RTC Response to Recent Claims that Staff Violated the Public Contract Code

In response to the recent claims that RTC staff violated the Public Contract Code section 20216(d), I would like to clear up a few points.

First, to be clear, Public Contract Code section 20216 does not apply to the RTC’s process to select an operator. It specifically applies to a “competitive negotiation” procurement process undertaken by specified agencies engaged in transit operations to contract for the manufacture and delivery of specified goods, transit vehicles, or equipment. Adopted in 1992, its purpose was to regulate the purchase by agencies engaged in transit operations of specialized transit equipment and apparatus (such as computers, telecommunications equipment, fare collection equipment, microwave equipment, and other related electronic equipment and apparatus, and rail cars) under laws exempting such purchases from competitive (low-bid) requirements. It has no application to this contract.

Nothing prohibited communications with potential proposers before the release of the formal RFP, nor did any communications give Progressive Rail (or any other proposer) any unfair advantage over any other proposer in the selection process. While it is true that Progressive Rail was in contact with RTC Deputy Director Luis Mendez and me several months prior to the issuance of an RFP, several other rail operators were also in contact with us during this time. It was well known in the rail industry (and reported in our local news) that Iowa Pacific was having financial difficulties as early as 2016. We received unsolicited calls and emails from at least three other operators expressing interest in the line should Iowa Pacific depart. All three of these operators (in addition to Progressive Rail) submitted proposals in response to the RFP. Since we knew that Iowa Pacific was likely to end their relationship with us, it seemed prudent to stay in touch with any and all interested parties. We had informal conference calls and meetings with these parties when they expressed interest in doing so. It was an opportunity for them to learn more about the conditions and operations on the line, and an opportunity for us to informally learn more about the individuals on their respective teams prior to the more formal RFP process. We had the RFP ready to issue in December so as not to delay the procurement process, and we engaged the services of a seasoned railroad consultant with over 50 years experience in the industry to evaluate the proposals. Despite some accusations that staff has been rushing to get a new agreement signed, it has now been six months since Iowa Pacific sent us written notice that they wished to exit.

Copies of our email communications with Progressive Rail are being shown as supposed proof of a pre-arranged and “secretive” deal. These emails were obtained through a public information request that only asked for communications with Progressive Rail. No requests were ever made for the communications we had with any of the other rail operators we were in contact with. Looking at the complete picture, the procurement process has been lawful, cautious and fair.

George Dondero, SCCRTC Executive Director