The public agency that oversees South Florida’s tri-county commuter rail service awarded a potential 10-year, half-billion-dollar operational contract Friday to a private railway firm after disqualifying five competing — and significantly cheaper — bidders.
The board of the South Florida Regional Transportation Authority voted 6 to 2 to approve Herzog Transit Services’ $511 million takeover of Tri-Rail’s daily operations, starting in July. With the contract, Herzog will handle a 72-mile passenger train service that attracts millions of annual passengers and is on the verge of an expansion into downtown Miami.
Agency officials said the agreement was put out to bid with the intention of improving Tri-Rail’s service. But whether Herzog will accomplish that task remains to be seen. So far, the deal has succeeded mostly in drawing political fire from the losing bidders, litigation, and scrutiny from the state’s transportation department and a key state legislator who says the entire process needs to be reviewed.
“I’m not saying there’s impropriety,” Sen. Jeff Brandes, a St. Petersburg Republican who chairs the legislative subcommittee that oversees Tri-Rail’s state funding, told the Miami Herald. “I’m saying it doesn’t look right. It doesn’t smell right.”
The agreement approved Friday combines four expiring vendor contracts for maintenance, train operations, station maintenance and dispatch services. Six firms submitted bids: Amtrak, Bombardier, First Transit, Herzog, SNC-Lavalin and Transdev.
Herzog’s bid was the most expensive by $38 million, and more than $100 million pricier than Bombardier’s barrel-bottom $396 million bid. But that didn’t matter, because Tri-Rail’s purchasing director tossed every bid but Herzog’s after deciding they’d all flubbed their submissions, as first reported by Politico Florida. The disqualifications, according to the transportation authority, were based on the bidders making their prices “conditional” by noting they were subject to change based on insurance coverage, even though the agency had warned vendors that all submitted costs had to be final.
“It was made clear time and time again: Do not condition your proposal. And they did,” executive director Jack Stephens told the board.
With five of the six proposals disqualified, only Herzog’s was evaluated and presented to the board. Agency staffers noted that the company’s submission, while the priciest of the six, nevertheless came in under an estimated cost prepared by an independent consultant. They said the other bids were artificially deflated based on pricing conditions, in some cases due to the incorrect expectation that Tri-Rail’s insurance would cover their affiliates and sub-contractors.
But within hours of the vote, Florida Department of Transportation Secretary Jim Boxold sent a letter to Stephens warning that the board’s action “heightens” the department’s concerns about the authority’s spending of state money. The department is currently at odds with the authority over an auditor’s opinion that the state, which currently disburses some $42 million to Tri-Rail in upfront payments, is required by law to release the money as reimbursements after reviewing expenses.
“Based on the authority’s action today, and the authority’s position on the ability of the department to impose state law controls on the authority’s expenditures, the department is reviewing all discretionary funding it provides the authority,” Boxold wrote, “and may elect to withhold such funding in the future.”
Meanwhile, all five disqualified firms are protesting the contract award. Earlier this month Transdev, which has opeated Tri-Rail’s trains for the last 10 years, sought an injunction in Broward court to stop the authority from awarding the contract or proceeding further with the procurement process. Bombardier and First Transit joined the suit.
Judge Barbara McCarthy ruled Monday that the process could move forward. She said all three disqualified vendors had opportunities to challenge the process during the bidding, or ask for further clarification, but did not.
“Transdev was more than willing to play by these rules when it thought it was going to win by them, and will not be allowed to complain about them now that it knows it has lost,” she wrote.
Undeterred, attorneys and executives for all three companies attended Friday’s board meeting in Pompano Beach to urge the agency to reissue its solicitation or reconsider its decision to disqualify them. Former Florida attorney general Bill McCollum, representing Bombardier, said the agency ought to be concerned about the cost of the contract and the perception of favoritism.
“It’s not right what went on, in my opinion, to get to this point. It’s just not right. And it has a very serious sense of impropriety,” McCollum said.
Tim Ryan, a Broward County Commissioner and chairman of the authority, was swayed. Gerry O’Reilly, the Florida Department of Transportation’s District 4 secretary, said he also worried about the cost of the contract, given that Tri-Rail literally can’t afford it barring cost savings or new income streams. But the remainder of the board members present — James Scott and Frank Frione were absent — sided with their administration, saying Herzog was clearly qualified and arguing that the agency needs to proceed with the contract now so it can be ready when its downtown Miami station opens over the summer.
“It makes me extremely uncomfortable to extend this beyond this point,” said Stephens, noting that Tri-Rail has nine months from the time its downtown station is ready to begin running trains into downtown before incurring financial penalties under an agreement with Miami-Dade County. “Our future right now is coming quicker than we ever expected it to, and we need to be able to handle that.”