HomeMy WebLinkAboutResolution No. 273-12 • RESOLUTION
WHEREAS, on April 2, 2012, the Common Council selected First Transit as the
operator of the City's publicly-funded transit system;
WHEREAS, the Common Council's April 2, 2012 action occurred as a result of the
following: (1) the City's implementation of the required Federal Transit Administration's
competitive procurement procedure in order to maintain the receipt of federal funds to pay
for the City's publicly-funded transit system; (2) the Evaluation Committee's review,
analysis, and recommendation of the proposals submitted in response to the December
28, 2011 Request for Proposals ("RFP"); and (3) the Common Council's meeting with
consultant Rich Garrity who assisted the City in this process;
WHEREAS, on April 5, 2012, Rochester City Lines filed a protest, as allowed by the
RFP, with the City Attorney in response to the April 2, 2012 selection of First Transit;
WHEREAS, on April 12, 2012, the City Attorney responded to the protest, finding
that it lacked merit, and denied it;
WHEREAS,-on April 17, 2012, Rochester City Lines further protested the,April 2,
2012 selection of First Transit by appealing the City Attorney's denial to the City
Administrator and Common Council;
WHEREAS, on May 7, 2012, the Common Council considered the matter at a
public meeting and, having reviewed all of the relevant materials presented to it, including
the protest, the City Attorney's response, and the City, Administrator's recommendation,
found that the protest lacked merit and denied it;
WHEREAS, on June 4, 2012, Rochester City Lines filed a second protest, based
on what it referred to as newly-discovered evidence,-with the City Attorney in response to
the April 2, 2012 selection of First Transit and further alleged that the City Attorney had a
conflict of interest based on his role in the process as prescribed by the RFP;
WHEREAS, on June 8, 2012, Rochester City Lines submitted a second letter
supplementing its protest;
WHEREAS, on June 11, 2012, the City Attorney responded to the second protest,
inclusive of both the June 4, 2012 and June 8, 2012 letters, finding that the protest lacked
merit, and denied it;
WHEREAS, the June 11, 2012 response also informed counsel for Rochester City
Lines, notwithstanding that any protest of the RFP process, including the City Attorney's
role in the same, was required by the RFP to be made prior to the April 2, 2012
announcement and award, and that such a protest, even if it had been timely, was without
merit, that special counsel would be appointed to advise the Common Council, if
• necessary, on any bid protest coming before it for consideration;
• WHEREAS, on June 14, 2012, Rochester City Lines further protested the April 2,
2012 selection of First Transit by appealing the City Attorney's denial of its second protest
to the City Administrator and Common Council;
WHEREAS, Rochester City Lines' second protest came before the Common
Council at its June 18, 2012 meeting, which was open to the public, and special counsel
Justin Templin of Hoff, Barry & Kozar, P.A. was in attendance at the meeting;
WHEREAS, at the June 18, 2012 meeting, the Common Council considered this
matter and reviewed the following documents (copies of which are attached hereto and
incorporated herein) that have been presented to it:
1. Letter dated June 4, 2012 and attachments from Gary A. Van Cleve
to City Attorney Terry Adkins;
2. Letter dated June 8, 2012 and attachments from Rob A Stefonowicz
to City Attorney Terry Adkins;
3. Letter dated June 11, 2012 from City Attorney Terry Adkins to Gary
A. Van Cleve;
4. Letter dated June 14, 2012 from Gary A. Van Cleve to City
• Administrator Stevan Kvenvold and Common Council of the City of
Rochester;
WHEREAS, after review and consideration of the above discussion, information,
and documents, the Common Council concurs in the analysis and conclusions of the City
Attorney in his June 11, 2012 letter.
i
jl
NOW THEREFORE, BE IT RESOLVED by the Common Council of the City of
Rochester that the Council concur in and adopt as its own the City Attorney's June 11, .
2012 response to the June 4, 2012 protest, as supplemented June 8, 2012, by Rochester
City Lines of the selection of First Transit as the provider of the publicly-funded transit
system and, accordingly, denies the protest as being without merit.
PASSED AND ADOPTED BY THE COMMON COUNCIL OF THE CITY OF
ROCHESTER, MINNESOTA ON THE /,4h DAY O ,-7't1 e-., , 2012.
PRESIDENT OF SAID COMMON COUNCIL
ATTEST:
• (�i [.ice 1
Deputy City CI k
APPROVED THIS 701 DAY OF J'14 n e , 2012.
MAYOR OF SAID CITY •
(Seal of the City of
Rochester, Minnesota)
1
, 1
Larkin
• Ho�inan Larkin Hoffman Daly&Lindgren Ltd.
ATTORNEYS
1500 Wells Fargo Plaza
7900 Xerxes Avenue South
Minneapolis,Minnesota 55431-1194
GENERAL: 952-835-3800
PAX: 952.89C-3333
WM www.Lukinhoff=n.com
June 4, 2012
Terry Adkins, City Attorney BY ELECTRONIC MAIL ONLY
Rochester City Hall
201 Fourth Street S.E.,Room 247
Rochester,MN 55904-3780
Re: Bid Protest—City of Rochester RFP for Rochester
Public Transit Service Operations &Maintenance
Organizational Conflict of Interest,Personal Conflict
of Interest;Lack of Bidder Responsibility; Failure to
Conduct Due Diligence;Bias,Prejudice, and Predetermination
Dear Mr. Adkins:
This letter is the bid protest of Rochester City Lines,Co. ("RCL")based upon newly-discovered
• evidence in the recent award of a contract by the City of Rochester("City")to First Transit,Inc.
of Cincinnati, Ohio ("First Transit") on the above-referenced Request for Proposals ("RFP")
solicitation. This protest is based on information that was previously unknown and undisclosed
to RCL by First Transit, Randy Huston, and the City,until discovered in the depositions of Paul
Buharin and Randy Huston taken on Thursday,May 31,2012. The newly-discovered evidence
shows a prohibited organizational conflict of interest, a prohibited personal conflict of interest; a
lack of requisite bidder responsibility and a failure of the City to conduct due diligence.
Moreover this evidence further shows bias,prejudice,and predetermination in the solicitation on
the part of the City.
RECUSAL
As a preliminary matter, it is apparent that you must recuse yourself from participation in this
matter(which is submitted to you in the first instance as is required by RFP¶5.1.2),on the
grounds of personal and professional conflict of interest. The basis for this demand is that as
City Attorney,you have previously acted both as administrative principal on an RCL protest
regarding this solicitation and as counsel for the Common Council in its quasi-judicial capacity
sitting as the appellate forum on your protest decision. This is a prohibited conflict of interest.
Further,under the Code of Ordinances you are in the very same position of conflict relative to
this protest in that any decision you render is again subject to appeal to the Common Council for
which you will act as its legal advisor in the matter,unless you recuse yourself.
An attorney may not act in any matter in which he or she has a conflict of interest. Minnesota
Rules of Professional Conduct Rule 1.7(a). It has been held that a government official cannot be
• both a prosecutor and a judge. If more than one function is to be performed by a single
administrative entity,then there must be walls of division which eliminate the threat or
Terry Adkins, City Attorney
June 4, 2012 •
Page 2
appearance of bias. While mere tangential involvement by an adjudicator in the decision to
initiate proceedings is not enough to show denial of due process,where an entity or individual
involved in the decision to prosecute is then"significantly involved"in the adjudication,there is
a denial of due process. Elim Homes, Inc. v. Minn. Dept. of Human Services, 575 N.W.2d 845,
849 (Minn. App. 1998) (stating in the state administrative hearing context that,"as a general
rule,two different assistant attorneys general deal with the different stages of the case [advocacy
and adjudicative]");see also Lyness v. State Bd. of Medicine, 529 Pa. 535, 546-47,605 A.2d
1204, 1209-10 (1992).
In the last protest filed by RCL, and in this one if the same process is followed, as city attorney
you made an administrative determination on RCL's bid protest and then played the significant
role of legal advisor to the Common Council in the discharge of its quasi-judicial function of
appellate decision maker in reviewing your protest decision. Indeed, during the last protest the
only statement on the record as to any putative basis for the action taken by the Common
Council is your interjection, after the call of the question for a vote by the president of the
council,purporting to tell the council members what the basis of"their"independent decision
was. This violates the essential separation of duties. Id.;see 21 Minnesota Practice, § 10.05.4
("consultation by the decisionmaker with agency staff who have taken an adversary position in
the proceeding such as investigating or appearing as a witness, should be avoided"); cf 5 U.S.C.
§ 554(d)(2)(A), (B) (Federal APA provisions stating clearly improper for attorney to prosecute
agency position and"participate or advise in the decision",recommended decision or agency
review). •
In a contrasting example of a public decision-maker avoiding such a prohibited conflict,the
rejection of a bid by the director of a public bureau of purchasing who was the contracting
officer responsible for determining if bids were responsive,was found separate and permissible
for due process analysis from the confirmation of that rejected bid upon review by that same
bureau's deputy director who did not participate in the original bid rejection determination. See
Cardiac Science, Inc. v. Dep't of Gen. Svcs., 808 A.2d 1029, 1036 (Pa. Commw. 2002). This
was held to be a sufficient separation from the decision-maker to preserve the minimum
requirements of due process. Id.
Hence,it is clear that you must choose either to act now as decision-maker of first instance on
this bid protest, or recuse yourself to preserve your role as legal advisor to the Common Council
on any subsequent appeal. Conversely, should you fail to recuse yourself at this stage,it would
be improper for you to then act as counsel to the Common Council on any appeal.
BACKGROUND
The following facts did not become known to RCL until the taking of the depositions of Paul
Buharin, a Regional Manager of First Transit,and former RCL Operations Manager Randy
Huston,in Minneapolis on Thursday,May 31,2012.
In the fall of 2011,prior to the formal issuance of an RFP for bus services by the City,but in
contemplation of an imminent solicitation, an agent of First Transit approached RCL Operations
Manager Randy Huston about serving as General Manager for First Transit should it be awarded •
Terry Adkins, City Attorney
• June 4,2012
Page 3
a contract to operate transit services by the City. The offer was reported by Mr.Huston to RCL,
his employer. What Mr. Huston failed to report to his employer was that he accepted the offer
from First Transit, contingent on the award of a contract by the City to them,and that he gave
his permission for First Transit to use his name as their designee for general manager in the
proposal they actually submitted to the City. Moreover,the City and its source evaluation and
selection advisors(specifically Richard Freese,the City's Director of Public Works,Anthony
Knauer,the City's Director of Transit and Parking, and Scott Retziaff)knew Mr.Huston to be
the employee and Director of Operations for RCL at the time that proposals were opened and
considered.
Neither First Transit nor Mr. Huston advised RCL of the formal designation of Mr. Huston as
First Transit's proposed General Manager. In fact,the previously-referenced deposition
testimony revealed that First Transit deliberately determined not to include Mr. Huston in its
interview team for the solicitation specifically to avoid RCL learning of his designation in an
explicit effort to"protect"Mr. Huston from any action RCL might take regarding his
employment by them in consequence of his conflict and disloyalty to it. During this same
period,Mr.Huston worked in the normal scope of his responsibilities as an employee of RCL on
RCL's own proposal,to which the First Transit proposal was in direct competition. See
Affidavit of Dan Holter, attached.
The City and its agents and employees did not advise RCL of the facts,either. The City failed to
vet or inquire into the conflict and also failed to challenge the proposer responsibility of First
Transit in consequence of the obvious and known(to them)conflict.
As stated above,RCL learned only for the first time that First Transit had formally designated
Mr. Huston as its proposed General Manager, and did so with his permission, in the course of
depositions taken of Mr.Buharin and Mr. Huston in Minneapolis on Thursday,May 31,2012.
Both First Transit and the City were represented by counsel during those depositions. These
disclosures constitute proof that First Transit and Mr.Huston were in a position of prohibited
conflict against RCL as proposals were prepared by them respectively and then while such
proposals were being considered by the City. The fact that RCL did not know of the conflict is
also clear.
CONFLICT
Organizational conflicts of interest are prohibited under the subject procurement.' See RFP
¶4.41; Code of Ordinances § 13.04 subd. 1;49 C.F.R. § 18.36(c)(1)(v); FTA C 4220.1F Ch.VI
¶2.a.(4).(h). The authorized use of Mr. Huston's name as proposed General Manager by First
Transit while Mr.Huston was not only employed by RCL, but working for it as part of RCL's
internal effort to prepare a competitive proposal vying against,among others,First Transit,
constitutes a breach of his duty of loyalty to RCL and a prohibited organizational conflict of
interest on the part of First Transit. See RFP¶4.41; Code of Ordinances § 13.04 subd. 1; 49
C.F.R. § 18.36(c)(1)(v); FTA C 4220.1F Ch.VI¶2.a.(4).(h). Further,the City acted improperly
• ' The RFP incorporates by reference all FTA terms into the subject procurement. RFP¶ 1.14.
Terry Adkins, City Attorney
June 4,2012 •
Page 4
in failing to avoid,mitigate,or neutralize the conflict by disclosing it, of which it had knowledge.
FTA C 4220.1F Ch. VI¶2.a.(4).(h).2. Any competitive solicitation that defeats the fundamental
purpose of such competition, such as permitting favoritism or collusion, invalidates any resulting
contract,even if initially set forth otherwise in the initial solicitation, and even in the absence of
actual fraud. Village of Excelsior v. F.W. Pearce Corp., 303 Minn. 118, 122, 226 N.W.2d 316,
318-19(1975); Griswold v. County of Ramsey,242 Minn. 529, 536, 65 N.W.2d 647, 652(1954).
DISQUALIFICATION AND EXCLUSION
In consequence of the prohibited conflict of interest,First Transit was—and is—ineligible for an
award of a contract from the City under the subject solicitation.See RFP¶6.3.2.7. Hence,the
award is null and the resulting contract is void.F.W. Pearce Corp.. 303 Minn. at 122,
226 N.W.2d at 318-19;Nielsen v. City of St. Paul,252 Minn. 12, 18-19, 88 N.W.2d 853, 858
(1958)(if a procedure has been followed which emasculates the safeguards of a competitive
solicitation,then the contract let is void,even in the absence of actual or intended fraud);
Griswold, 242 Minn. at 536, 65 N.W.2d at 652.
FAILURE OF DUE DILIGENCE BY THE CITY
The City has a duty to make a determination of proposer responsibility as to every offer it
received under the solicitation. RFP¶7.0. The City failed to make any appropriate inquiry into
the facial conflict in this matter and failed to make a correct determination that First Transit did
not submit a responsible offer. Therefore,the City did not exclude First Transit's proposal in •
this matter, as it was bound to do by law, and it has improperly awarded a contract to First
Transit.Nielsen,252 Minn. at 17, 88 N.W.2d at 857("bids for municipal contracts must
substantially comply with all requirements relative thereto, as contained in statutes,charter
provisions, ordinances, and advertisements.") The contract with First Transit is therefore void as
a matter of law.F.W. Pearce Corp.. 303 Minn. at 122,226 N.W.2d at 318-19;Nielsen,
252 Minn. at 18-19, 88 N.W.2d at 858; Griswold,242 Minn. at 536, 65 N.W.2d at 652.
BIAS,PREJUDICE,AND PREDETERMINATION
The conduct of the City with regard to the serious matters of conflicts of interest and bidder
responsibility in the subject solicitation is additional evidence,beyond the prejudicial statements
which appear in the official minutes of the Common Council referring to RCL's action seeking
an allowance for profit in its current agreement with the City as extortionate, in addition to
Council Member Wojcik's notorious blog publications against RCL and its general manager,
Dan Holter, of animus against RCL and Mr.Holter as well as a preconceived and predetermined
objective of replacing RCL as the fixed route transit provider in Rochester.
EXCLUSIONARY AND DISCRIMINATORY
FTA grants may not be used to support procurements that are exclusionary or discriminatory. 49
U.S.C. § 5325(h). The City's failure to respond to the organizational conflict of interest which
benefited First Transit worked as discrimination against RCL for it was denied a level playing
field. The City's bias,prejudice,and predetermination worked to exclude RCL from •
Terry Adkins, City Attorney
• June 4,2012
Page 5
consideration by the City. The City's putatively-competitive procurement has not been full and
open within the meaning of 49 U.S.C. § 5325(a) and therefore violative of the City's duty to do
so as a recipient of FTA assistance.
