Milwaukee County is launching an audit of an emergency paratransit contract snafu that's costing taxpayers an extra $8.6 million over three years, officials announced Monday.
County Comptroller Scott Manske ordered the audit Monday in response to a Journal Sentinel investigation Sunday that uncovered the problem.
The scope of the audit has not yet been determined, but it will include a review of the three-year emergency extension contracts to provide rides for people with disabilities, Auditor Jerome Heer said.
The Journal Sentinel investigation showed the emergency extensions were approved after a bidder mistakenly signed twice on a form included in its proposal last summer. This resulted in a dispute between the two firms providing the service. Transit Express, which serves the northern part of the county, appealed the bid from First Transit, which serves the south side but wanted to take over the north side as well.
Transit officials waited for legal guidance from federal authorities on whether the bid could be accepted, and no contract could be issued during the appeals process.
But existing contracts were expiring, so Lloyd Grant Jr., the top manager with Milwaukee Transport Services, which manages the Milwaukee County Transit System, sought short-term extensions. Grant said Transit Express wasn't willing, and that First Transit wanted more money and lower performance standards if it were to serve both areas under a short-term contract — something First Transit denies.
In the end, Grant settled the disputes in October by approving three-year emergency extension contracts under which each company keeps its area. Grant said it was the only way to ensure uninterrupted service for riders.
However, in announcing the settlement to county officials, Grant did not disclose the cost to taxpayers.
The Journal Sentinel calculated that Transit Express will get $24.7 million to serve the north side. First Transit will get more than $15.5 million to serve the south side, plus $225,000 as a lump-sum payment. That totals nearly $40.5 million over three years — $8.6 million more than First Transit's "best value" bid of $31.9 million to serve both areas.
Grant is allowed to spend more than $50,000 without approval of the County Board in case of an emergency as long as he explains why afterward.
In an email March 7, before the Journal Sentinel story, Grant provided talking points to board members on the emergency contract, saying First Transit was "physically unable to provide full, and dependable, service" to both areas under a short-term contract and had demanded prices much higher than its bid.
"Simply stated, First Transit offered to provide lesser service, for a higher price," he wrote. "Thus, potential for lost savings, which appears to be a focus of the Journal Sentinel investigation, is misleading because it ignores that the events described above did in fact occur and therefore no bidder could have been awarded the contract under the terms of the (request for proposals)."
But supervisors lashed out at Grant, accusing him of mismanagement, providing them incomplete information and not understanding the significance of the unrealized savings.
"Mr. Grant, I cannot emphasize enough how much I and the people I represent feel 'duped' related to this situation," Deanna Alexander, supervisor in District 18, said in a strongly worded email to Grant on Sunday. "Whether you call it a 'loss' or 'potential savings' or a 'bag of taxpayer funds being tossed out the window' isn't the issue.
"What is of deep concern is that we already knew we would be facing a near-crisis in funding transit in the years to come, and now we've been contractually committed to unnecessarily spending" more than $8 million.
Milwaukee Transport Services' contract sets no limit on how long an emergency can last. In an interview on Monday, Alexander suggested the board examine whether to rewrite county policy and limit emergencies to a year, for instance, so vendors can't take advantage if the county is in a vulnerable situation.