred to each of the issues mentioned in his letter to Reichert at the Nov. 3 board meeting, according to a transcript of the proceedings.

According to the transcript, Smart said Lorien Systems was the only firm asked to sign the proposed contract because it was the company recommended by transit district staff.

The document quotes Stanton’s response:

” . . . If this board is something other than a rubber stamp and is truly making decisions, then, when we get two contractors, or two or three vendors, everything should be laid out so that we can choose any one. . . . “

Transit district board member William E. Farris, a Buena Park attorney, said he, too, was “surprised” when staff members recommended one firm for a big contract without telling the board about the rival bid and put it on the board’s consent calendar. Consent calendar items are decided without discussion.

Large Expenditure

“It’s one thing when it involves a small amount for landscaping or something of that nature, but here we were talking about spending what will be eventually more than a million dollars. . . . “

Farris said it appeared that staff members “had made up their minds” and didn’t want anything “to get in their way.”

However, Farris also said he believes the staff was motivated by a strong desire to “bring in some new blood.”

According to the Nov. 3 transcript, Waltzman argued that Lorien Systems would devote more hours to the transit district project and do a better job than Arthur Anderson & Co. She also said that the bid evaluation team favored Lorien Systems’ particular work plan, which involved training employees on a prototype.

But Stanton countered during the Nov. 3 meeting that Arthur Andersen was never asked what it would charge if it did the project using the training approach proposed by Lorien Systems. Waltzman claimed that to do so would have wrongly influenced the contract negotiations, according to the transcript.

Stanton said last week that he had Reichert and Waltzman come to his office the day after the Nov. 3 meeting to stress how unhappy he was with the way the contract had been “mishandled” but got unsatisfactory answers to several questions.

Stanton said he does not know anybody at Arthur Andersen but had been impressed by the company’s track record, which includes installation of similar systems at more than 30 transit agencies nationwide. He said Lorien Systems’ experience was limited to about 10 installations similar to the Orange County Transit District project but none involving transit.