Wednesday, September 12, 2018

City sues Transdev. Circulator on course to crash and burn

The days when Baltimore's very own Charm City Circulator bus system could easily upstage the MTA and demonstrate how cool transit could look are long over. From being one of Baltimore's jewels it slid into the position of unloved stepchild in the eight years of its existence.
Baltimore bus transit woes. Circulator in trouble.

Now ultimate trouble is in sight. The operation contract held by the multi-national Transdev Corporation (formerly known as Veolia) expired in January and an extension will expire in October. But a real bombshell exploded today.

The City has been stewing over the two bids it reportedly got in response to its request for proposals (RFP) since April. As noted in an earlier article on this blog, the RFP  did not ask bidders to identify the best services they could offer based on a defined sustainable budget (the current operation runs a loss, at least if bus payments and renewal are included in the budget) but was prescriptive in telling bidders what service they had to provide and even prescribed a certain number of buses to do so. The RFP was mum on the bus garage and maintenance facility that is needed to run a fleet of buses. Current operator Veolia has a lease on such a facility, any competitor would have to find one starting with the moment it would begin operation. Not an easy proposition given that bus garages are rarely sitting around for the picking.

The process of vetting the bids came to a sudden end with a press release coming out at 5pm today containing explosive news. The City is suing Transdev/Veolia for breach of contract and overcharging $20 millon for the operation of the Circulator. The dispute seems to center around te question whether Transdev rightly charged for scheduled services or whether the City's position is correct that they can only charge for actual services. This sounds clear cut (how can you charge for a service you should, but didn't provide?) except that there may be external reasons not to run a service that Transdev couldn't control, situations where the operator still occurred cost even if a bus run didn't happen and the like, all something that the courts will now look at. The number is so large because the City disputes all eight years during which time it had accepted the schedule based billing.
Today's agenda of the City's Board of Estimates includes among other details about the Circulator bid this:
On March 28, 2018, the Board received two proposals for B50005328, Baltimore City Shuttle/Transit. Vendors were solicited by postings on CitiBuy, eMaryland Marketplace, and in local newspapers. The above noted proposal met the City’s minimum technical score requirements for price opening, and was determined to be the sole responsive and responsible proposer.

 The legal matter certainly eliminated Transdev from being the favored bidder. The City is now negotiating with the second bidder, RMA Worldwide, a Montgomery County based VIP Limousine service which also runs the Bethesda free Circulator. It doesn't take much to imagine the train wrecks that are possible once the Veolia extension expires on October 11.
  • A new company gets the contract without funding for the required Banner Route (where already old Diesel fumes spewing bus are run to save cost), low ridership on the Orange Route,  a route that defies any transit planning logic, and the flagship Purple Route bleeding money since it has been extended to Hopkins University). A company that would have to procure buses and grab a maintenance facility in mere weeks 
  • Additionally, further State support for the Circulator on which the City came to rely, could be in jeopardy if no viable operation of the City system is in sight, especially since the State already saw their support of bikeshare evaporate into nothing.
Anyone who cares about Baltimore's precarious transit conditions must be concerned about a situation where a good outcome is hard to imagine. The option to negotiate yet another extension to the current operations contract, nix the current RFP, and rebid the project on an outcome and performance base instead of a prescriptive basis is out the door with the law suit. No new operator will be able to take over the operation when the Veolia contract extension ends in the first half of October. A patch operation with loaner buses from various local tour bus operators without a proper coordinator seems to be the most likely outcome. It is difficult to imagine how the service can recover from such a blow.
Downtown Bethesda Circulator, in operation since 1998, operated by
RMA Worldwide.

The citizens of Baltimore don't care about who can provide the cheapest service for the existing routes  skimping on head-ways and rolling stock. Instead, the system must perform top notch, have environmentally friendly, clean and comfortable buses and be economically viable. This means it must fulfill the original mission of the Circulator, to allow commuters, nearby residents and visitors to get around downtown and  point at the edge of the surrounding neighborhoods without draining the General Fund. The original funding pool were parking taxes. Should those not pay for the desired service, other entities which benefit from the service (such as Hopkins University or the developers in Locust Point) must step up and help with funding the operation.  According to the Baltimore SUN DOT Director Pourciau promised smmoth sailing:
“The Charm City Circulator strives to provide the residents, businesses and visitors of Baltimore with fast, friendly and free services. DOT is committed to providing seamless, uninterrupted service as we transition to a new vendor.”
Circulator riders better hold on to your seats. Your ride may or may not show up come October 12. 

Klaus Philipsen, FAIA

updated for link to Baltimore SUN article and Board of Estimates quote.
updated to correct statements about RMA Worldwide. It does operate a bus service, the previous statement was incorrect. A somewhat outdated report about the service from 2008  can be found here.

DOT press release:
City of Baltimore Brings Suit Against Charm City Circulator Operator
Law Department Seek Damages to Make Taxpayers Whole

Baltimore City has filed suit against Transdev North America, Inc., and Transdev Services, Inc. (“Transdev”) for breach of contract.  The lawsuit alleges that Transdev overcharged the City more than 20 million dollars for the operation of the Charm City Circulator, the free shuttle service available to City residents, downtown employees, students, tourists, and anyone who wants to ride. This lawsuit reflects the Mayor’s priority to increase transparency and accountability in government dealings.
The City determined that instead of invoicing the City for the hours it actually operated the Circulator, as the agreement for the operation of the Circulator required, Transdev invoiced the City for thousands of hours more for passenger transport. Transdev’s overbilling practice resulted in the City overpaying Transdev over $16 million since 2010. The City’s lawsuit seeks compensation for the overpayment.
In October of 2017, City Solicitor Andre M. Davis created a subdivision of the Law Department devoted to affirmative litigation for precisely this type of suit. “When companies violate their contracts with the City and either overbill or underpay, the Law Department will seek damages to make taxpayers whole,” said Solicitor Davis. “Mayor Pugh has been clear that we have many pressing funding needs for essential programs for our youth, to provide job training and job creation, to remedy vacant properties, and to upgrade basic services for City residents. This lawsuit is wholly consistent with our duty to serve as responsible stewards of tax payer funds and hold accountable companies doing business with the City who fail to live up to their contractual obligations.”
The lawsuit was filed this morning in the Circuit Court for Baltimore City. The City has asked that its claim for breach of contract be decided by a jury. Transdev is expected to be served with the lawsuit this week.
The Baltimore City Department of Transportation is in the procurement process to select a vendor to provide the Charm City Circulator bus service. The new contract duration will be for 3 years. Following today’s Board of Estimates actions, the negotiations between the city’s Bureau of Procurement and the selected vendor will begin immediately. If the subsequent negotiations are concluded successfully, it is anticipated that  the new contract will be awarded by October 10, 2018.
DOT is committed to the continuity of service and is taking immediate actions to provide bus bridge services while negotiations are completed and service begins with the new vendor. The Department of Transportation will be utilizing local companies to provide the bus bridge service until a permanent vendor is ready to begin full operations. During this time, citizens will not see changes in existing service locations, schedules or hours of operation.  However, citizens should be aware that some of the buses in operation after October 11, 2018 may differ slightly in size and/or design from the original Charm City Circulator fleet.

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