CONCLUSION
Because the depositions in which the prohibited procurement activity discussed in this protest
have not yet been transcribed,but also because of the administrative deadline to file this protest,
transcripts of the depositions referred to herein will be provided to supplement this protest as
quickly as they are prepared. The facts have been known all along.to First Transit and to
Mr. Huston,just as they were,or should have been clear to the City which never revealed them
to RCL nor considered them either for the purpose of a proposer responsibility determination or
for any other purpose.
Based on the information contained in this protest,the depositions of Messrs. Buharin and
Huston,and the attached affidavit of Dan Holter,it is respectfully submitted that the selection
and award of a contract to First Transit in this matter violates the evaluation criteria of the
subject procurement and is null and void. Therefore,the award and contract of the City to First
Transit must be rescinded.
• Very Yy yours
%414 /44t, 4C
Gary;A. an Cleve, for
Larkoffman Daly&Lindgren Ltd.
Direct Dial: 952-896-3277
Direct Fax: 952-842-1720
Email: gvancleve@larkinhoffman.com
Enclosure
cc: Dan Holter
Steven A.Diaz, Esq.
Charles Maier,Esq.
1409002.1
•
AFFIDAVIT OF DANIEL HOLTER •
STATE OF MINNESOTA )
:ss.
COUNTY OF OLMSTED )
Daniel Holter,being first duly sworn on oath says:
I. My name is Daniel Holter. I am the general manager of Rochester City Lines,Co.
("Rochester City Lines"). Rochester City Lines is a Minnesota corporation with its principal
place of business at 1825 North Broadway,Rochester,Minnesota 55906.
2. I am an adult resident of the State of Minnesota. I make this affidavit on personal
knowledge and in support of the Rochester City Lines protest of the award to First Transit,Inc.
("First Transit")of a contract for the operation and maintenance of public transit service in the
City of Rochester.
3. Following the receipt by my counsel of First Transit's proposal from the City's
counsel last week,wluch listed Randy as First Transit's General Manager,and the taking of
•
Randy's deposition on May 31,2012,I first became aware of Randy's extensive involvement
with First Transit. It was at that time that I first learned that Randy had given his permission to
First Transit to have his name be part of the First Transit proposal as its General Manager;and
that Randy had been offered the position of General Manager should the City award the contract
to First Transit.
4. In February 2012,Randy was working on and preparing the proposal of Rochester
City Lines. During this time period,neither Randy nor anyone else told me that Randy was
working with First Transit at the same time he was preparing the proposal for Rochester City
Lines. Randy had full access to all of the Rochester City Lines proprietary information being
•
collected, analyzed,edited,and otherwise prepared for inclusion in the Rochester City Lines
proposal.
5. In early March 2012,following submission of proposals and interviews by the
City of Rochester,Randy assured me that he was not intending to leave Rochester City Lines.
Then on April 3,2012,Randy tendered his resign/ioo�Rochester City Lines.
x,
Daniel"Holter
Subscribed and sworn to before me
this 4th day of June,2012.
Notary P He
,~ TAMARA L. M SING
3 ° Notary Public-Minnesota
IAY Commiesion E:piras,!vn 31,2014
• VWVVNVvrWMNYWNVYJv�
1408940.1
. 2.
City ofRochester
CityAchninistratoesOfficeo
Memo
To: Mayor and City Council
From: Stevan E. Kvenvoldt��
Date: April 19, 2012
Subject: RCL Protest of City Council's Contract Award for Bus Transit Services
Attached for your review and information is a letter from Rochester City Lines attorney,
Steven Diaz, requesting that the City rescind the award of the bus service contract to First
Transit and either award the contract to Rochester City Lines or redo the competitive bid
process.
Also attached is a letter dated April 5, 2012, from Mr. Diaz to Terry Adkins requesting the •
same action as referenced above and Terry's response to Mr. Diaz rejecting Mr. Diaz's
request.
This mater will be placed on the May 7, 2012, City council agenda for your consideration.
will be recommending that the Mayor and City Council concur with Terry's reasoning
rejecting the appeal presented by Mr. Diaz on behalf of Rochester City Lines.
Enclosure
c: T. Adkins
R. Freese
T. Knauer
Y '
• Law Office
STTEVC1,\3 A. DR11L
2300 M Street NW,Suite 800
Washington, D.C. 20037
Telephone: 202-416-1633
Electronic Mail: sdiaz@diazlaw.net
April 17,2012
By Hand Delivery
Stevan Kvenvold
City Administrator
Rochester City Hall
2014th Street SE
Rochester, MN 55904
• Rochester City Council
2014th Street SE
Rochester, MN 55904
Re: Further Protest of City Council's Contract Award for Bus Transit Services
Dear Mr. Kvenvold and the Rochester City Council:
This letter serves as Rochester City Line's("RCL's")further protest of the Rochester City Council's award
and announcement on April 2, 2012,and its proposed selection of First Transit as the provider of bus
transit services in the City of Rochester. RCL appeals for all the same reasons articulated in its April 5,
2012 letter to City Attorney Terry Adkins,which is attached, and for such other and further reasons as
set forth herein. As fully articulated in the Appeal of April 5,2012,the competitive procurement for this
contract was the product of a biased,outcome driven,and fundamentally unfair evaluation and
selection process, rendering any contract awarded to First Transit invalid.
The City has failed to respond substantively to RCL's claims or to justify the fundamentally flawed
procurement. Instead,the City seeks to avoid responsibility through unfounded technical procedural
claims. Rochester City Attorney Terry Adkins responded to RCL's protest in a letter dated April 12,2012,
which is attached. Rather than defend the procurement by demonstrating that the process was fair and
impartial, as is the City's burden,the City instead claims that RCL has failed to present sufficient
• evidence of unfairness. This is disingenuous at best, as the City has refused to provide the information
requested by RCL to substantiate its claim further, namely,the evaluation instructions,scoring sheets
Stevan Kvenvold and Page 2 April 17, 2012
Rochester City Council •
from members of the evaluation committee, and related documents. At the same time the City chides
RCL for failure to provide specific evidence contained in the very documents in the City's own custody
which it refused to disclose. The City cannot withhold evidence and then deny RCL's complaints and
protest for"failure"to provide that very evidence: this is a clear abuse of City power.
In summarily rejecting RCL's appeal,the City relies primarily on an April 2,2012 memorandum from the
city attorney to the Mayor and Common Council to justify the City's actions. The city attorney's
memorandum is, however,insufficient to cure the fundamentally flawed and biased procurement
process. Once again,the City sidesteps the issue by stating that RCL"presented no information
indicating the Council failed to follow the guidance provided in this memo,"thereby attempting to lay
blame on RCL instead of acknowledging the City's own error and unfairness. Moreover,the city
attorney's statement that the memorandum "directed [the Council]to not consider any other matters"
is simply inaccurate. Rather than advise the Council that it is legally impermissible to consider whether a
proposer has exercised its free speech rights or sought to enforce its legal rights in a court of law,as is
required,the city attorney simply stated that it was his "recommendation"that the Council not consider
these things,thereby incorrectly implying that such considerations,though not"recommended," are
allowable. This"recommendation" was accompanied by a description of actions applicable only to RCL,
thereby highlighting(if not suggesting)the negative inferences identified by the city attorney. At best,
this memorandum suggests as a mere alternative approach the actually mandatory source evaluation
and selection criteria and the requirements of Due Process in a manner that fails to mitigate the
fundamentally unfair nature of the procurement. The City has failed to rebut RCL's presented evidence
of a biased procurement process, or to disclose or consider the evidence in its own sole and exclusive
control.
While RCL presented the City with numerous substantive objections to the procurement process,the
City has failed to address these objections in any meaningful way and instead relies on wordplay and
technical procedural objections in violation of RCL's right to a full and fair consideration of its protest.
Therefore, it is necessary to briefly restate the grounds for RCL's protest here.
First, half of the purportedly impartial evaluation committee are City officials who have a history with
RCL and its operation of regular route transit services in Rochester. The City at no time notified RCL of
this fact so that RCL could seek alternative references. Further, none of the persons in a position to
provide operating references to RCL and who were on the committee recused themselves in light of
proffered reference citations, instead sitting on their hands allowing the untrue and unfair appearance
that there are no references for the service history of RCL. These same officials have been directly
involved in the City planned ouster of RCL from its own transit system. These and others on the
committee have a direct bias and conflict in that they have stated the City's intent to remove RCL from
transit service in Rochester but did not recuse themselves in consequence of that bias and material
predisposition. These facts are admitted in Mr.Adkins letter of April 12, 2012 that at least one selection
committee member, unknown by RCL to be on the committee at the time it submitted references, "did
not provide a reference, [and therefore] a conflict of interest did not occur." Mr. Adkins does not claim
that such person(s)also recused themselves, or that RCL was, in consequence of the timely undisclosed
conflict,afforded a fair opportunity to provide other references. Such conduct is prejudicial to RCL and .
taints the fairness of the entire procurement.
• Stevan Kvenvold and Page 3 April 17, 2012
Rochester City Council
Second,the City Council's bias against RCL is established by Council Member Michael Wojcik's public
statements of personal animus against RCL and its General Manager Dan Holter. Further, Mr.Wojcik
has publicly stated that the entire Council shares his bias and predisposition against RCL and Mr. Holter.
Neither Mr.Wojcik nor any other member of the Council recused themselves from participating in the
making of the subject award.
Third,the evaluation process itself and the selection committee's final report confirm that the
procurement and contract award were fundamentally unfair. RCL was scored last in categories that
included evaluation of its "experience with providing Public Transit Fixed Route Service in areas of
similar size and scope to the City," and "experience with operating and maintaining a fleet of similar
size," despite the fact that RCL has provided, operated, and maintained the transit system for the past
45-plus years in a manner often and publically lauded by City officials and others. RCL was also scored
next-to-last in the "Transition Plan" category,which included evaluation of a proposer's startup plan for
taking over the transit service (implicitly from RCL)and its plans for recruiting and training staff--the
subject RFP explicitly calling for the hiring of existing staff selected and trained by RCL. RCL was also
scored last under the "interviews with Key Management Staff"factor. This inherently subjective factor
was given undue weight and invited partiality. Biased evaluation under this factor is evidenced by the
undisputed disinterest and disrespect by selection committee members during RCL's interview,openly
• mocking RCL representatives as they spoke (for example, rolling their eyes and by other non-verbal
conduct).
Fourth,as discussed above,the City's evaluation committee failed to disclose in a timely manner the
inherent conflicts of interest by members of the committee and failed to afford RCL the opportunity to
provide alternative references. There is no justification for the failure to disclose such conflicts,for
failing to cure them, or for secretly disallowing only RCL from presenting untainted references(keeping
in mind that the membership of the selection committee was undisclosed until after its work had been
completed).
Finally,the "Financial Ability"factor inherently and unfairly skewed the evaluation against RCL, not
because of any rational connection to its ability to perform under the contract, but explicitly,as
confirmed by the city attorney in his letter of April 12, 2012, because of the biased predisposition of the
City to firms of a certain size (in effect,any company larger than RCL or any other Minnesota-organized
and headquartered company). The city attorney's response is that"the financial ability of a prospective
vendor to float costs between City payments is critical to sustained or uninterrupted provision of public
transit services." (April 12,2012 letter, pp.7-8). The city attorney continues in this vein,stating a clear
admission where he writes that RCL"did not excel sufficiently to overcome the inherent advantages
characteristic of these larger firms." (April 12,2012 letter, PA,emphasis added). After 45 years of
continuous and successful operation of fixed route public transit in Rochester,this factor was clearly
used as a pretext, and in a preemptive fashion,arbitrarily to exclude RCL from serious consideration for
award, and to discriminate against it.
•
Stevan Kvenvold and Page 4 April 17, 2012 •
Rochester City Council
The Cityit has failed to justify, explain, or rebut any of the above affirmative evidence. Moreover,the
City's overall response to RCL's claim that it received biased and unsupportable low scores from the
evaluation committee is that it cannot discuss these claims because the actual scores given by
the evaluation committee members are not public. The City,which itself has this evidence in its own
files, has obviously failed to consider it, and proceeds upon the circular argument that because it refuses
to disclose such evidence, RCL cannot provide it and the protest must therefore be denied. Such
tortured logic is mere evidence of the bias and predisposition which have guided the subject
procurement and of the fundamental unfairness of the manner in which the procurement has been
administered.
For all of the reasons stated in this letter,as well as those set forth in RCL's April 5,2012 initial protest to
City Attorney Adkins (whose own conflict in giving legal advice on the appeal of his decision to superior
City authorities is patent), RCL requests that the City rescind its selection and award of a contract to First
Transit and either award the contract to RCL or cure the fundamentally flawed selection process by
allowing for a fair and unbiased procurement.
Respectfully,
to nA. Diaz
Enclosures
cc: Dan Holter, RCL
Terry Adkins, City Attorney
•
p4.tLUCIhR
HESTER•MINN£'SO
• ALL-AA3EIIIG1t1TY
u
•.... ... .. . .5
�T1=b.AUGUSS•
TERRY L ADKINS
City Attorney
April 12, 2012 201 4th Street SE,Room 247
Rochester,MN 55904-3780
(507)328-2100
Steven A. Diaz, Esq. FAX#(507)328-2-727
2300 M Street N.W.
Suite 800
Washington, D.C. 20037
Dear Mr. Diaz:
Thank you.for your April 5, 2012, letter labeled as Rochester City Lines' ("RCL's")
protest of the Rochester City Council's award announcement on April 2, 2012,
and its proposed selection of First Transit as the provider of bus transit services
in the City of Rochester. I received this document on April 5, 2012, and am
responding to you on behalf of the City of Rochester as required by Section 5.01
• of the City's Request for Proposals.
RCL's protest focuses on your claim that the City's process "was marred by a
biased and unfair evaluation and selection process, rendering any contract
awarded to First Transit invalid." RCL also states "that the selection of First
Transit was the product of a biased, outcome-driven, and fundamentally unfair
selection process." RCL lists several grounds in support of your claims. I will
individually address each of the complained-of grounds mentioned in your letter.
First, RCL states that half of the evaluation committee members were City
officials "who have a history with RCL and have been a part of the City's
contentious relationship with RCL since the City issued the request for proposals
(RFP)." RCL suggests these City employees wanted to replace RCL with
another operator in conjunction with their effort to build a new maintenance
facility. RCL also suggests that the selection of these City employees for the
evaluation committee established an internal bias and predisposition that
infected the entire evaluation process."
The facts indicate the two parties had a decades-long civil relationship. The
current issue arose only because of the findings contained in the City's most
recent Triennial Review, not as a result of any City employee or official seeking
to oust RCL as the operator of the City's publicly-funded transit system.
The fact that the City constructed a maintenance facility is consistent with the
• practices of virtually every other municipal transit operator in the United States.
Construction of maintenance facilities, using FTA capital funds, will ultimately
An EqualOpporhunity Employer
work to lower the costs paid to transit operators thereby providing benefits to •
customers and taxpayers alike. The mere fact that Department of Public Works
employees supported a City decision to construct this facility simply represents
good government practice. RCL has submitted no evidence to suggest this
action was discriminatory to RCL.
You attached to your letter comments made by. the City Attorney. Those
comments merely affirmed RCL's contention that it could operate a parallel
transit system. He stated that the City does maintain authority to approve routes
and schedules, and gave an example about how two separate transit systems
might be regulated to protect the public's health, safety and welfare. But, he said
nothing indicating an "intent to put RCL out of business" or to "prevent RCL from
continuing to operate."
Under 49 U.S.C. § 53250)(2)(C), the City is obligated to consider the past
performance of vendors submitting bids or proposals under transit procurements.
Other than making a general and subjective statement that a contentious
relationship existed at the time of evaluation, RCL has offered no evidence
indicating the City/RCL relationship materially impacted RCL's ability to compete
for the contract.
More importantly, at the time it considered this matter at its Committee of the
Whole meeting and its formal Council meeting on April 2, 2012, the Council had
before it a memo from the City Attorney. That memo, a copy of which is
attached, instructed the Council to base its decision solely upon the responses to .
the RFP, the outside consultant's work, and the Evaluation Committee's scoring
and conclusions based upon the evaluation criteria. The Council was specifically
directed to not consider any other matters beyond this scope. You have
presented no information indicating the Council failed to follow the guidance
provided in this memo.
