Appeals board nullifies pacts on van service

2 MTA employees found to have tainted process

Transport of disabled at issue

State agency told to rebid $43 million in contracts

April 13, 2004|By Stephen Kiehl and Michael Dresser | Stephen Kiehl and Michael Dresser,SUN STAFF

In a sharp rebuke to the state Transportation Department, an appeals board has overturned $43 million worth of contracts to transport disabled passengers because the contracts were awarded in a "tainted and flawed" process.

The state Board of Contract Appeals found "serious violations of laws and regulations" on the part of two Maryland Transit Administration employees who had frequent contact with a company bidding for the lucrative contract to provide van and taxi service to the disabled.

The appeals board, in a unanimous 3-0 decision, ordered that the bidding process for the contracts be redone and said a decision to uphold the contracts, as the Transportation Department had urged, would "result in a complete undermining of the procurement process in Maryland."

The MTA decided last fall to award the contract to Laidlaw Transit Services of Overland Park, Kan., and MV Transportation Inc. of Fairfield, Calif. The decision came after two MTA employees sent numerous supportive e-mails to a Laidlaw executive, including one saying, "Please make this note disappear!"

The e-mails were written by Ruth Silverstone, the former head of the MTA's paratransit service, and Joyce Callahan, an employee in the paratransit section. Both were on a committee that recommended Laidlaw receive the $43 million contract, which is currently held by Yellow Transportation Inc. of Baltimore.

In one e-mail, Callahan wrote to Laidlaw executive Kim Chin that his team "did an excellent job" at the interview for the contract and "set the pace" for the other companies to follow. Callahan called Chin "an example of excellence in this industry."

Also, after Chin had sent Callahan a newspaper article critical of Yellow's service, Callahan wrote back to say the article provided "a perfect opening for you" and had been "manipulated into our daily clips for the powers that be to see. Keep up the good work."

According to the appeals board's 43-page ruling, which was made public yesterday, "This communication strikes a body blow at fundamental notions of fair and impartial procurement procedures and is violative of any number of Maryland procurement laws and regulations."

Silverstone and Callahan remain employed with MTA. Officials would not say yesterday whether their status would change.

Yellow, which has provided van and taxi service to disabled people in the Baltimore region for 15 years, brought the case before the board after it failed to win a renewal of its contract last fall. Yellow contended that state officials were biased in favor of Laidlaw and against Yellow.

Although the board found bias for Laidlaw, it did not find that the employees were biased against Yellow. The board also did not find evidence of bias on the part of state Transportation Secretary Robert L. Flanagan or his deputy, Trent M. Kittleman.

The core of the issue is who will provide transportation to 2,300 disabled passengers in the Baltimore area. Yellow, the current provider, has been the target of frequent complaints that its vans are late for pickups or never show up at all.

Yellow says the problems are the result of a "dysfunctional system" in which the MTA takes the reservations and passes them on to Yellow, which cannot change them. Yellow has recently had an 85 percent on-time record, but company officials said that should improve when a new reservation system is implemented.

Yellow's contract runs to July 1. Last week, the Transportation Department issued emergency contracts to Laidlaw and MV Transportation to prepare to provide service. A final decision on who will provide the service is expected within days.

Flanagan would not say whether the appeals board's ruling would influence the decision on who gets the contract, nor would he say whether Laidlaw's improper contact with the MTA employees would disqualify it from doing state work. "That's a fair question, but I would rather not comment further on it at this time," Flanagan said.

The president and chief executive of Yellow Transportation, Mark L. Joseph, said the emergency contracts should be immediately terminated. "Now Laidlaw has benefited from their own wrongdoing, which is a miscarriage of justice," Joseph said. "Laidlaw should not benefit from that kind of conduct."

State Del. Peter Franchot, chairman of the House subcommittee overseeing transportation spending, called the board's decision "outstanding."

"Some heads should roll at the Department of Transportation," said the Montgomery County Democrat, who held a hearing on the procurement issue.

A Laidlaw official said the company was "disappointed" by the ruling but would need to study it further before making additional comments.

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