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June 6-12, 2007

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Sayoum Asrat

Photograph by Felipe Buitrago
Breach of contracting: Sayoum Asrat, a driver with Golden Star Cab, says problems in the paratransit program are worse than the Valley Transportation Authority is willing to admit.

Out of Service

A brutal audit shook up the VTA, but it missed problems that affect millions of dollars in funding

By Raj Jayadev

ALTHOUGH Santa Clara County has never been known as a public transportation mecca, there was always one word that had offered the possibility of redemption–BART. But even the fantasies of BART have gone up in smoke after an audit of the financial decision–making within the Valley Transportation Authority. Now, VTA is examining its mission, its management and its internal operations.

The problem is, some of the system's most significant transportation programs are contracted out, such as its service to the elderly and disabled. Despite the enormity of the funding at stake—$27 million—and the fact that its users rely on transportation services more than any other segment of the South Bay population, that program was overlooked by the Hay Group, the consulting firm that conducted the scathing audit of the VTA and concluded it was "making decisions without adequate financial information." VTA communications manager Jamie Kunz says there's a good reason the Hay Group was directed only to look at internal operations, and that the contracted services are solid.

"They were directed to look at weaknesses," says Kunz. "Why try to fix things that aren't broken?"

However, the VTA subcontracts some of the services for the elderly and disabled to local cab companies, through the service broker Outreach. Now, these cab drivers say that the system providing for the county's most vulnerable public–transit users is monopolized, unregulated, and lacks transparency. They point to a broken–down bidding process, and the fact that a major provider has handed Outreach a termination of services letter. Whether the contract system requires "fixing," it appears, it a matter of opinion.

Dollie Sandoval, a VTA board member, does not remember the issue of Outreach's performance coming up in a meeting "in the last year of so." She says most of the decisions involving Outreach are handled at a managerial level. But Outreach's contract is coming up for renewal this fall, and given the lessons learned from the internal audit, the board is likely to take a harder look at how its public money is being allocated.


The Outreach para–transit program provides low-cost services for over 11,000 Santa Clara County community members, and has been around for over 30 years. The program allows customers to shop for groceries, travel to and from doctor appointments and make other important trips. Customers pay a subsidized average rate of $3.50 per ride, and each ride costs VTA $29.87. Both the size of the customer base and the costs are anticipated to increase. According to Outreach, the 65–and–over population in Santa Clara County is expected to triple by 2020. Sandoval says the VTA board anticipates 5.6 percent growth in its para–transit budget for 2007, and 4.9 percent in 2008.

The financial trail of services to seniors and disabled in Santa Clara County is a maze of subcontracting. The VTA, which gets city, county, state and federal funding, contracts with Outreach, which provides a bulk of its rides by subcontracting with Violia, a French-based multinational corporation that provides drivers and other staff. In 2006, Violia had revenues of $36 billion, and became so large it had to create a spin–off to focus on North America. Violia Transport has become the largest privately owned transportation company in the United States.

Rides that are not covered by the contract with Viola are then contracted out to a cab company, which is considered the prime contractor.

"There is a procurement process, a Request for Proposal, based on the lowest bidding," says Katherine Heatley, president of Outreach.

Most recently, Yellow Cab won the bid and was named the prime contractor. The problem is the last time Outreach put out an RFP was in 2002, and five years can be a lifetime in the transportation industry. Cab companies have risen and fallen in that period, and have also changed ownerships. Yellow Cab, along with Violia, accounts for roughly 60 percent of Outreach's rides.

Another, smaller, service need is fulfilled by supplemental providers. Currently, Heatley says that Outreach splits the 40 percent supplemental service need down the middle—20 percent to United Cab, and 20 percent to Golden Star Cab.

Bid Business

Sayoum Asrat, a driver with Golden Star Cab, disputes the presumed fairness of Outreach's decision making, and the numbers cited by Heatley as well.

"VTA needs a new procedure to oversee Outreach; currently it seems there is no transparency," says Asrat.

He says the lack of a Request for Proposal is causing problems across the board.

"It destroys the competitive process, which is about lowering costs and ensuring quality service, plus the RFP is the only way companies come into the business, and the rest can get locked out," he says.

Asrat says drivers develop not only a relationship with their Outreach customers, but also a better understanding of their operational needs.

"These rides gives us the drivers an opportunity to learn about their communities and how to serve them," he says. "We are all part of the same county, so it makes us go the extra mile."

That's why drivers should be represented in the oversight of Outreach, he argues: "We are the ones driving the customers, directly seeing their needs and challenges, so we can offer a lot to the question of improvement of services."

Currently drivers play no part in oversight of the program, but Kunz says their input would be encouraged if it improves quality of service.

"For VTA services, we already have an operation board where drivers participate in a monthly dialogue on what's working and what's not," says Kunz.

Threat of Termination

Outreach and VTA may both need some of those insights, as Violia has served Outreach with a letter terminating their relationship in six months. When contacted, Violia representatives would not give the reason for their decision to pull out of Santa Clara County.

Meanwhile, cab companies have still not received an RFP.

"When I heard about Violia, I did raise the question, what is going to be our plan B, how are we going to serve those clients?" says Sandoval.

However, despite the impending termination, Sandoval says the Outreach issue is not currently on the upcoming agenda.

Heatley says that no matter what, services will continue, even without Violia. Seniors and the disabled need not worry that their rides will stop coming, she says.

Regardless, Asrat says that all signs point to a need for an examination of the contract funding, and the regulations that govern them.

"It is not enough for VTA to say we will follow the rules," he says. "It may also be a time to start changing the rules."

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