Second, RCL claims that the City employees who made up half of the Evaluation
Committee were biased against RCL, were pre-disposed to oust RCL and to put
it out of business.
In order to completely respond to this claim, I must discuss the actual scores
given to the four proposals by City employee Evaluation Committee members as
compared to non-City employee Evaluation Committee members, as well as the
comments of all of the Committee members. However, 1 cannot provide this
information at this time as such data remains nonpublic until a City completes the
negotiation of a contract with the selected vendor. Minn. Stat. §13.591, subd.
3(b)
The facts in the public record simply do not support RCL's claim of bias in the
evaluation. Four of the eight-member Evaluation Committee had no connection
to the City of Rochester at all. RCL has provided no information that even hints
i 2 •
• the four non-City members of the Evaluation Committee were biased or
prejudiced against RCL.
More importantly, at the time it considered this matter at its Committee of the
Whole meeting and its formal Council meeting on April 2, 2012, the Council had
before it a memo from the City Attorney. That memo, a copy of which is
attached, instructed the Council to base its decision solely upon the responses to
the RFP, the outside consultant's work, and the Evaluation Committee's scoring
and conclusions based upon the evaluation criteria. The Council was specifically
directed to not consider any other matters beyond this scope. You have
presented no information indicating the Council failed to follow the guidance
provided in this memo.
Third, RCL cites individual comments of a member of the Rochester Common
Council and concludes (1) there must have been improper and .exclusive
contacts and negotiations with the ultimate contract awardee; (2) the Council had
a "grudge" with RCL; and (3) there exists personal animus between the Council
and the RCL General Manager. Yet, I could find nothing in your letter that
supports any of these claims.
As to comments that may have been made by one member of the seven-member
Common Council, the law in Minnesota is quite clear. The comments of one
cannot be attributed to the whole.
• "jE]ven if members of the Common Council, the city attorney, and
the city administrator made the statements attributed to them by the
affiants, such statements would not be evidence of the intent of the
Common Council as a whole."
Queen City Const. Inc. v. City of Rochester, 604 N.W.2d 368, 377 (Minn. Ct.
App. 1999) review denied, (Mar. 14, 2000). More importantly, in Minnesota the
courts will not inquire of the motives of legislative bodies in enacting any
legislation.
Legislative acts would rest on insecure ground, indeed, if
admissions of the individual legislators that the attainment of a
nornpermissible or unlawful end was the motive and purpose in
enacting a law is to be received in evidence and be considered by
the courts when called to pass on its validity. ... but manifestly it
ought to be beyond the power of one who has been intrusted (sic]
with authority to enact a law to impeach the same by any
subsequent statement of secret or avowed motives entertained at
the time of its passage that would work its invalidity.
Arens v. Village of Rogers, 61 N.W.2d 508, 518 (Minn. 1953) quoting Higgins v.
Lacroix, 119 Minn. 145, 148 (1912).
• 3
Fourth, RCL states that the evaluation committee's technical score for RCL does •
not reflect RCL's 45-plus year history of providing, operating and maintaining a
transit system as well as RCL's "numerous accolades and testimonials."
The facts indicate the tenure, testimonials, and 2003 award are not in dispute.
RCL is qualified to operate the City's public transit service. The fact that a larger,
national transit management company outscored RCL in the minds of the
Evaluation Committee was based on a number of elements contained in the
successful proposal (as taken from the Rochester Common Council Committee
of the Whole Agenda for April 2, 2012):
1. Superiority in the technical proposal in terms of fully
addressing all operation elements;
2. Strong corporate support that adds additional expertise to
local managerial capabilities,
3. Extensive Minnesota experience with more management
contracts in the state than other offerors;
4. Outstanding Intelligent Transportation System (ITS)
deployment experience;
5. Only vendor with experience with the City's asset
management software; •
6. Excellent strategies for transition and building community
goodwill; and
7: Use of performance benchmarks in all areas of operations
and maintenance.
It is axiomatic that when a local transportation company competes against larger,
national management companies, it is prudent that the local company excel by
demonstrating equivalent or superior management, local knowledge, community
experience, excellent working relationships with governing boards, lower
overhead and cost structure, and superior pricing. While the RCL proposal was
clearly-a well-constructed effort, the firm did not excel sufficiently to overcome the
inherent advantages characteristic of these larger firms.
To suggest bias simply because a competitor submitted a superior proposal is
disingenuous to the procurement process. Simply put, RCL did a credible job
indicating that it could manage the transit system comparable to the status quo.
A competitor, however, demonstrated that it would operate the service with
greater initiative, superior oversight, and would work to better the operational
performance of the system.
4 •
• Fifth, RCL states that the Evaluation Committee's score for RCL in the
"Transition Plan" category is "simply inexplicable" as RCL is the incumbent
operator and "needs no startup plan."
In order to fully respond to this claim, 1 must discuss the actual scores given to
the four proposals by City employee Evaluation Committee members as
compared to non-City employee Evaluation Committee members. I cannot
provide this information at this time as such data remain nonpublic until a City
completes the negotiation of a contract with the selected vendor. Minn. Stat.
§13.591, subd. 3(b).
Sixth, RCL states that the "Interviews with Key Management StafP factor was
inherently subjective, invited partiality, and was given undue weight.
The facts indicate that the FTA does not dictate evaluation factors to be used in a
competitive proposal other than that established by the Common Rule (49 CFR
part 18). The City may adopt criteria it deems most important to the selection
process. Additionally, the City may assign any weight it desires in evaluating the
factor. FTA only requires that the City identify all evaluation factors and their
relative importance. Numerical or percentage ratings or weights do not even
have to be disclosed. Thus, there is no violation of FTA standards in the City's
use of this criterion or its relative weight.
• In order to further respond to this claim, I must discuss the actual scores given to
the four proposals by - City employee Evaluation Committee members as
compared to non-City employee Evaluation Committee members, as well as the
comments of all of the Committee members. However, I cannot provide this
information at this time as such data remain nonpublic until a City completes the
negotiation of a contract with the selected vendor. Minn. Stat. §13.591, subd.
3(b).
I can tell you that,, if one assumes this factor is a subjective one, the FTA
guidelines tell us the factor is nonetheless appropriate for consideration. Section
4.5.2 of the FTA's Best Practices Procurement Manual states, in part, as follows:
Some agencies have employed a quantitative approach of
assigning scores to both technical and cost proposals, thereby
compelling a source selection that is basically mathematically
derived. Proponents of this method usually argue it is the most
"objective," and therefore the fairest, approach to determining a
winner. On closer examination, however, all approaches are to one
degree or another, subjective.The decision regarding what score to
assign any given factor is subjective, and any formulas employed
after the initial scoring cannot make the process an "objective" one.
Further, grantees must be allowed the flexibility of making sound,
factually based decisions that are in their agency's best interests.
We also believe that any approach that assigns a predetermined
. 5
numerical weight to price, and then seeks to"score" price.proposals
d factor that score into a final overall numerical grade to •
an
automatically determine contract award, is a mistake. Rather, we
believe that agencies should evaluate the prices offered but not
score the price proposals. Prices should be evaluated and brought
along side the technical proposal scores in order to make the
necessary tradeoff decisions as to which proposal represents the
best overall value to the agency. Agencies should carefully
consider the technical merits of the competitors and the price
differentials to see if a higher price proposal warrants the award
.based on the benefits it offers to the agency as compared to a
lower price proposal. This its a subjective decision-making, tradeoff
process.
Seventh, RCL states the "Past Performance-Reference Checks" factor was
"fundamentally unfair and prejudicial to RCL."
The facts indicate the City solicited only.one reference per form. Respite that
fact, RCL listed two City employees as references on one form. The Evaluation
Committee and Technical Assistance Consultant considered that as only one
reference. When he learned he was listed as a reference, the affected City
employee contacted the City Attorney for advice. In order to comply with the
City's. Code of Ethics and in light of the City employee's involvement in pending
litigation between the City and RCL, the City Attorney advised the City employee •
to not participate in the reference interview process. Because this individual did
not provide a reference, a conflict of interest did not occur.
More importantly, it is the proposer's responsibility in naming a reference to
ensure that individual is able and willing to participate as such. By naming a city
employee who is heavily involved in public transit issues without first determining
the employee's ability to participate simultaneously as a reference and as a city
employee engaged in public transit matters including the review of the proposals
submitted in response to this RFP, RCL took the chance this reference would not
be able to participate as such. RCL's failure to conduct its due diligence as to
this particular reference is RCL's responsibility; not the Evaluation Committee's
or the City's responsibility.
Eighth, RCL states the Financial Ability" factor demonstrates that the evaluation
was skewed against RCL and deprived RCL of an equal opportunity to bid."
Initially, it should be noted that RCL did not ask for any relief from this RFP
provision during the pre-proposal conference, or during any subsequent question
and answer period prior to bid' submission. RCL's opportunity to protest the
inclusion of this provision within the RFP occurred prior to the proposal
submission deadline. Because RCL did not do so, it has waived that claim and it
cannot be made following the award of a contract.
6 •
• As for the merits of RCL's claim, the facts indicate the City utilized a financial
ability as an evaluation factor because it is required by law to do so. FTA Circular
4220.1 F, Chapter IV, paragraph 2a states:
In addition to the Common Grant Rules that require contract
awards be made only to responsible contractors, Federal transit law
at 49 U.S.C. Section 53256) limits third party contractor awards to
those contractors capable of successfully performing under the
terms and conditions of the proposed contract. Before selecting a
contractor for award, the recipient must consider such matters as
contractor integrity, compliance with public policy, record of past
performance, and financial and technical resources (emphasis
added).
Additionally, the Federal Mass Transportation Act, as amended (49 U.S.C. §
53250)(2)(D)), specifically requires that recipients of FTA funds shall consider,
before making an award to a contractor, the contractor's financial and technical
resources to perform the contract. Thus, the imposition of financial responsibility
criteria in this procurement is a matter of law rather than an element created by
the City of Rochester to hinder RCL's competitive ability in the procurement.
Admittedly, both FTA Circular 4220.1 F and the Best Practices Procurement
Manual contain little guidance on how to determine financial responsibility.
• However, use.of a "Yes/No" or "Pass/Fail" evaluation method for this criterion
was not arbitrary. FTA Circular 4220.1 F, Chapter 11, paragraph 3b states that,
while Federal Acquisition Regulations (FAR) do not apply to FTA procurements,
"in the absence of other guidance, FAR standards may prove useful if the
recipient's circumstances are suitable. for application of the specific FAR
provision under consideration."
FAR 9.104-1(a) echoes FTA requirements in this regard and is supplemented by
Best Practices for Collecting and Using Current and Past Performance
Information. This publication states:
Responsibility is a broad concept that addresses whether an offeror
has the capability to perform a particular contract based upon an
analysis of many areas including financial resources, operational
controls, technical skills, quality assurances, compliance with
Government laws, and past performance. These surveys and
evaluations provide a "yes/no," "pass/fail," or "go/no-go" answer to
the questions, "Can the offeror do the work?" to help you determine
whether the offeror is responsible.
The Evaluation Committee's process in assessing this criterion was consistent
with Federal guidance on the subject. Since FTA and the City operates its transit
program on a "cost-reimbursement" basis, the financial ability of a prospective
vendor to float costs between City payments is critical to sustained or
7
uninterrupted provision of public transit services (e.g., performance under this •
� p p
contract).
It is important to note that RCL performance under this criterion resulted from its
unilateral decision to disregard or ignore the RFP, and substitute its own
judgment in the preparation of its proposal response as opposed to some
concerted effort on the part of the City to ensure RCL could not win the award,
RCL unilaterally determined its status as the incumbent was sufficient to ignore
the City's RFP requirement to submit a letter indicating it could secure a
performance bond. if the City were committed to .see that RCL did not receive
the contract award, as RCL has repeatedly claimed, it would have jumped on this
failure to comply and ruled RCL's proposal as non-responsive. Instead, the City
viewed the failure as a minor irregularity and, accordingly, waived it as such. At
the vendor interviews, RCL was given the opportunity to correct this error and the
City subsequently received the necessary letter.
Additionally, RCL had nearly two months following the release of the RFP to
remedy any shortcomings in its working capital. Nothing in the City's RFP
precluded Rochester City Lines from demonstrating sufficient financial ability
pursuant to the requirements of the RFP. RCL could have obtained a line of
credit more than equal to the minimal requirements of the RFP (the City believes
the company certainly has assets in the form of real property and other company
owned rolling stock to serve as collateral). Alternatively, RCL could have offered
tangible evidence that the current economic conditions or lack of suitable •
collateral precluded the firm from obtaining such a line of credit. It took neither
step. Instead, RCL simply cited its status as the incumbent operator, noted its
long history as the incumbent operator, and unilaterally determined it need not
meet this requirement.
The above facts show that RCL has failed to demonstrate that inclusion of
financial ability as an evaluation criterion, mandated by Federal transit law,
hindered its ability to compete.
Ninth, RCL states the use of deliberately and arbitrarily exclusionary and
discriminatory requirements is a violation of FTA Circular 4220.1 F, Chapter VI,
paragraph (2)(4). Your letter does not cite the specific violations.
I assume RCL meant to cite FTA Circular 4220.1 F, Chapter VI, paragraph 2a(4)
which outlines ten conditions that are illustrative of prohibited solicitation
requirements that unduly restrict competition.
The City received five proposals, four of which were deemed responsive. Based
on marketplace conditions for transit management, operations, and maintenance
service contracts, and on the procurement experience of other municipalities
soliciting similar services, and on the fact that no protests were filed prior to the
proposal due date regarding the City's RFP's specifications, competition is
deemed adequate and the specifications were not unduly restrictive.
8 •
In response to the Circular's provisions, the City has demonstrated:
It has previously established that it did not establish
unreasonable business requirements for preparing a
proposal.
• It did not impose unnecessary experience
requirements.
• It did not pre-qualify offerors and, therefore, did not
limit competition by imposing conditions prohibited by
the Circular.
• It did not.place the selected awardee on a retainer
contract.
• It did not impose excessive bonding requirements.
• It did not include brand name only type specifications.
• It did not include state or local geographic
• preferences (prohibited by the Circular).
• It did not allow organizational conflicts of interest to
occur as prohibited by the Common Rule.
* It did not support or acquiesce to noncompetitive
pricing practices between firms or between affiliated
companies.
• It did not engage in any arbitrary actions in its
solicitation and evaluation process
Thus, in the absence of specific claims, I can find no support for RCL's claim that
the City violated FTA Circular 4220.1 F in the conduct of this procurement.
In summary, the facts I have gathered in response to RCL's protest indicate the
following:
• Suggestions of bias and prejudice against RCL are
not supported by scoring data that is currently public
data;
di Claims of discriminatory evaluation are not supported
by factual evidence. The results simply reflect the
9
outcome of the competitive procurement process and •
superior competition;
• There are errors of fact in your claims regarding
improper contact with the selected firm prior to award
and how the Committee evaluated Financial Ability;
• RCL's performance in the evaluation process resulted
from its own mistakes in preparing its proposal
including the failure to verify the legal availability of
references prior to proposal submission and outright
dismissal of key RFP requirements. These errors
contributed to RCL's lower scores as compared to its
competitors; not bias reflected by Evaluation
Committee members; and,
• The City's RFP and evaluation process complied with
its RFP specifications, federal law and FTA Circular
4220.1 F.
For the reasons stated herein, RCL has failed to establish a basis for any of the
claims asserted in its protest. Therefore, I find RCL's protest of the Rochester
City Council's award announcement on April 2, 2012, and its proposed selection
of First Transit as the provider of bus transit services in the City of Rochester to
be without merit and do hereby reject it. •
Sincerely,
TERR L.'ADkK I N
Rochester City Attorney
TLA:jlh
Cc: Mayor and Common Council
Stevan E. Kvenvold
Richard Freese
10
l OFFICE OF THE CITY ATTORNEY
MEMORANDUM
DATE: March 14, 2012
TO: Mayor and'Common Council
FROM: Terry L.Adkins—Rochester City Attorney I Z0
SUBJECT: Selection of an Operator of the Publicly-Funded Bus Service
The purpose of this memo is to provide legal direction to the Mayor and Council•in the
selection of a firm to contract with the City to provide operating personnel to utilize.City-owned
buses and other City-owned facilities to provide public transportation regular route' bus
services in Rochester.
