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AC Transit invalidates $13 million security contract deal

An AC Transit bus in Berkeley
An AC Transit bus in Berkeley
Competing company raises questions about vote, directors' ties to winning firm

AC Transit acknowledged yesterday it improperly awarded a $13 million contract to a firm with financial ties to two members of its board of directors.

Securitas Security Services won the contract in July, despite receiving the lowest score in the transit agency’s bidding process. AC Transit's board approved the deal by a vote of 3-1, even though its rules require four votes of approval.

After Cypress Security, the bidder with the highest score, raised questions about the vote during a board meeting last week, AC Transit General Manager David Armijo yesterday declared the contract with Securitas invalid, according to a memo obtained by The Bay Citizen. In the memo, Armijo – who was present at the July 11 meeting – acknowledged the board did not follow proper procedures.

No one at the meeting appeared to notice the board did not have enough votes to approve the contract, according to the meeting minutes. Two board members were on vacation. Unlike most AC Transit meetings, that meeting was not recorded. It was held offsite at Hayward City Hall.

Zach Wasserman, Cypress' attorney, challenged the propriety of the vote last week when he urged the board to hear his company's appeal of the awarding of the contract. He also questioned the relationship between Securitas and directors Joe Wallace and Joel Young.

Wallace, who is paid $950 a month as a board member, also works as a security guard for Securitas. Young received $6,650 in donations from the firm and its employees for his failed bid for a state Assembly seat. Securitas was one of his biggest campaign donors.

Wallace recused himself from voting on the Securitas contract. Young voted to approve the deal.

Wasserman told the board last week that Young and Wallace “acted legally,” but said the men’s ties to Securitas presented “an appearance issue.”

AC Transit does not prohibit directors from voting on contracts involving campaign donors and does not limit such donations.

“In the sense of appearance, this deserves a full hearing,” Wasserman argued at last week’s meeting.

The board did not discuss the issues Wasserman raised when it voted to hear Cypress’ appeal. Wallace also recused himself from that vote; Young voted in favor of hearing the appeal.

In the memo sent yesterday to the transit agency's board of directors, Armijo said there would be no need for an appeal since the contract was not properly approved in the first place. He wrote that the matter would be discussed at the next board meeting on Sept. 19.
Armijo did not immediately respond to a request for comment.

Wallace declined to comment on his relationship with Securitas. He began working for the firm last year, according to his statement of economic interest, before AC Transit began considering whether to renew its contract with the firm.

Young did not return a call or an email seeking comment. A vice president for Securitas also did not return calls seeking comment.

Securitas has provided security guards for the transit agency’s buildings and bus yards since 2000. AC Transit put the contract out to bid earlier this year and received responses from 10 companies.

After narrowing the field to four firms, the transit agency’s staff scored each bidder. Cypress bid $6.5 million for the first five years of the contract, with an option for another five years at $7.2 million. Securitas had a slightly lower bid, offering $6.3 million for the first five years, with an option for another five years at the same price.

Price counted for 30 percent of a bidder’s rating – and Cypress earned much higher marks than Securitas on technical expertise, resulting in a final score of 85. Securitas received a 77, the lowest score among the four bidders. But the transit agency’s security chief recommended the board approve Securitas’ contract at its July meeting, because of continuity and its slightly lower price.

AC Transit provides bus service throughout Alameda and Contra Costa counties. Like BART’s board of directors, AC Transit’s directors are elected representatives. But BART has limits on campaign contributions from contractors.

Chris Peeples, an AC Transit director, told The Bay Citizen that he would like to see stricter rules in place regarding contracts and potential conflicts of interest. Peeples wants the board to discuss the matter at a future meeting.

“It’s partly because of some of the stuff that’s come out with this contract, but for me it's because we’re going into a period where we’re going to be doing a lot of procurement with our (bus rapid transit) project coming up,” Peeples said. “I just think it’s a useful good government thing to do.”

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