High Speed Rail CEO Jeff Morales Scrambles to Explain his Actions

Morris Brown
Founder of DERAIL, a grassroots effort against the California high-speed rail Project

Last week the LA Times disclosed the Authority had changed the construction bidding rules for the first segment of the High Speed Rail project. See here.

The rules, by which a winning bidding group would be chosen, were established by a full vote of the Authority Board at the March 1, 2012 Board meeting.

At that meeting, a full presentation of the issues was given. Then a formal vote approving a Board Resolution establishing the rules that were to be followed took place.  This whole process took 1 hour and 15 minutes.

Video of the whole presentation. (1 hr 15 min).

The key slides establishing the rules can be viewed here (5 minutes) and here (1 minute).

The selection process was to be in two phases.  The first phase would involve evaluation of the proposals solely on technical merit.  After this evaluation only the top 3 bidding groups based on technical merit would be further evaluated on price.  The final weighting would be 70% on price and 30% on technical merit.

The presentation emphasized how important was not only price, but the technical ability of the winning group, and the 2 phase procedure followed good practices.

The presentation stated quite clearly that CEO Morales could only make non-substantive changes to the rules and then only with approval of Board Chair, Dan Richard acting on behalf of the full board.

It should be clearly noted, Chair Richard was conflicted and recused himself from the whole presentation. Before coming onto the Authority board, he was a paid consultant with Parsons; Parsons is a member of one of the 5 bidding groups and as it turns out, that group is the apparent winner of the contract. Here is the press release from the Authority on the bidding outcome.

Although the Authority has yet to award the contract, the group of Perini/Zachry/Parsons is ranked top, using the new rules. This group had the lowest technical merit score, and would have been eliminated under the original rules.

The change in the rules occurred in August, when the Authority issued Addendum #4 to the process, and that addendum changed the rules such that all 5 bidding groups would be further evaluated even after looking at technical merit, not just the top three.

This change which CEO Morales keeps calling “thoughtful and transparent”, is embedded in this addendum of 150 pages and involved deleting a couple of sentences. Simply publishing the addendum on the Authority’s website, without any public comment noting the change, is to Mr. Morales, “thoughtful and transparent”. AMAZING!

This change effectively removes technical merit from being a deciding factor for wining the contact. The weighting of 70% on price vs. 30% on technical merit swaps out technical merit. This is clearly what has occurred in this case.

This change was not presented for full board approval, and must have been made in agreement with Chair Dan Richard, who was to approve for the full board.

CEO Morales has been on a major writing campaign to justify his action.  He wrote a letter to the LA Times complaining about the article, which had been created by top reporters, Dan Weikel and Ralph Vartabedian. Click here for more.

There he writes: “The decision to open all qualified bids was a thoughtful and transparent step to attempt to create the best outcome for the state.”

He also writes a longer letter to the San Diego Union Truibune not only attempting to justify the change but at the same time, saying the paper was irresponsible for their editorial on the subject:

“By ignoring this public information and apparently basing an editorial solely on a Los Angeles Times news story, this paper betrayed its readers and failed to confirm facts from an independent source.”

He also on Authority letterhead writes many key members of the State Legislature justifying the rule change. A copy of the letter can be viewed here.

There is plenty to be explained. Why were the rules changed in the middle of the bidding process is the 64 thousand dollar question (in this case the billion dollar question).  Did one or more bidding groups ask for this change?

CEO Jeff Morales continuing to portray this action as “thoughtful and transparent” is simply not believable.  Neither was this change one of a “non-substantive” nature, which was the only change allowed without full board approval.

On May 2 is a full Authority Board meeting.  Will the Board rubber stamp CEO Morales’ rule change or will they exercise their duties and enforce the policy they approved?

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