In making this decision, you are riot evaluating or weighing evidence, as you would in a public
hearing. The Request for Proposal (RFP) sets .forth performance and cost proposal
• ;;quirements, contractual terms and conditions, administrative requirements, criteria which the
City will use in evaluating proposals submitted in response to the RFP, and other important
information. In exercising your discretion as the Mayor and Council, you should review the
responses to the RFP, the consultants' work, and the Evaluation Committee's scoring and
conclusions based on the evaluation criteria. Ultimately, you should base your decision on the
RFP's requirements and terms.
It is my recommendation that you not give any consideration to whether any firm submitting a
response has taken a position in negotiations with the City (or with another city), or pursued a
particular strategy related to such negotiations. 1 also recommend that you not give any
consideration to whether any firm submitting a response, or its owners or representatives, has
exercised its rights to free speech (or the contents of that speech). And, I also recommend
that you do not give any consideration to lawsuits or claims filed or threatened by any of those
firms, or the actions taken by such a firm in that lawsuit. If such a firm has filed a lawsuit, do
not hold that fact against that firm, and do not give that firm any preference because it has
done so.
Even if you. disagree with something that was said by or on behalf of such a firm, your focus
should be on the responses to the RFP submitted to the City.
LAW OFFICE
STEVEN A. DIAZ
April 5,2012 •
Terry Adkins
City Attorney
Rochester City Hall
201 4th Street SE
Rochester,MN 55904
tadkins@rochestermn.gov
Re: Protest of City Council's Contract Award for Bus Transit Service
Dear Mr.Adkins:
This letter serves as Rochester City Line's("RCL's")protest of the Rochester City Council's
award announcement on April 2,2012,and its proposed selection of First Transit as the provider
of bus transit services in the City of Rochester.
The competitive procurement for this contract was marred by a biased and unfair evaluation and
selection process,rendering any contract awarded to First Transit invalid. The Minnesota
Supreme Court has recognized that"[a] fundamental purpose of competitive bidding is to
deprive or limit the discretion of contract-making officials in the areas which are susceptible to
such abuses as fraud,favoritism,improvidence, and extravagance." Griswold v. Ramsey County,
65 N.W.2d 647,652 242 Mi.m1529, 536 (1954). Any competitive bidding procedure that
defeats this fundamental purpose invalidates the contract. Id. The competitive procurement •
process must"promote honesty, economy, and aboveboard dealing", as well as provide
prospective contractors with"an equal opportunity to bid." Transit Team, Inc. v. Metro. Council,
679 N.W.2d 390,396 (Minn. Ct.App.2004). Minnesota courts will "scrupulously guard the
competitive bidding process." Lovering-Johnson, Inc. v. City of Prior Lake, 558 N.W.2d 499,
503 (Minn. Ct.App. 1997). A public contract will be invalidated if officials acted in an
arbitrary, capricious,or unreasonable manner. Griswold, 65 N.W.2d at 651-52.
Here,the bid evaluation process,the fmal report of the evaluation committee,the City Council's
actions,and subsequent statements by City officials,all demonstrate that the selection of First
Transit was the product of a biased, outcome-driven,and fundamentally unfair selection process.
The City Council's decision was thus patently unreasonable and the product of an unlawful use
of local regulatory powers to compete with an existing private transit provider. Therefore, it
must be rescinded.
2300 M STREET NW,SuiTE 800 • WASHINGTON,D.C.20037
TELEPHONE: (202)416.1633 • Fax:(202)833-3843 9 EMAIL:SDIAZ@DIAZLAW.NET
•
Half of the members of the evaluation committee were City officials who have a history with
RCL and have been a part of the City's contentious relationship with RCL since the City issued
the request for proposals (RFP). The same officials that were involved in the City's ouster of
RCL from its own transit system and the subsequent letting of a contract for others to operate the
system,were then charged with evaluating RCL's bid to continue to operate the system. These
were the very city officials who prepared for the predetermined substitution of RCL with another
transit operator by spending millions of public funds to recreate administrative office, dispatch,
garage,parking and yard,and dispatching facilities. These officials included Richard Freese,
Anthony Knauer,and Scott Retzloff. The selection of these individuals is plainly contrary to the
purportedly impartial nature of the evaluation committee. City officials—comprising half of the
evaluation committee—simply cannot be considered impartial. Their selection established an
internal bias and predisposition that infected the entire evaluation process. The City's fixed
intent to put RCL out of business is reflected in the City's threat to use its regulatory powers to
prevent RCL from continuing to operate. For example, see public statements made by the
Rochester City Attorney such as the attached press report.
The City's bias and predisposition against RCL is farther shown by the Common Council,which
is responsible for final approval and selection of a proposed contractor. Council Member
Michael Wojcik publicly alleged,before the RFP was even issued,that"RCL stole$140,000
from taxpayers", and further stated that"[e]veryone on the city council was disgusted by the
[six-month contract awarded to RCL in December 2011] and looked forward to awarding a new
• contract through open competition beginning July 1,2012." Mr.Wojcik also stated that the
Council,prior to any contract award,"secured an understanding with First Transit that they
would recognize the existing ATU organization and would be offering positions to existing
employees first." Finally,Mr. Wojcik has stated that"[t]here is no love lost between me and
Dan Holter, given his lobbying antics,belief that he is `entitled' to a profit,and his holding us
hostage for that profit." (See Mr.Wojcik's blog entries dated December 22,2011 and April 2,
2012, copies of which are attached). These statements indicate that: (1)there were improper
exclusive contacts and negotiations with the ultimate contract awardee prior to the final
selection; (2)the Council has a grudge over an"extorted"allowance for any profit in the current
subsidy contract with RCL; and(3)there is personal animus between the Council and Dan
Holter,RCL's General Manager.
The obvious appearance of impropriety created by all of the above facts is sufficient to invalidate
the City's contract award. See Telephone Assocs. v. St. Louis County Bd., 364 N.W.2d 378, 382
(Minn. 1985)(holding that mere creation of an opportunity for fraud or collusion cannot be
tolerated even when there is no evidence of it); Coller v. City of St. Paul,223 Minn.376, 389,26
N.W.2d 835, 842(1947) (noting that although there was no evidence of fraud or wrongdoing,it
was unnecessary to make such a showing). Furthermore, it is improper for a public entity
exercising regulatory powers to use such power to its own advantage in competition with a pre-
existing transit operator.
Moreover,in addition to the makeup of the evaluation committee,the evaluation process itself
and the committee's final report confirms that the contract award is the product of bias,
predetermination,and fundamental unfairness. The committee considered four evaluation
• factors relating to the technical proposals: technical,interviews with key management staff,past
2
�! performance (reference checks), and financial ability. Each of these evaluation factors was used •
artificially and unfairly to skew the outcome against RCL,thus depriving RCL of an equal
opportunity to bid.
First,the committee's scores in the technical factor,which
e technicalmade
the largest
RCL scored Bast f
total points, demonstrate the bias against RCL. Under
overall,including last in qualifications,proposed management and operations plan,and proposed
maintenance and equipment plan. RCL scored next-to-last in the transition plan category. As set
forth in the RFP,the most important criteria to be considered in the "Qualifications"category are
the bidder's"experience with providing Public Transit Fixed Route Service of similar size and
scope to the City," and"experience with operating and maintaining a fleet of similar size." RCL
has provided,operated,and maintained the transit system for the past 45-plus years. RCL has
received numerous accolades and testimonials for its service. In fact,in 2003,RCL was awarded
the State of Minnesota Transit System of the year award. Its qualifications to operate the same
transit system that it has already been operating are well established. RCL's scores in this
category demonstrate the outcome-driven nature of the committee's evaluation. These scores are
also entirely inconsistent with the numerous public statements made by City officials,including
Mr.Freese (for example,those comments recorded by the City itself during the pre-bid
conference on the RFP, and statements made before Judge Chase by the Rochester City Attorney
litigation), attesting to the consistently high level of
in open court during hearings in pending
service RCL has always provided.
The fact that the committee scored RCL next-to-last in the"Transition Plan"category is simply
inexplicable. The RFP specifies that this category includes consideration of a bidder's"plan for •
taking over the City's'transit service—operations and maintenance including a detailed startup
plan to ensure service is initiated according to the date determined by the City." This category
also includes consideration of the bidder's plan for"recruitment and hiring and training of all
staff."-RCL needs no startup plan. It has already been operating the transit system at the highest
level for more than 45 years. RCL also needs no plan to hire and train staff. It already has fully
trained staff and a contract in place with Amalgamated Transit Union Local 1005. RCL's
ability to take over the service and to recruit and train staff in order to provide service by July 1,
2012, is simply not at issue. Indeed,the RFP itself calls for the retention of as many of the staff
recruited and trained by RCL as possible(see also,Council Member Wojcik's blog postings
referenced above,in which Mr Wojcik encourages RCL's employees to work for First Transit).
The committee's scores in this category demonstrate that the entire evaluation was purposefully
skewed against RCL.
Staff'factor,which was given 30%weight in the
Second,the"Interviews with Key Management
overall evaluation, enabled the committee to unfairly sway the overall evaluation against RCL.
This factor,which is inherently subjective and invites partiality,was given undue weight. Not
surprisingly,the committee ranked RCL last---rand did so by a significant margin. During RCL's
interview,the committee members were disengaged and disinterested; some were openly
disrespectful,rolling their eyes while RCL management made its presentation.
Third,the"Past Performance—Reference Checks"factor was fundamentally unfair and
prejudicial to RCL. The evaluation process for this factor created an internal conflict that
destroyed any purported impartiality of the committee. To evaluate this factor,the technical
•
3
• assistance consultant conducted telephone interviews of references provided by each contractor
to attest to"the contractor's experience/history on comparable projects of fixed-route operational
experience." The technical assistance consultant then compiled answers given by each reference,
Which the committee then reviewed and scored. RCL's prior experience involves operating the
very transit system that is up for bid, and its references were the very City officials with which it
has regular contact in the ordinary course of operating the transit system in Rochester..As one of
its references,RCL listed Anthony Knauer,the City's Parking and Transit Program Manager.
Mr.Knauer,unbeknownst to RCL,was also a member of the evaluation committee. Thus,Mr.
Knauer acted both as a reference and an evaluator of that reference. There is no indication in the
report that Mr.Knauer ever disclosed this conflict or recused himself from this portion of the
evaluation. RCL also listed Scott Retzlaff, a City employee in the Parking and Transit Program,
as an additional contact to attest to its past performance. Mr.Retzlaff also turned out to be a
member of the evaluation committee,and there is no indication that he disclosed the conflict or
recused himself. This provided the opportunity for these City officials to not only improperly
influence the evaluation by provided biased.references against RCL,but also to then evaluate
and score RCL based on their own reference. In fact,one of the questions that the RFP provides
to be asked of references is whether they"would choose to renew a contract with[the
contractor]." The conflict.of interest made impartiality impossible. Furthermore,the conflict of
interest gives an overwhelming appearance of impropriety,which alone is sufficient to invalidate
the contract award. See Telephone Assocs., 364 N.W.2d at 382; Coller,223 Minn. at 389,26
N.W.2d at 842.
• Finally,the"Financial Ability"factor also demonstrates that the evaluation was skewed against
RCL and deprived RCL of an equal opportunity to bid. The committee purportedly evaluated
this factor on a"pass/fail"basis. However,even when provided with the same objective opinion
from an outside auditor,half of the evaluation committee concluded that RCL had the requisite
financial ability while the other half somehow concluded, after 45-plus years of successful
operations,that it did not. The bias against RCL is palpable. Moreover,the City's requirement
under this factor that a contractor show working capital representing at least 25% of its bid price
shows a strong bias toward large national firms. A large company has far more cash on hand and
can much more easily obtain a significant credit line. This requirement stacked the deck against
RCL and in favor of large national firms from the start. RCL has operated the transit system for
the past 45 years with no interruption. This historic performance is more than sufficient to
establish RCL's financial ability to operate the system. However,the committee ignored this
fact in its evaluation. It is no surprise that all three contractors ranked ahead of RCL are large
national and international companies. First Transit operates throughout North America and is
one of the nation's largest providers of bus transportation. MV Transportation advertises itself
as the"largest American-owned passenger transportation contractor"in the country. Veolia
advertises itself as"the largest private sector operator of multiple modes of transit in North
America." In contrast,RCL is small,locally owned business, and simply does not have the
excess working capital of these gargantuan-sized firms. The City's requirements in the financial
ability section of the RFP are heavily biased towards very large firms,with no factual or logical
nexus to the ability to perform the work. This use of a deliberately and arbitrarily exclusionary
and discriminatory requirement is a violation of very third party contracting rules adopted by the
City expressly for this procurement. (See Federal Transit Administration Circular 4220.1F, ch.
VI(2)(4)). This improper and unnecessary device was improperly invoked to achieve the
• intended result—namely,that RCL would not be awarded the contract.
4
In short, every aspect of the evaluation,from the makeup of the committee,to the evaluation •
criteria,to the scoring and final report,to the revealing admissions made by senior City officials
in public, demonstrates the bias of the City against RCL. The decision was made long before the
RFP process that RCL would no longer be the provider of transit services to the City of
Rochester. The evaluation and award of this contract demonstrates that the entire process was
outcome-driven and fundamentally unfair.
Because the City Council's decision is plainly unreasonable,RCL requests that the City rescind
its selection of First Transit and either award the contract to RCL or cure the fundamentally
flawed selection process and allow for a fair and unbiased competitive bid..
Very truly,To rs j
Steven A.Diaz
LAW OFFICE OF STEVEN A.DIAZ
•
•
5
vatewo'cik.org -
1
:
. .
BLOG . . . . . .
Frst Transit to operate Cty of Rochester's transit Contribute
s IN
system. c>>�aa,�lott a,nlw,C
Ap r i l 2 s a 2 0 1 Z
6y mwojclk '�'
Today the clry council unanimously(6-D with Hanson ahsentV to approve the �®�®�
codependent recommendation to select First transit to operate Rochester's transit Powered by Donation Can.
system. There were four companies competing,huz everyone was Interested In Recent Posts
wltetfier First Transit or suck wtth Rochester Qty ones. FirstTrans;tto operate Lily of Rochester's
barrsit system.
If we are going to be a serious player far businesses we must be fan to those that wish Financial impact of competitive bids in transit
[o compete here.After a fair process,Hre had an impartial recommendation that Assesslnellis for7rtd Streetnon•profits
stated that First Transit was the best of.}choices fall capable)while Rochester Llry Senators Senjem and Nelson to offer strong
suppLx[torMayo Gvic Centerproplrsal
ones came In last_Flrst cranstt also costs2 million less over 54 months based on ReILs[riltingilte rrwst urtde�tPd issue in
operating 7D,OOD hours per year.To look az these facts and chose anytlting bur First demarsazy
Transit would be cronyism at Its worst: I asked questions about rile process and found •�a�
It to he exceedcngfy fair.RC1 questioned if the request forproposals was fair,but the 65thfareet 2010�CCOUntabllity
example that they raised about experience with new technologies,was aztually $��LaneS Bike PaEhS Budget racy
something that I strongly think Is needed. Coiaid City Caune;l Updates Community
EventCQmplete Streets
We also secured an understanding wnh Frrst Transit[hat they would recognize the Crime Crime Prevention
existing ATU organization and would be offering positions to extsting employees first_ pevelopment downtown
if we lowered our costs by pushing working families Into poverty vre accomplish mastel'Plan energy
nothing. 1 have already told these workers,that i vrill continue ro have Chet:backs.I Environment G0815 humartsaLes
respect hlnv good these drivers are. �+�7 Pik landlords LGA Local
Government Local Government
Dan Holler continues to threaten to run a parallel nansn system that he Implies will COOPefat100 Mayo Civic Center
Ouse harm to the ciry's system.'that ktnd of entitled behavcar leaves me shaking my I`Ie1P,,lIbOTItOOdS NLC Qrchard Hills
(lead.That said,If he can run a successful system that will only help trans[[in V;llaz Patfls PCdeStTTanS Planning Rolia
• public safetypublic
Rochester,but w do so he Hell have w follow rules Pertaining to franchLses. 'I,,
WolrICS Q8 A RNeighbors salestax StOFli1
iNaterTdXEStransit
There Is no lave lost beiwEeti me and Dan Hotter,given his lobbying antics.Feller tfiat TrahsPareneY Ttart -
be Is'entttled'to a prafirr,and his holding us hostage for that profit.tint vve lose
Trees urban design water
credibility as a city If vje don't have a fair process to choose our venders.We did have Dr1e5
a fair process,and made a decision based on Facts-We did not make any soft of ��utMichOL4
decision based on spite or revenge- city Cmmnl
community
Events
This should have no negative impact on Dan Holler's business since in a statement Issues
the city council he stated ha" made any profit In 44 Years..
