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Taken for a (Bus) RideA French transit firm wins a no-bid deal with Phoenix, and taxpayers are left without a transferBy Sarah FenskePublished on August 08, 2007 at 3:26pmFor years, people have argued about who really runs Phoenix. The mayor? The city manager? City Council? But when it comes to city buses, the answer is all too clear. It's a bunch of French businessmen. Seriously. As it turns out, most of the municipal buses in Phoenix, as well as the shuttle service at Sky Harbor, are run by subsidiaries of a French-based conglomerate named Veolia. That company makes its living by handling the municipal details that typically bore politicians to tears: trash removal, transportation management, and shuttle service. Naturally, the company does it all for a fee. And in Phoenix, that fee just got a whole lot bigger. That's even though the satisfaction reported by local bus riders, according to the city's own survey, is on the decline. And that's despite the fact that city staffers didn't bother to get a quote from a single Veolia competitor. After looking at a half-dozen boxes of records and talking to a number of people, it's clear to me that the system here failed completely. That's because Veolia had every incentive to win bigger contracts for itself, but no one at City Hall put any energy into stopping it. City staff drafted the deals. The city manager signed off on them. The mayor and council rubber-stamped them. The upshot is that, this summer, Phoenix agreed to increase Veolia's management fees by a collective $7 million on its two contracts without shopping around. By my calculation, Veolia is getting a 79 percent raise. Kind of makes you want to get into the bus business, eh? Here's the truly pathetic part of the city's renewal with Veolia for bus service. Under the old contract, Veolia's entire $850,000 management fee was tied to its performance. Was it on time on certain routes? Did it properly serve customers with disabilities? If Veolia screwed up, the city docked it. In recent times, that meant the company lost out on more than $100,000 a year pretty good incentive to kick it up a notch. The new contract greatly decreases that accountability. No matter how badly the company performs, in fact, it stands to get $850,000 a year. Then, on top of that, the company is eligible for a $150,000 bonus, the only part of its fee now linked to performance. That change comes even as bus riders in Phoenix are less and less happy. According to the annual customer poll commissioned by the city, overall satisfaction with bus service dropped 5 percentage points in 2006. Satisfaction with the buses' cleanliness dropped 24 percent. Satisfaction with on-time performance was down 30 percent. Now, we Phoenicians are all facing problems with "on-time performance" in this era of orange barrels and endless construction zones. But the company's scores are down overall and you certainly can't blame dirty buses on the light-rail fiasco. Really, nothing in the city's most recent survey justifies giving the company a no-bid renewal, particularly one with more money and less accountability. Still, that's exactly what happened. City staffers recommended that the city re-up with Veolia in April. In June, the City Council approved the contract renewal, and the fat raise, without much of anything in the way of discussion. Not a single person on the council even bothered to vote against the thing. And the council proved just as vigilant with the company's airport shuttle-service contract. That contract wasn't due for renewal for another three years. But that didn't stop city staffers from altering the contract to give Veolia more money. They recommended a retroactive fee increase for Veolia one that will earn the company roughly an extra $1.5 million a year. That's an increase of 136 percent. Once again, the Council signed off on the deal last month without a single "no" vote. One month before city staffers made their pitch to give Veolia these sweet perks this spring, a host of local Veolia executives nine in all donated a total of $3,200 to Mayor Phil Gordon's re-election campaign. As Gordon stressed in an e-mail to me, that's not a lot of money in the scheme of things. After all, he's sitting on a war chest of nearly $1 million. But it's nothing to sneeze at in this world of so-called clean elections and strict contribution limits. Seven of the nine Veolia execs, in fact, gave Gordon the maximum permitted by law, $390. I can't say that there's anything nefarious going on. But I can say this: The timing stinks. Gordon says he never discussed the contract renewal with his Veolia contributors, much less the staff that put the deals together. "I did not talk to anyone about these contracts before [City Manager Frank Fairbanks] came to brief me on the staff recommendations for a number of agenda items," Gordon wrote. He added, "Our system isn't a system where mayors and council members lobby staff to do this or that. It is the exact opposite staff comes to the mayor and council to tell us what they are recommending we do." Fair enough. But that makes me wonder something else: Why even bother to elect a mayor and a council if all they're going to do is rubber-stamp the recommendations of the city bureaucracy?
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