I Local government
Heighborboods
It Will he interesting how long the wasteful lawsuits continue.lye will see tremendous Press
Improvements in transit between now and 201g.We are going to see better access,
Untategonssed
faster service.and more hours,and we can best achieve this by working vAth the best.
Websites
City Council Home Page
Tags:A 1►public tks,Tattes,sransrt MichaersVtdeos
Posted in my Council I colttments(03 ' RHeighbors
Take Action Minnesots
Pages
No corms—Yet About Mimed
Community
Contact Us
Video and Photos
Leave a Reply Comment
Name Irenwredi plxit7012
Mail twill nm be published)(required) M T W T IF S 5
1
Websne ® 2 3 4 5 6 2 3
9 10 11 12 13 14 15
16 17 IB 19 2D 21 22
23 24 25 26 27 28 29
30
.Mar
meta
Login
Entries FM
commends M
Wordlirea.otg
' j •_7`n ° � ;'w.• ;� •t,. F':;''M`�t.�'7�"�t.If��^,'`'.�5�'ij' '.�^'? a.
;t.� .' 7¢�'i`L�saLr+�'":.`I.��is,�•-•%W-+. _Y� �y v r+ a�•Cana •.e-` �?X���'�'�1
y Y s•^t��a+ZY:
yylfl.�YyrntC,• 4"r".'� �?-i; 9 S� � �r�,4t .�.. ��ry 5� .i•.�w„ .,��e ln.,j ��a.`�`l
Yi"t�[it,Ir ����['cbG .' �dLu • r:. -}'ij�a..Y'.
. 4r'•: �+1 i 11?j. Ga ••j1J 'i.f:} .+e« S�`J ��.5
St J:YT�1�1[Sy - w7 4.
Wardpres'spowersvmewojdkorg.L yemdtemeDesignedhyJaft�rrdY+
K;:.''" .�+Ky ,t�.a.- r+a t_"rc� sJ'tir`� qtd •:t.. '
votewo� � �
naour iwcrui�[
How KCl.stole S14Q,OQQ from taxpayeirs i Contribtne
•n.,.m n.. a a.a. a n s s Oib¢seduatimmamrt
.ny rnwnjuk
Powered by Oatati ttn Caa
RecentPosis
a=rrss�rma;r m operam p[r bnmd+e:ters
:�`•. .ac• transitsysterb.
_ ranrtcial impat3 brtxtnpetitivt:Dads in tl3nSi[
Assessmesds far Znd Sheet rton-pmrds
Senates Setske aatl tklson m bf rev sTmnB
� snPPbK raMayo CsvieCetrter propttsal
..;�, pedts�ClSt�The evstmMerratetlissaein
• ' Tags
ba •_.._._. —'• a�rDar�e[zo�oAecountability
Bike WnesBike PathsBUdgetcar
f�(t�,��g •— I mural I54<Coundl Updates Commtmity
1Ja'1 Dussness is crmtted toaprbfir E�Ldmptete Streets
Crime Crime prevention
-Rochester Ctry Ltnes sgCLI General Idanager Dan Molter
DevelopmentdoWntoWn
ear
/_ Environment GDaIs rrvrnor t�
1��business swrks smM antl svmtss ItarU m earn a Profit- kutzky peak lanrbords l-���i
� Government total Government
COpPeratlOn Mayo Civic Center
Qtu-iness bvunv hhdtael Woitik � Nejg}ti7Or}1DOIiS NLC Orchard F51ts
vines Parl6Pedestrians Planningyaliq
NoticeadiBerence. � pUbilC Sdfetj/ppbtiC
I atrstaxstblm
4t dte speuzlmredng bn Decemh=rZ2.201i she cny munul me[mpaYO�H�ur nis Sla0,0001n raxpaYe* W�(rN Q&A�eiDr�
ransom.'Te atv approved a hornble 6 monm rnnrmct by a A-2 margin Erervanei n she csry mbr,Ql aas WaterTaxes transit
s even m��
disgussetl by she conetatt and lobxed forward m awatdtng a nnv ctlnsraa Mrough open rompetislbn beginNngA+W T�S uT��rT deign water
t,:012 In adtllhon,the taxpayers ar fibehescer sdU be funtling a 3%woss Me bwrd tttcrease for RCL Iota siaY.b
Categories
getun9lSincreasest 7bMeeX[en[iha[tslegallYPe�h•iblewewilltvnsltlerMi eWerlenainesaluadn4�—'Tor AbttutRidtad
tttwre mmpebuve cvnaacss. Ci1yr Cbtatcil
As match as Panffolteris ttibfame fortitlsfiasca l piece a similar amount of blame tm drystaffforallowfng us to be : Community
In a situation where a majority of We council felt we had no choice but to give into Hotrer's demands.The question Events
Issues
Ir why we had not negotiated with another company so as to have some leverage w-.th RCL A review of the entire
- Local Cavenment
process and transit operations is probably in order Hewilturboods
press
After the meeting Nolter was stopped from making some statements by his con staff.1 wasn't there,but others Dneateticatzed
were.1 wish he had gone tm.He also wanted to blame me for some of this and ciaims that I have been non- W"tes
responsive.Idill mee[tvith Holler and other took his concerns back to transit stafr.Thettmblemlasalwaysbem City Cmodst Home page
that he lends to make these silly statements like fie owns the transit system The taxpayers own the buses,streets, flithad's Videos
bus stops.RCL oams the RCL name and the garage where some buses are currently stored.We viaste a hunch of OHesghburs
Take Action f/aitesola
staff tint_to debunk flies?statements time and time again.It was also suggested that the service would have
t[orninuedtoopemte regardless ifrie fadapprove0 the contract Wewere not made aware afthis. Pages
About Miclud
My advireto a bus driver at RCL that 1 spoke with atcerihe meeting is that you further organize and perhaps make Cow
ty
Contact lh
your tom bid forthe mntratx beginning in July as an employee owned bus company I halt to see Innocent victims Video and Phates
to-other's greed.
Tags:61yailimeaUpdaery T—ink December2d11
Posted in City Co®.6I its it T W T F S S
' 1 2 3 4
3 6 7 6 9 10 11
13 13 14 15 16 17 It
No comments yet 19 213 11 32 23 24 25
26 V 29 39 30 31
-U. Jan.
Meta
Leave a Repty
Log in
home UeeulrgPl rammmt Entries rM
6lid Mill nac 6e PPalutrc0,requkedl
Cwnmeds 0.6
Wwdpttss.mg
Wehxire
}+w;, `ti" s T8t!er r ,J� '• r���'"'t,�': sr"w2 `� 'Fi� '`�y`rH„ A
. t*atpr$pttwers votewojn"keg.Layvsiheme Oesrgned Dyjai Rtbdya.
Page 1 of 2
POA- Moulte-, n
Buses might battle for riders in Rochester
Mar 31,2012,6:23 am
By Jeffrev Pieters
The Post-Bulletin,Rochester MN
This might be more competition than the city council bargained for.
A brewing bus battle could be touched off by a council vote Monday,presumably to award a 54-month service
contract to a new transit company,First Transit of Cincinnati.The new contract starts July 2.
But the current contractor,Rochester.City Lines,isn't ready to let go,said Dan Holier,the company's general
manager.
City Lines has acquired buses,and is ready to start planning routes and schedules,pending Monday's council action.
"I continue to take steps that will allow us to be a viable participant"in transit,Holier said."As we sit right now,I
believe there is nothing that prohibits us from doing that."
City Lines,a company started and still owned by Holier's family,has run public transit free of competition in
• Rochester since 1966.
Last year,the Federal Transit Administration ordered the city to award its next contract through competitive
bidding.Four companies submitted bids,and City Lines was ranked fourth among them.First Transit ranked first
for quality and had the lowest bid price.
Holier disputes the city's scoring system and objects to the entire bidding process.The bus system is privately owned,
Holier insists,and is being wrongly taken from him.
The dispute is being argued now in Olmsted County District Court,where two attempts by Holier to stop the bid
process were unsuccessful.
Competition
There is nothing to stop City Lines,which holds a five-year,non-exclusive city transportation franchise,from running
buses as a private enterprise in competition with the city,said City Attorney Terry Adkins.
Under the city franchise,the city council must approve the company's proposed routes and schedule,Adkins said.
"In order to maintain traffic flow and prevent gridlock,they would have the ability to say,'No,not at this time,but
maybe at a different time,"'he said.
City buses have the advantage of being federally subsidized.Holier says he'd level the playing field by running his
buses only on the most fruitful routes and switching to mini-buses for mid-day service.
More specific route and schedule information"has yet to be formulated,"he said.
The biggest question mark,Holier said,is whether he would be able to keep his drivers or if some would leave him for
First Transit.
• "If they decide to raid our business,it's going to be pretty tough,"he said."We have a great team,and we intend to
keep them."
http:/Iwww.postbulletin.com/news/stories/print.php?id=l 491655 4/5/2012
Page 2 of 2
I� •
He is still hopeful the city council might award City Lines the contract.
"The city and us have a lot at stake,and we would like to continue a mutual relationship,"Bolter said."It was never
my intention to right with the city."
Post-Bulletin Company,L.L.C.
www.postbulletin.com
h4://www.postbulletin.com/news/stories/print.php?id=1491655 4/5/2012
Larkin
• HoATTO all Larldn Hoffman Daly&Lindgren Ltd.
RNEYS 1500 Wells Fargo Plaza
7900 Xerxes Avenue South
Minneapolis,Minnesota 55431-1194
GENERAL: 952-835.3800
FAX: 952-896-3333
WEE: wwwlarldnhoffn=.com
June 8,2012
Terry Adkins, City Attorney BY ELECTRONIC MAIL ONLY
Rochester City Hall
201 Fourth Street S.E.,Room 247
Rochester,MN 55904-3780
Re: Bid Protest--City of Rochester RFP for Rochester
Public Transit Service Operations &Maintenance
Organizational Conflict of Interest,Personal Conflict
of Interest;Lack of Bidder Responsibility;Failure to
Conduct Due Diligence; Bias,Prejudice, and Predetermination
Dear Mr. Adkins:
This is in reply to the letter from First Transit dated June 8,2012,regarding its claim that there is
• no real conflict raised in the pending protest in that Mr.Huston". . . informed Dan Holter of
RCL that he had been approached by First Transit in the Fall of 2011." Unfortunately for First
Transit, it is a long way from disclosing that one has been approached by a competitor to
revealing that one has actually entered into an agreement for employment(current or future) and
has given actual consent to use one's name in the proposal of the competitor to one's current
employer. This is a failure to disclose of material scope,and because it was not revealed to
RCL, carries with it the implied value that Mr.Huston provided access to RCL's proprietary
information to its competitor in the preparation of its proposal,although the conflict is patent
whether Mr. Huston actually gave any RCL"insider" information to First Transit or not.
Moreover,the RFP calls for the availability of key personnel for proposer interviews that were
conducted by the city. In that several members of the city's evaluation committee were well
acquainted with Mr. Huston's then current employment status at RCL, and at least one of them
had personally recommended Mr. Huston to them as a potential employee,the city was on actual
notice of the conflict at the time it occurred. It is not yet known by RCL how or why the city
allowed Mr. Huston as the designated First general manager,obviously a"key personnel"
person, not to participate in the evaluation interview given to First, or how or why First's score
was not correspondingly affected by the conflict as it was known to the city,but such facts are
presumably known to the city, and are clearly material.
The essence of conflict of interest is the potential for halm,not"proof' of actual harm, as you
know. There is no way for First Transit and city to avoid the obvious consequences of the
circumstances. The conflict is patent, and has the legal effect of making the resulting contract
between the city and First Transit an absolute bar to any Federal funding,now or in the future.
Terry Adkins, City Attorney
•June 8, 2012
Page 2
The conflict also makes the contract signed between the city and First Transit void under the
"law of the specs"even if there is no present use of Federal grant money.
Accordingly, it is clear that the protest of RCL on the grounds of organizational conflict of
interest is well founded and must be sustained. Finally,the city may recognize that under these
circumstances if it has a desire to preserve any eligibility for Federal funding of transit services,
the best course is to cancel the contract with First Transit"for the convenience of the
government." This is a very grave situation which has been created by indelible wrongdoing of
Mr. Huston and First Transit as well as the gross negligence and mismanagement of the
procurement by the city.
Thank you for your attention.
rl
ery truly yours,
�VLgren
ary . an C eveRob A. StefonowicLarkin Hoffman D Ltd.
Direct Dial: 952-896-3277
Direct Fax: 952-842-1720 •
Email: gvancieve(@Iarkinhofftnan.com
cc: Dan Holter
Steven A. Diaz,Esq.
Charles Maier,Esq.
1409691.1
•
boo �F.0 c.ESTER:rnq ,£SO
ALL-AhtERICACITYnucyr S
r; b
�A0RATED.AUGUS I•5•P
TERRY L.ADKINS
City Attorney
June 11, 2012 201 4th Street SE, Room 247
Rochester,MN 55904-3780
(507)328-2100
FAX#(507)328-2727
Gary A. Van Cleve
Larkin Hoffman Daly & Lindgren Ltd
1500 Wells Fargo Plaza
7900 Xerxes Avenue South
Minneapolis, MN 55431-1194
Dear Mr. Van Cleve:
Thank you for your June 4, 2012, letter labeled as Bid Protest— City of Rochester
RFP for Rochester Public Transit Service Operations & Maintenance
Organizational Conflict of Interest, Personal Conflict of Interest; Lack of Bidder
Responsibility; Failure to Conduct Due Diligence; Bias, Prejudice, and
• Predetermination. You state that this particular protest "is based on information
that was previously unknown and undisclosed to RCL by First Transit, Randy
Houston, and the City, until discovered in the depositions of Paul Buharin and
Randy Huston taken on Thursday, May 31, 2012."
Initially, you state that I must recuse myself from participating in this matter
because I "previously acted both as administrative principal on an RCL protest
regarding this solicitation and as counsel for the Common Council in its quasi-
judicial capacity sitting as the appellate forum on your protest decision."
Section 5.1.2 of the RFP contains a specification as to the processing of Protests
Prior to Proposal Opening. The first step in this RFP protest procedure is a
submission to the City Attorney no later than the date and time the proposals
were opened. You were fully aware of the City Attorney's involvement in the
protest process when you received the RFP. Yet, you took no action protesting
the specification that included the City Attorney in the protest process within the
given time limit. As such, you have waived your ability to protest the City
Attorney's participation in the protest process on the basis that the City Attorney
acts as legal counsel to the body that may consider the City Attorney's decision.
More importantly, your statement that the City Attorney acted as counsel for the
Common Council when it considered RCL's April 5, 2012 bid protest is simply
incorrect and inaccurate.
In the previous protest, I asked the Council for confirmation as to the information
they were considering before there was any motion on the issue and clarification
An'EquulOpportunity EmpCayer
as to the nature of the motion that was made, but not yet voted upon. These
facts are readily shown by the following dialogue between the City Attorney and
the Councilmembers as taken from the videotape of the May 7th Council meeting: •
City Attorney: Before you vote if I could
Council President: Yes
City Attorney: I assume that what you are considering in making
any decision that you do make are the discussion materials
presented by the consultant Mr. Garrity at the April 2"d Committee
of the Whole meeting that describe for you the manner in which the
proposals were ... the request for proposals was drafted; how the
responses were received, scored, and evaluated; how the
committee was composed, and the criteria that they used in coming
up with their recommendations; as well as Mr. Diaz's letter of April
the 5th, his attachments; as well as my letter of April 12th back to Mr.
Diaz; and the April 17tt' letter from Mr. Diaz to the City
Administrator; and the memorandum of April 19th from the City
Administrator to the Mayor and Council.
Council President: All right. Everybody clear with that. If so, could
have a motion.
Bilderback: Move approval •
Hruska: Second
Council President: Motion by Bilderback, second by Hruska,
discussion.
City Attorney: And by approval I assume you're meaning to concur
in the decision of the City Attorney and to deny the protest.
Bilderback: That's correct
Hruska: Right
As the scrivener of council documents memorializing Council decisions made in
response to matters appearing on council agendas, I needed to know how to
draft the document that ultimately became identified as Resolution #217-12.
That was the reason for my two questions asked of the Council during the
Council's May 7tn meeting. And that was the extent of my involvement with the
Council as part of the Council's consideration of RCL's first bid protest.
2 is
Nonetheless, in an effort to narrow the focus of the dispute between RCL and the
• City, and in an effort to avoid tangential issues such as this one, I have decided
to follow your suggestion and arrange for a Special Assistant City Attorney to
attend any future Council meeting at which any bid protest appeal comes before
the Council.
Your first allegation is that an organizational conflict of interest has occurred
because the selected operator (First Transit) used Randy Huston's name as its
proposed general manager while Huston was employed by RCL and while he
was working as part of RCL's effort to be selected as the operator of the City's
publicly-funded transit system ("Huston Issue"). You state this amounts to a
breach of duty to RCL and a prohibited organizational conflict of interest on the
part of First Transit.
Section 5.1.2 of the City's December 28, 2011, Request for Proposals ("RFP")
states that a bid protest must be submitted "within three calendar days after such
aggrieved person knows or should have known of the facts giving rise thereto."
You state you learned of Mr. Huston's involvement with First Transit when
Huston's deposition occurred on May 31, 2012.
In fact, you knew or should have known this information when the City, in
compliance with RCL's Minnesota Government Data Practices Act request,
provided you with First Transit's submission in response to the RFP. The City
• provided First Transit's submission to RCL on May 25, 2012. Indeed, Mr.
Holter's affidavit attached to your June 4t' letter acknowledges the fact that RCL
first learned of Huston's listing as First Transit's General Manager "[f]ollowing the
receipt by my counsel of First Transit's proposal from the City's counsel last
week ... ."
Your second bid protest letter is dated June 4, 2012, which is more than three
calendar days following May 25th. Thus, you have waived your ability to base
this second bid protest on the "Huston Issue" because the facts giving rise to
your protest were known or should have been known by you on May 25, not May
31. Your second bid protest is untimely under RFP §5.1.2.
In addition, your letter does not attempt to demonstrate that you have standing to
bring this challenge. Your letter makes no effort to demonstrate that, but for the
supposed error of the City, there was a substantial chance that RCL would have
received the award. Your protest focuses exclusively on something regarding
First Transit's proposal that you do not claim was present in the proposals of MV
or Veolia. As you know, each of the eight evaluation committee members
awarded RCL fewer points than any of the other three proposers. While this was
a "best value determination" which also involved consideration of the price
proposals (the one area in which RCL was not fourth out of four), it was still
necessary for RCL to have offered evidence showing 'a substantial chance that it
would have received the award but for the alleged error.
•
Aside from the untimely nature of your protest and your failure to demonstrate
RCL's standing, your claim that the "Huston Issue" constitutes a prohibited
organizational conflict is not supported by any of your legal citations. •
RFP §4.41 does not apply in part because it contains an exception for a "bona
fide full time salaried employee working solely for the Contractor." To the City's
knowledge, Mr. Huston is a bona fide full time salaried employee working solely
for First Transit. As the City construes its own RFP, Section 4.41 does not
regulate future employment solely for one company as a bona fide full time
salaried employee, even if the future employment opportunity is contingent upon
the future employer receiving the award. What the City intended to accomplish
through the inclusion of Section 4.41 was to disallow and discourage influence-
peddling by restricting the ability of a proposer to hire or retain someone to work
for them in seeking the contract in exchange for compensation for that work that
is contingent on obtaining the award. I understand that this is the primary
purpose of such provisions. See, e.g., Michael D. Schag, "The Use and Misuse
of Contingent Fees in Government Contracting," Contract Management 12, 14
(October 2003). First Transit's communications with Mr. Huston did not create
any conflict of interest under the language and purpose of RFP §4.41. The City
reasonable interpretation of its own RFP is entitled to considerable deference,
particularly in the context of a best-value determination. See Banknote Corp. of
Am. Inc., v. United States, 365 F.3d 1345, 1356 (Fed. Cir. 2004); Galen Med.
Associates, Inc. v. United States, 369 F.3d 1324, 1330 (Fed. Cir. 2004).
Section 13.04, subd. 1 of the Rochester Code of Ordinances does not apply •
since the ordinance applies only to a "Public Official" and the ordinance definition
of that term does not include First Transit. Your reference to 49 C.F.R.
§18.36(c)(1)(v) is not helpful as that rule simply prohibits an organizational
conflict without indicating what constitutes an organizational conflict. Finally, FTA
Circular 4220.1 F, Ch. VI §2(a)(4)(h) does not apply because you have made no
showing that:
1. First Transit is unable to provide impartial and objective
assistance or advice to the City due to other activities,
relationships, contracts, or circumstances;
2. First Transit has an unfair competitive advantage through
obtaining access to nonpublic information during the
performance of an earlier contract; or
3. During the conduct of an earlier procurement, First Transit
has established the ground rules for a future procurement by
developing specifications, evaluation factors, or similar
documents.
First Transit's letter of June 8, 2012, claims the absence of any organizational
conflict. First Transit states it had the same access to information as enjoyed by •
4
the other proposers and First Transit's communication with Mr. Huston did not
• impair its ability to be objective with the City. Furthermore, First Transit, by way
of an affidavit of John Matthews, states that at no time did it request of or receive
from Mr. Huston any non-public financial or business information regarding RCL.
Indeed, First Transit points out that at least two RCL officials knew of First
Transit's contact with Mr. Huston regarding a potential general manager position
should First Transit receive the contract. As First Transit notes, "[d]espite having
this information, RCL continued to allow Mr. Huston to work on its proposal.'
RCL, by way of Mr. Stefonowicz's follow-up letter of June 8, 2012, suggests there
is no need to show any "proof' of actual harm. Instead, a conflict of interest
exists if there is the "potential for harm." RCL claims because this material fact
was material and was not revealed to RCL, it "carries with it the implied value
that Mr. Huston provided access to RCL's proprietary information to its
competitor in the preparation of its proposal, although the conflict is patent
whether Mr. Huston actually gave any RCL "insider" information to First Transit or
not."
Yet, if one actually reads the Federal Transit Administration's primary.conflict of
interest provision, found in FTA Circular 4220.1 F, Chap. III, Section 1(a), one will
quickly learn that the prohibited conflict of interest scenario involves grant
recipient employees who "participate in the selection, award, or administration of
a contract supported with FTA assistance" and who are employed or are about to
• be employed by the selected vendor. Section 1(a) does not address conflicts of
interest, apparent or actual, between competing vendors seeking to operate a
public transit system funded by FTA monies.
There are no facts showing Mr. Huston was employed by the City of Rochester
during this time period. And, there are no facts showing Mr. Huston was involved
in the "selection, award, or administration" of the contract ultimately awarded by
the City to First Transit. As such, any reliance upon FTA administrative rules in
claiming a conflict of interest as a result of the "Huston Issue" is misplaced.
You have claimed an organizational conflict and have relied solely upon the
"Huston Issue" as proof. None of your legal citations support your claim. The
facts do not support your claim that First Transit's employment discussions with
Randy Huston amounted to any conflict of interest. And, you have made no
showing that Randy Huston was involved in the "selection, award, or
administration of the contract awarded to First Transit. Accordingly, it is my
decision to deny your June 4, 2012, bid protest as to your claim of an
organizational conflict.
Your second allegation is that, as a result of the presence of an organizational
conflict, First Transit is ineligible to receive a contract from the City in response to
its submission to the RFP. Since you have failed to show the existence of an
organizational conflict, this second allegation necessarily fails.
5
Your third allegation is that the First Transit contract is void because the City
failed to inquire into the "facial conflict" and failed to conclude that First Transit's
proposal was not a responsible proposal. I assume your reference to a "facial •
conflict" is a reference to the "Huston Issue." You then cite RFP §7.0 in support
of your claim.
Section 7.0 simply states all submissions in response to the RFP will be scored
by an Evaluation Committee using the FTA Best Value Procurement Manual.
Nothing in §7.0 even remotely ties the "Huston Issue" with your claim that the
City failed to exercise due diligence. Accordingly, it is my decision to deny your
June 4, 2012, bid protest as to your claim of a failure of due diligence by the City.
Your fourth claim is that the City was biased and prejudiced in its decision to
select First Transit as the operator of its publicly-funded transit system. This is
nothing more than a rehash of your April 5, 2012, bid protest claim that a "biased
and unfair evaluation and selection process [rendered] any contract awarded to
First Transit invalid. I rejected that claim in my April 12, 2012, letter finding it to
be unfounded and unsupported. And I do so again in response to your second
bid protest for the same reason.
Actually, since my April 12, 2012, letter, information has now become public that
puts this issue to rest once and for all.
The public facts indicate that, after comparing the technical scores submitted by
the four City employees on the Evaluation Committee with the scores submitted •
by the non-City employees on the Committee, there is nothing to support the
claim of bias or prejudgment. Indeed, the City employees scored the proposal
submitted by RCL higher than the non-City employees. Attached to this letter is
Exhibit 1 containing the results of this comparative analysis. While the two
groups differed on the second and third ranked firms, both City and non-City
employee Evaluation Committee members ranked First Transit as the top-ranked
vendor and both ranked Rochester City Lines as the fourth ranked vendor. The
range between first and last ranked firms was closer among the City employee
Committee members than among non-City employee Committee members.
The individual scoring data indicates the City employee Committee members
ranked the RCL proposal higher than non-City employee Committee members.
Moreover, the range of scores from high to low was smaller among City
employee evaluators.
The facts simply do not support RCL's continuing claim of bias, prejudice, or
predetermination in the evaluation process. Even if the scoring of City
employee Committee members were discounted completely in the
evaluation process, RCL would still have been the fourth ranked firm and
the outcome of this procurement would be unchanged.
I 6
Your fifth and final claim is that the City's failure to respond to the alleged
• organizational conflict of interest discriminated against RCL as it was allegedly
denied a level playing field. You cite 49 U.S.C. §5325(h) in support of your claim.
Since you have failed to show the existence of an organizational conflict, this fifth
allegation necessarily fails. Moreover, your argument regarding the "Huston
Issue" does not in any respect go to the question of whether RCL was subjected
to discrimination by the City or deprived of a level playing field. You do not
allege, for example, that the City disqualified or penalized RCL under Section
4.41 or any of the conflict of interest rules that your letter invokes.
Additionally, 49 U.S.C. §5325(h) prohibits a federal grant in support of a
procurement that uses an exclusionary or discriminatory specification. Nowhere
in your June 4th letter do you indicate any specification contained in the RFP that
is exclusionary or discriminatory. As such, it is my decision to deny your June 4,
2012, bid protest as to your claim of exclusionary and discriminatory action by
the City.
In summary, the facts I have gathered in response to RCL's protest indicate the
following:
• The fact that First Transit listed Randy Huston as its
proposed general manager does not constitute an
organizational conflict of interest;
• First Transit is eligible for an award of the contract
resulting from the City's RFP;
• The City complied with §7 of its RFP;
• The City did not act with bias, prejudice and
predetermination in selecting First Transit as the
operator of its publicly-funded transit system; and,
• The City's RFP was not exclusionary or discriminatory
towards RCL.
For the reasons stated herein, RCL has failed to establish a basis for any of the
claims asserted in its second protest. Therefore, I find RCL's protest of the
Rochester City Council's award announcement on April 2, 2012, and its
proposed selection of First Transit as the provider of bus transit services in the
City of Rochester to be without merit and do hereby reject it.
Finally, just after 10:00 am today and just a few hours before my deadline to
respond to your June 4, 2012, bid protest, I received another letter from you.
Your letter of today states it occurred in reply to First Transit's June 8tn letter and
was intended "provide the specific hard evidence regarding the existence of an
• organizational conflict of interest ... ." In fact, your letter of today goes beyond
7
the organizational conflict topic and, instead, addresses a brand new subject.
Based upon your choice of words for your letter's first subtopic, you are now
alleging improprieties with the technical proposal scoring and suggesting that, •
arithmetically, the score awarded First Transit is not possible.
Because this is a new subject and involves a review of matters not involved in
your June 4, 2012, bid protest, and because you sent this letter to me just hours
before the time deadline by which I must respond to the pending second bid
protest, I have decided to treat. your letter of today as a third bid protest. As
such, I will address your June 11, 2012, protest separately within the time frame
provided for in the City's RFP.
ncerely, n
TER . ADKINS
Rochester City Attorney
TLA:jlh
Enclosures
Cc: Mayor and Common Council
Stevan E. Kvenvold
Richard Freese
8 •
Exhibit 1. Breakdown of Evaluation Scores
Total-All Eight Evaluators
Proposer Company
Rochester City
Evaluation Factor Points Veolia First Transit MV Transportation Lines
Technical Ability(40%)
Evaluate this factor based on your review of the technical proposals distributed by the City Clerk
V4.
Qualifications(20%) 20 128 142 125 113
Proposed Personnel(20%) 20 110 129 103 114
Transition Plan(10%) 10 59 71 49 57
Proposed Management and Operations Plan (20%) 20 126 129 113 107
5. Risks and Added Value Assessment(10%) 10 57 65.5 52 50
6. Proposed Maintenance and Equipment Plan (20%) 20 119 130 108 105
Subtotal-Technical 100 599 666.5 550 546
Past Performance(20%)
Evaluate this factor based interviews with references that will be provided by the technical assistance consultant
Reference Checks 50 148 289.5 283 103
Subtotal-Past Performance 50 148 289.5 283 103
Financial Ability(10%)
Evaluate this factor based on report to be prepared by the City Finance Department
Financial Ability and Risk Ranking 25 200 200 200 100
Subtotal-Financial Ability 25 200 200 200 100
Interviews with Key Staff(30%)
Evaluate this factor based on vendor interviews
Interviews with Key Management Staff 75 466 457 445 426
Subtotal-Interviews 75 466 457 445 426
Total-All Evaluation Points 250 1413 1613 1478 1175
City Only Evaluators
Proposer Company
MV Rochester City
Evaluation Factor Points Veolia First Transit Transportation Lines
Technical Ability(40%)
Evaluate this factor based on your review of the technical proposals distributed by the City Clerk 75 72 64
t3.
Qualifications(20%) 20 9�EE
63 61
64
Proposed Personnel (20%) 20 26 32
10 30 33
Transition Plan (10%) 67 58
20 64 66
4. Proposed Management and Operations Plan (20%) 30 23
5. Risks and Added Value Assessment(10%) 10 30 33 64 55
6. Proposed Maintenance and Equipment Plan (20%) 20 62 67 322 293
Subtotal-Technical
100 313 338
Past Performance(20%)
Evaluate this factor based interviews with references that will be provided by the technical assistance consultant 150 65
Reference Checks SO 72 142 150 65
Subtotal-Past Performance 50 72 142
Financial Ability(10%)
Evaluate this factor based on report to be prepared by the City Finance Department 100 50
Financial Ability and Risk Ranking 25 100 100
25 100 100 100 50
Subtotal-Financial Ability
Interviews with Key Staff(30%)
Evaluote this factor based on vendor interviews 217 206
Interviews with Key Management Staff 75 238 226
Subtotal-Interviews 75 238 226 217 206
250 723 806 789 614
Total-All Evaluation Points
Non-City Evaluators
Proposer Company
Rochester City
Evaluation Factor Points Veolia First Transit MV Transportation Lines
Technical Ability(40%)
Evaluate this factor based on your review of the technical proposals distributed by the City Clerk
f-4.
Qualifications(20%) 20 58 67 53 49
Proposed Personnel(20%) 20 53 65 40 53
Transition Plan(10%) 10 29 38 23 25
Proposed Management and Operations Plan (20%) 20 62 63 46 49
Risks and Added Value Assessment(10%) 10 27 32.5 22 27
Proposed Maintenance and Equipment Plan (20%) 20 57 63 44 50
Subtotal-Technical 100 286 328.5 228 253
Past Performance(20%)
Evaluate this factor based interviews with references that will be provided by the technical assistance consultant
Reference Checks 50 76 147.5 133 38
Subtotal-Past Performance 50 76 147.5 133 38
Financial Ability(10%)
Evaluate this factor based on report to be prepared by the City Finance Department
Financial Ability and Risk Ranking 25 100 100 100 50
Subtotal-Financial Ability 25 100 100 100 50
Interviews with Key Staff(30%)
Evaluate this factor based on vendor interviews
Interviews with Key Management Staff 75 228 231 228 220
Subtotal-Interviews 75 228 231 228 220
Total-All Evaluation Points 250 690 807 689 561
Larkin
HOf n Larkin Hoffman Daly&Lindgren Ltd. •
ATTO,-RNEYS
1500 Wells Fargo Plaza
7900 Xerxes Avenue South
Minneapolis,Minnesota 55431-1194
GENERAL: 952-835-3800
FAX: 952-896-3333
WEE: www.larkinhoffman.com
June 14,2012
Stevan Kvenvold, City Administrator BY ELECTRONIC MAIL ONLY
Rochester City Hall
201 Fourth Street S.E.
Rochester,MN 55904-3780
Common Council of the City of Rochester
Rochester City Hall
201 Fourth Street S.E.
Rochester, MN 55904-3780
Re: Further Protest-City of Rochester RFP for Rochester Public
Transit Service Operations&Maintenance
Organizational Conflict of Interest, Personal Conflict of
Interest; Lack of Bidder Responsibility;Failure to
Conduct Due Diligence; Bias,Prejudice,and
Predetermination •
Dear Mr. Kvenvold and the Common Council:
This letter serves as Rochester City Line's ("RCL's") further protest of the Rochester Common
Council's award and announcement on April 2,2012, and its proposed selection of First Transit,
Inc. as the provider of bus transit services in the City of Rochester. RCL appeals for all the same
reasons articulated in its June 4,2012 letter, and supplemental letters dated June 8,2012 and
June 11, 2012,to City Attorney Terry Adkins,incorporated herein by reference, and for such
other and further reasons as set forth herein. As fully articulated in the Appeal of June 4,2012,
the competitive procurement for this contract was infected by an organizational conflict of
interest,rendering any contract awarded to First Transit invalid. We request that you please
forward this electronic submission to the Common Council.
RECUSAL
In his response,City Attorney Terry Adkins indicates that he has appointed an independent
counsel to attend all future meetings of the common council where any bid protest appeals are to
be considered,such as this appeal. In considering this appeal,Mr.Kvenvold and the common
council should not give any deference to Mr. Adkins's prior denial of this protest, and instead
should consider the advice from the special counsel.
i
Mr. Kvenvold and Common Council
June 14, 2012
Page 2
THE THEORETICAL BASIS FOR THE ORGANIZATIONAL CONFLICT OF
INTEREST
At its heart,the response of Mr. Adkins shows a fundamental misunderstanding of organizational
conflicts of interest("OCIs"). Not all OCIs fit neatly into the precise boxes that may have been
described in particular sets of regulations,and the Federal Acquisition Regulation specifically
holds that"[c]onflicts may arise in situations not expressly covered in this section 9.505 or in the
examples in 9.508." 48 C.F.R. § 9.505. One of the two underlying principles for addressing
OCIs is"[p]reventing competitive advantage." Id. To further this principle, "the exercise of
common sense, good judgment, and sound discretion is required," id., not intense scrutiny of
whether a particular conflict conforms in exactitude with regulatory proscriptions that could
never possibly contain every possible type of OCI.
In this case,the OCI arose from the City's interference with the competitive process so as to
provide a competitive advantage for First Transit,Inc. ("First Transit"), and a competitive
disadvantage for RCL. Ordinarily,where one of two competing proposers alleges that its
competitor has lured away one of its key employees,the dispute between the two competitors is
a private dispute between the two proposers and for which there is no OCI with respect to the
soliciting government agency. Ellwood Nat'l Forge Co.,B-402089.3, Oct. 22,2010,2010 CPD
¶250 at 3-4 (citing LLH&Assocs., LLC, B-297804,Mar. 6,2006,2006 CPD 152 at 5).
However, such a protest may be sustained where there is evidence of government involvement.
• Id. Here,there is government involvement.
More particularly,the City,through Anthony Knauer, provided competitive advantages to First
Transit. Mr. Knauer started meeting with Paul Buharin,a regional manager for First Transit, in
the summer of 2011,probably late June, as the City was putting together its Request for
Proposals("UP"). See Buharin Dep. at 21,29 (Buharin deposition excerpts enclosed). Mr.
Buharin was seeking information about the possibility of the City issuing an RFP for the work
being performed by RCL. Id at 21. There were two such meetings between Messers. Knauer
and Buharin, each about 45 minutes in duration. Id. at 49-50. Both were conducted in private.
Id.at 49. Mr. Buharin believes that no one else met with Mr. Knauer prior to the release of the
RFP. Id. at 56.
Mr. Buharin telephoned Mr. Knauer to make arrangements for the first private meeting. Id. at
50, 52. Mr. Knauer indicated that he wanted to meet with Mr. Buharin. Id. at 52. During the
first meeting, Mr. Knauer told Mr. Buharin that there would be an RFP released,probably in
autumn,probably October. Id. at 52-53. Mr. Knauer also described Randy Huston, RCL's
operations manager,to Mr. Buharin as follows: "Here's someone who we like.Here's someone
who knows the operation." Id. at 21. He described Mr. Huston as the"operations manager for
the incumbent." Id. at 26. Mr. Knauer also emphasized to Mr. Buharin the importance of the
winning bidder to focus on local jobs and local employees, something that Mr. Buharin took as
being important and an "interesting"analogy. Id. at 53. But as soon as this important
information was conveyed to Mr. Buharin,Mr. Knauer ended the meeting suddenly, id.at 54, as
if the purpose of the meeting had just been completed. The communication from Mr. Knauer
• was clear: If First Transit were to lure away Mr. Huston from RCL then First Transit would be
viewed positively; nothing else could be served by the conversation between Messers. Knauer
Mr. Kvenvold and Common Council ,
June 14, 2012
Page 3 •
and Buharin in their private meeting. Mr. Buharin later communicated to his superior,John
Mathews,that Mr. Huston was"well regarded by the City." Id. at 23.
The second private meeting between Messers. Knauer and Buharin was in early autumn or perhaps
in August 2011. Id. at 50. Again,Mr. Buharin called Mr. Knauer. Id. at 54. At the second meeting,
Mr. Knauer provided Mr. Buharin with much non-public information concerning the RFP, including
the review of its RFP draft by the Federal Transit Administration("FTA")regional office in
Chicago. Id. at 55. Mr. Buharin found it to be odd that the FTA should be involved in the minutia
of the RFP. Id.
Taking heed to the encouragement of Mr. Knauer, Mr. Mathews arranged for a conversation with
Randy Huston in the fall of 2011—prior to the release of the RFP—at the annual Minnesota Public
Transit Conference. Mathews Aff. 15. During that conversation Mr. Mathews gauged Mr. Huston's
interest in defecting from RCL and joining First Transit as its general manager. Id. at 16. But for
the active involvement and encouragement of Mr. Knauer there would not have been any pursuit by
Mr. Mathews of Mr. Huston.
Mr. Knauer furthered First Transit's competitive advantage by giving assurances to RCL's
Maintenance Manager, Roger Ritchie, almost a year ago that Mr. Ritchie would not have anything to
worry about when transit moved to the new facility. See enclosed Affidavit of Pat Donahoe, ¶ 7.
Mr. Ritchie, of course, was named by First Transit as its proposed Maintenance Manager
(unbeknownst to RCL) in First Transit's response to the City's RFP. Simultaneously,Mr. Ritchie •
appeared as part of RCL's management team in the interview portion of the RFP process.
In sum,the intimate involvement of Mr. Knauer with senior First Transit management,through now-
known secret meetings and possibly other secret meetings not yet discovered, and through his
effective assurances that the First Transit would be awarded the contract if the company were
successful in luring away certain key persons from RCL,there is clearly implicated an OCI. Mr.
Knauer tried to throw the RFP to First Transit, a unfair competitive advantage to First Transit,and
an unfair competitive disadvantage to RCL.
REFUTATION OF CITY ATTORNEY ADIUNS'S RESPONSE
Timeliness of Protest
Sufficient information for RCL to launch a protest did not come to be until May 31,2012,the day
that Mr. Huston's deposition was taken. The protest relied on the content of Mr. Huston's
deposition. The 3-day protest period did not commence until May 31, 2012. The protest was timely.
The supplemental protest material was submitted in response to the submission by First Transit dated
June 8,2012. RCL is entitled to reply to the opposition submitted by First Transit, especially since
Mr. Adkins's response itself relies upon the First Transit submission. Its supplemental protest
material was submitted within three days of the date of the opposition papers, and was,therefore,
timely.
, Standing .
RCL has standing to protest the contract award, as do the other two proposers, MV Transportation
and Veolia. See Protest letter from Van Cleve to Adkins of 6/11/12. There was
Mr. Kvenvold and Common Council
June 14, 2012
Page 4
no tradeoff balancing in making the award to First Transit since that company was rated first for
both its technical and cost proposals. Were First Transit to be disqualified,no other proposer
was first rated for both aspects. RCL was rated first for its cost proposal. Even if RCL's
technical proposal were not corrected for its erroneous evaluation,the lower cost of RCL's
proposal might have been sufficient, in the discretion of the common council,to be superior to
the other two proposals. The likelihood of RCL's ultimate success increases if its technical
proposal were to be properly evaluated. RCL has standing.
Organizational Conflict of Interest
Mr.Adkins attacks specific situations outlined explicitly in the citations,but fails to attack the
actual conflict of interest outline above. He never addresses the fundamental principle that
guides OCI jurisprudence: prevention of competitive advantage. He failed to exercise common
sense, good judgment, and sound discretion, and instead fished for regulatory constructions that
would lead to dismissal of protestant's claims instead of investigating whether or not First
Transit benefitted from advantages. In addition,the First Transit opposition fails to refute the
existence of the OCI, and does not even address its relationship with Mr. Knauer which created
the conflict.
From the Adkins response, it is evident that no one was interviewed or that any real investigation
was conducted. The common council should reject the Adkins response,and instead should
sustain the protest. In the alternative, the common council should conduct its own investigation,
• through the special counsel, staying the contract award at least through the conclusion of its
investigation.
Very ly yours,
Gary A. an Cleve,for
Larki offman Daly &Lindgren Ltd.
Direct Dial: 952-896-3277
Direct Fax: 952-842-1720
Email: gv_ancleve(a larkinhoffman.com
Enclosures
1410224.1
In The Matter Of:
ROCHESTER CITYLINES CO. vs.
CITY OF ROCHESTER
PA UL B UHARIN
May 31, 2012
HERBERT L. PETERSON& ASSOCIATES, INC.
11900 WAYZATA BOULEVARD WEST
SUITE 115
MINNETONKA, AN 55305
952.543.6910
Original File Buharin_Paul 5-31-12.txt
Min-U-Script®with Word.Index
•
ROCHESTER CITY LINES CO.vs. PAUL BUHARIN
• CITY OF ROCHESTER May 31,2012
Page 21 Page 23
[li Q. Sure. [li A. John Matthews.
121 A. --until they're awarded is potential [21 Q. Okay. Did Mr.Matthews ever tell you that he
[31 opportunities. [31 knew of Mr.Huston prior to the letter of
is Q. How did you know he was well regarded by the [41 application received from Mr. Huston?
[si City? [si A. I can't answer that.
[61 A. I —I —Tony Knauer said,"Here's someone [61 Q. Did you ever mention Mr. Huston to
[71 who we like. Here's someone who knows the [71 Mr. Matthews as a result of anything
Lai operation." Lei Mr. Knauer may have said to you?
[ei Q. Well,when did Tony Knauer say that? [9i A. When I saw his letter and application, I
moi A. I started meeting with Tony last summer. I 11oi said,"He's well regarded by the City.
mii knew that there was a possibility that this [111 Q. But not before that?
1121 work could come out for bid,and so I had two 1121 A. Correct.
(133 meetings with him a year ago and just,"Well, [131 Q. Okay. So you and Mr. Matthews never
[141 tell me about this,what does it mean?" [141 discussed Randy Huston before receipt of his
11si Q. And what-what did Mr.Knauer tell you [lsi —of Mr. Huston's letter of application?
oxi about Mr.Huston? [16i A. No.
[171 A. Nothing,really. [173 Q. Okay. Did you ever discuss Mr.Huston with
ilel Q. So when Mr. Huston applied to this online ad [lei Mr. Baldwin?
[191 about—about a job,you already knew who he 1193 A. I—I think we've ascertained through your
[201 was? 12o1 questions that—just paraphrasing here—
1211 A. Yes. [211 that I didn't know of Randy Huston before I
[221 Q. Had any effort been made to contact him [223 saw his letter of interest and application,
1231 between your discussion with Mr. Knauer [231 so I could not have talked to Jim Baldwin
1241 sometime last summer, summer of'11,and the [241 about Randy Huston If I didn't know about
[251 time that Mr.Huston submitted his letter of [2si him.
• Page 22 Page 24
[li application to First Transit? 11j Q. Well, I believe,sir,you testified that—
[21 A. Not that I know of. 121 A. Oh, I'm sorry. Yes. 1 did hear about him
[33 Q. Did you have the intention of recruiting [31 from Tony Knauer--
141 Mr. Huston as a result of your conversations [41 Q. You hear about him—
[si with Mr. Knauer--Knauer? [si A. —but—
[61 A. We don't want people to come to us unless [61 Q. --in--in this previous summer?
[7i they want to come to us. If Mr. Huston had [71 A. No.
Lei not indicated his willingness to join our Lai Q. I —there—
1s1 company,we would not have solicited him. [ei A. Yeah.
iloi Q. Did anybody at First Transit,to your [loi Q. No—no trick questions here.
[lui knowledge,contact Mr. Huston to make known illi A. Yeah.
[121 to him that the posting of the potential job [121 Q. You know,just—I'm—I'm working my way
[131 was online? 1131 through the fog to find out—
[141 A. I can't answer that. I can tell you that 1 [141 A. Okay.
11si did not. [lsi Q. —what's—what's—what the—
[161 Q. I understand. And that would not be the sort [161 A. The answer is no. I didn't talk to Jim
1171 of responsibility that would be yours,in any 1171 Baldwin about--
[lei event, to recruit personnel at that level, [lei Q. Okay.
[19i would it? ilei A. --Randy Huston.
12oi A. I recruit my subordinates. But I'm--1'm [201 Q. What—at the time that you met with
[211 assisting with this start-up. I'm not going [211 Mr.Knauer in the summer,was anyone else
[221 to be ultimately in charge of this operation. 1221 from First Transit with you?
[231 Q. Okay. Well,for--for this particular 1231 A. No.
1241 situation in Rochester,who would have had [241 Q. Just the two of you?
1253 that responsibility? [2si A. Yes.
HERBERT L.PETERSON&ASSOCIATES,INC. Min-U-Script® (6)Page 21-Page 24
ROCHESTER CITY LINES CO,vs. PAUL BUHARIN t
CITY OF ROCHESTER May 31,2012
Page 25 Page 27 •
Eli Q. Did you take notes at that meeting? Eli general manager on the contingency that First
[21 A. No. [21 Transit would get the contract?
[31 Q. Did you provide a memo to the file after that [31 A. On the possibility that we would get the
(4) meeting? [41 contract,yes.
[si A. I might have briefed my boss about it,about r51 Q. He was offered the job?
163 a potential future opportunity. [61 A. I believe so,yeah.
[71 Q. So you might have had a verbal [71 Q. Were there any—
rei conversation— [ei A. We used him in our proposal.
[91 A. Verbal conversation. [91 Q. During or prior to February?
iloi Q. --with Mr. Matthews? [loi A. When we submitted our proposal, he was
[lli A. Yes. [ili included as our general manager. I have to
[121 Q. Okay. All right. Was there any email on the [121 answer your question very specifically—
[131 subject, to your knowledge? [133 Q. Yes, sir.
1141 A. I don't recall writing one, no. [l43 A. --because I'm not sure where you're going.
[lsi Q. Did Mr. Matthews follow up,to your [lsi Q. No. That's fine. Thank you. I'm going--
1161 knowledge,as a result of that conversation [161 I'm going where the facts take me. I'm just
1171 with you? [171 looking for--
mei A. Not that I know of. With me or with his [lei A. Okay.
[l9i superiors? [l9i Q. --the facts.
1201 Q. With anyone. [201 Who extended that offer to him?
[211 A. Not--not that I know of. [213 A. That would have to be John Matthews.
[221 Q. Again,we'd have to ask Mr. Matthews? 1221 Q. So Mr. Matthews would, indeed,likely have
[233 A. Yes. 1231 spoken with Mr. Huston during or prior to
[243 Q. Did Mr. Knauer make any suggestion that [241 February of 2012?
[251 Mr. Huston might make a good general manager? [251 A. I'm going to say probably.
Page 26 Page 28 •
Eli A. No. Just what his present position was. Eli Q. And that would have been before the
[21 He's,you know,sort of operations manager [21 solicitation, before the job announcement?
[31 for the incumbent. [31 A. We didn't know that we needed a manager until
[43 Q. Did you — [43 the solicitation for the—for the transit
[si A. We never talked about his potential. [51 service began. I don't believe he would have
[63 Q. I'm sorry. I—I told you I do that [63 had occasion to speak with him before that or
[71 sometimes. I have to be careful. 1 [71 any reason to speak with him before that.
[si apologize. [ei Q. Is—had Mr.Huston indicated his
[91 A. Okay. [9i willingness to accept the position of general
moi Q. Was there any consideration given to [ioi manager with First if you had a contract to
[lli potential employment of Mr. Huston by First [ili operate transit in Rochester?
[123 Transit as general manager for transit [121 A. I don't know specifically. But I assume he
1131 operations in the City of Rochester in [131 --he said yes, he was Interested, because
[141 February or before of this year? [143 ultimately we proposed him as our general
1151 A. In February,yes. Before, no. risi manager.
[163 Q. And—and what consideration was--was 1161 Q. Was that—
[171 given to that proposition in February of this 1171 A. We would not have done that without his
[isi year by First Transit? [let willingness.
[193 A. I'm not sure how to answer that question. He [i93 Q. Was that the context in which the decision
[201 applied for the position. He appeared on [2o3 not to use him on the interview team came up?
[211 paper to have the qualifications and the [211 A. You're assu--you're assuming we're much
1221 confident of the —and the confidence of the [221 more organized than perhaps we are behind the
[231 client,and those are Important Issues in-- [231 scenes.
[241 in our competitive business. r243 Q. No. I'm just asking as a matter of fact.
[251 Q. Did—was he offered the—the job of [251 A. The interview team came up as a function of
HERBERT L.PETERSON&ASSOCIATES,INC. Min-U-Script® (7)Page 25-Page 28 •
ROCHESTER CITY LINES CO.vs. PAUL BUHARIN
• CITY OF ROCHESTER May 31,2012
Page 29 Page 31
[1i our who is going to get in the car and go to [1i Q. And so it's a matter of some importance that
[21 the interview. The decision was made within [21 the team presented be available. Is that
Di 48 hours before that interview. And again, [31 correct?
[41 as I stated before, it was that we are not tal A. That's correct.
rsi going to Include Randy in our interview team. [si Q. And so—
161 And -- [6i A. Are we discussing the interview or the
(7) Q. Would it be customary for First Transit to [7) proposal?
tei take its proposed general manager on such an [ei Q. Well,we're discussing the proposal.
191 interview? [9i A. Okay. Thank you.
[loi A. It is common. If the--and I —you know, [101 Q. And with regard to the proposal,would the
r11i my--my experience with this is somewhat [iii company offer a general manager with whom
t121 limited. But the avenue that we took in-- [121 they did not already have some agreement or
t131 in this instance,I believe, Is common,where [131 understanding?
[141 if that person is not an employee or It would 1141 A. It would be a bad business practice to do so,
[isi be a conflict for that person to participate [lsi so no,we typically would not do that.
[l6i in that activity,that they don't 1161 Q. How many times in your experience—you've
r171 participate. [171 been with First Transit for many years?
[lei Q. Was there any discussion about the potential [lei A. Eighteen --18 years,yes.
r19i of conflict in Mr. Huston's circumstances in [3.91 Q. For 18 years. In your 18-year experience,
12oi deciding not to take him to the interview? [2oi how many times has First Transit ever done
[21i A. We decided it would be a bad idea. [211 so?
[223 Q. Did you have any reason to believe at the [221 MR. MAIER: Object to the form of
(23) time'you made that decision that Mr.Huston 1231 the question as vague.
[243 would himself have been willing to go to the [241 MR. DIAZ: Okay. Well, let's go
[251 interview with First? [251 back.
• Page 30 Page 32
t11 A. It--he—he was never asked. It was never [1i BY MR.DIAZ:
[21 his decision to make. [21 Q. In your 18 years with First Transit, how many
[31 Q. All right. Now,you said that in your (3) times has the company made a proposal to—
141 proposal--in the First proposal to the [al for a prospective contract which included the
[si City,you stated that Mr. Huston would serve [si designation of—of a prospective general
[6i as general manager. Did I get that [61 manager from whom the company did not already
[7i correctly? [71 have a commitment that they would accept the
[ei A. Uh-huh. [el assignment?
[91 Q. You— 191 A. I can't say a number. But it's—it's
[1oi A. Yes,sir. [1oi happened from time to time where someone
t11i Q. You have to answer. [11i pulled their--you know,the thing's already
[121 A. Yes,sir. [121 printed, and somebody says, "I'm not
[131 Q. Okay. And I take it that First wouldn't [131 interested." Well,guess what,we submit it
tlai customarily list senior personnel, such as a i141 anyway because it's done.
rlsi general manager,without having some tisi Q. All right. But you,at the time—
[16i assurance that the personnel in question t161 A. It's very--it's very limited,but it does
E171 would be available,would you? [171 happen.
[lei A. Can you restate your question, please? [lei Q. All right. At—at the time that the
[19i Q. Sure. The company's putting its neck on the ti9i proposal would have been printed,though,the
[201 line when it says to a prospective customer, [201 company would have had a good-faith belief--
[211 "We're going to present--the reason you [211 A. Correct.
[221 should engage us is that we're going to use [221 Q. --that the person would accept the job.
r231 this team,including this general manager." [231 Correct? -
t241 Right? [211 A. Correct. Yes.
1251 A. Yes. [251 Q. And what does it take to form that level of
•
HERBERT L.PETERSON&ASSOCIATES,INC. Min-U-Script® (8)Page 29-Page 32
ROCHESTER CITY LINES CO.vs. PAUL BUHARIN
CITY OF ROCHESTER May 31,2012
Page 49 Page 51 •
[li included in your proposal? 111 A. ATU,yes.
[21 A. Yes, he was. [23 Q. From the international or from the local?
[31 Q. He was? [3i A. From the local.
[41 A. Yes. 143 Q. And from the--from the—its either the
[si Q. Okay. In what section of the proposal? 1e3 general secretary or the president of the
[6I A. We included him in--we--we have resumes. 163 local?
[71 But he was mentioned in the maintenance [71 A. President.
1e1 section. [ei Q. The president of the local. And this is
193 Q. Okay. So he had also been offered employment [9i someone that you know?
[101 as of the submission of the proposal? [loi A. Yes. They also represent some of our
[lii A. Yes. [ii[ employees.
[121 Q. Okay. Mr. Buhadn, can you be somewhat more [121 Q. Okay. And how did the president of the union
[131 specific than just the summer of 2011 as to [133 come to make this information known to you?
1141 when you may have met with Mr.Knauer in [141 A. We were finishing up our negotiations for my
[lsl Rochester? [15i mechanic group last spring,and her schedule
[163 A. I knew my son was out of school because I [1c —it was very difficult for us to meet
[171 dropped him off at my parents'house before 1 [171 because she said she was going to Rochester
[le[ went to that meeting,so it had to be [lei quite a bit,and I said,"Oh,yeah? How
[i91 probably late June. [191 come?" You know,just small talk.
[203 Q. Late June. Okay. And if—if I understood [2oi Q. Sure.
[211 you correctly,you had two such meetings? [211 A. And she said, "Well,we're negotiating a
[221 A. Yes. [221 contract for the group." And I said, "Oh,
1233 Q. And those meetings were just between you and [231 yeah? I didn't know you guys represented
1241 Mr. Knauer? [241 them." And she says, "Yeah. It's --we've
[2si A. Correct. Informal. [2si had them for a couple years." And —but she
Page 50 Page 52 •
[1J Q. Okay. How long did those meetings each last? 13.1 said, "It's really kind of hard because it's
[21 A. He might have carved out 45 minutes for me. [21 a very short-term agreement." And I said,
131 Q. Okay. And when was the second meeting? [31 "Well,why is that?" And she said,"Well,
141 A. Early autumn. August,maybe. [41 they--they think there's going to be an
[si Q. And that was also just between you and he? [s) RFP." And 1"m,"Oh,really? That's
161 A. Correct. to interesting." So--that's all.
[71 Q. And that was also about 45 minutes? [71 Q. Okay. And based on that information,you
[ai A. I think so,yes. [ai called Mr. Knauer?
[91 Q. And how did the first meeting come to be [9i A. Correct.
[lot scheduled? [ioi Q. And what did you tell Mr. Knauer when you
[iii A. I called him. [ili called?
[i2i Q. You called him? [121 A. "I'd like to meet with you."
[131 A. Yes. [13[ Q. Did you tell him why?
1143 Q. And what was the purpose of your call? pm A. No.
[lsi A. To find out when there would be an RFP for [is[ Q. So he said,"Come on by"?
[io the transit work in Rochester. 1161 A. Yeah.
[i7i Q. And did you have information that caused you [171 Q. And during this 45-minute conversation,what
[le] to believe that there would be an RFP? [lei was—what was in your mind,what was the
a91 A. Yes. r19i purpose of having this meeting?
1203 Q. What was that information? [2o[ A. To find out when there would be a business
[211 A. I had heard from—I think my first 1211 opportunity in Rochester, Minnesota.
[221 indication was from the union,that there may [221 Q. Okay. And did he tell you?
[231 be a —an opportunity in —in the City of [231 A. Yeah.
[241 Rochester. [24i Q. And what did he say?
[25] Q. From the ATU? [2si A. Probably late winter,early spring. No.
HERBERT L.PETERSON&ASSOCIATES,INC. Min-U-Scriptg (13)Page 49-Page 52 •
ROCHESTER CITY LINES CO.vs. PAUL BUHARIN
• CITY OF ROCHESTER May 31,2012
Page 53 Page 55
rli Actually, he said autumn. He thought it clr He said that the RFP was under review by the
[21 would be October. And I said,"Okay." We [21 FTA regional office, and he wasn't sure when
[31 talked about lots of things. We didn't just [3) they were going to get done,which I thought
[4[ focus on that. It was— [41 that was a little odd,but,you know,just
[sr Q. I see. [sr listening now. And he said, "Well,you know,
161 A. You know, I needed to catch up with him. 1 (6) when it comes out, I'll—I'll give you a
[71 .had met him through some,you know,trade [71 heads-up that there's a posting on the City
[er associations years ago,and I don't circulate cei of Rochester website." And—and he
[9i as much as I used to,so it was good to see 191 ultimately did so.
[loi him after 15 or 20 years. [101 But I think he ultimately sent the same
[li] Q. Uh-huh. [l1] heads-up to our competitors.
[121 A. So we talked about where we've been. And he 1123 Q. And why did you think it was a little odd
[13] talked about the new garage and he was really 1131 that they were having trouble with this—or
cl4i excited and how much of a headache it was. [143 that there was some delay in FTA review of
[151 He did talk about how he had let his [lsr their proposal?
[l6i parking contract,and he talked about what [16i A. In my experience,that's not usual,that the
[173 value the City put on the winning bidder's [171 FTA will review a local municipality or
[lei focus on local jobs and local employees. And r1ai transit authority's procurement procedures to
[191 in terms of a business opportunity,that's [l91 that level of detail. That caused me to
[201 important information,knowing what's [201 scratch my head a little bit.
1211 important to a potential customer. [211 Q. But the FTA does do,sometimes,more detailed
[22[ And so that was an interesting analogy, [223 guidance when they're requested to by their
1231 and I took that information very much to (231 grantees, don't they?
124) heart. [241 A. Yes.
1251 Q. Okay. 1251 Q. Did Mr. Knauer suggest that they had asked
• Page 54 Page 56
c1] A. And then it was kind of weird because he just Eli for special guidance from the FTA? "They"
r2i kind of summarily dismissed me. I think he 121 being the City of Rochester.
[31 had another meeting,and he closed it very [3] A. No. He did not. He just told me factually
[41 quickly. "Okay. Thank you. Good-bye." 141 that it was at the—the region office in
cs1 Q. Did you agree at that time to meet again? [si Chicago.
[61 A. Huh-huh. That is no. Correct. I'm sorry. 161 Q. Did anyone else,to your knowledge,from
[73 1 was taking a swallow of my coffee. I'll M First Transit have any meetings with
cei put it down. rai Mr. Knauer prior to the issuance of the RFP
[91 Q. That's—that's okay. And how did the 191 for a transit operator?
[lol second—what gave occasion to the second [lot A. To my knowledge,no one else met with him.
[lli meeting? [11I Q. Did anyone else,to your knowledge,call him,
[121 A. I —there was still no—no written [12[ anyone else from First Transit call him?
[131 Indication of an RFP coming out. I couldn't [131 A. I don't think so,because I don't think John
[141 find anything out about it through my perusal [14i was getting Information from anyplace else,
clsi of industry news or of,you know, my limited [lsi My boss Is a very busy man. He spends a
[16J opportunities reading FTA circulars. I c16] tremendous amount of time watching over not
1171 couldn't find anything about when —what the [173 just his operations In Minnesota but
[le] process was and the--the--I should have [lai elsewhere in the country,and if I can brief
ci9r heard something by then if it was going to c19i him on something, I will do so.
[201 come out. [201 Q. Mr. Matthews is well known.
1211 Q. So did you call Mr. Knauer? 1213 A. Okay.
1221 A. Yeah. [221 Q. Mr. Matthews is well known.
[231 Q. And in that—in that—in that--in that 1231 But I take It from what you have said
[241 call,what was the sum and substance? 1241 that it is your testimony that Mr. Matthews
Us1 A. Well, he was a little vague on the details. 925I might have had a phone conversation with
HERBERT L.PETERSON&ASSOCIATES,INC. Min-U-Script® (14)Page 53-Page 56
•
AFFIDAVIT OF PAT DONAHOE
STATE OF MINNESOTA )
:ss.
COUNTY OF OLMSTED )
Pat Donahoe,being first duly sworn on oath says:
1. My name is Pat Donahoe.I am the Project Manager of Rochester City Lines,Co,
("Rochester City Lines"). Rochester City Lines is a Minnesota corporation with its principal
place of business at 1825 North Broadway,Rochester,Minnesota 55906.
2. I am an adult resident of the State of Minnesota. I make this affidavit on personal
knowledge and in support of the Rochester City Lines protest of the award to First Transit,Inc.
("First Transit")of a contract for the operation and maintenance of public transit service in the
City of Rochester.
3. Randy Huston attended the Minnesota Public Transit Conference held on October •
12 through 14 in St.Paul,Minn. Afterwards I found out that during the conference Randy was
introduced to someone from First Transit. I became aware upon his return to work that he had
been in conversation with First Transit but I was of the understanding that he was not
immediately offered a job by First Transit.
4. Over a period of time Randy was having conversations with First Transit both at
home and during his work day at Rochester City Lines. I do not know the date that he was
officially offered a job with First Transit.
5. I believe that Randy had a conversation with Joe Jacobson a week or two prior to
the interviews regarding 1us intei viewing with First Transit. That is when Joe informed Randy
that he would no longer be an employee of Rochester City Lines if he did sit with First Transit
during their interview. Subsequently Randy made the decision not to attend First Transit's
interview session.
6. The week before the award of the contract Randy was planning his time off and
transition to First Transit.
7. Roger Ritchie,Rochester City Lines Maintenance Manager,who has recently
submitted his resignation,told me that that City of Rochester Transit Manager Tony Knauer
stated a year ago that he,Mr.Ritchie,would not have anything to worry about when transit
moved to the new facility.I believe he has accepted a position with First Transit.
- C40
Pat'15onahoe
• Subscribed and sworn to before me
this 4th Jay f June,2012.
Notary ublic
TAMARA L.MOSING
Notary Public-Minnesota
.,m.1408941.1 My ComWaston Explies Jan 31,2014
• 2.