The Belgian Connection: Second of Two Parts
Shortly after Rick Fernandez took over as the general manager of AC Transit, the agency's board of directors awarded him the authority to approve employee travel. Sixteen months later, in April 2001, Fernandez and four of his staffers took an all-expense-paid trip to Europe that included a visit to the headquarters of the Van Hool bus company near Antwerp, Belgium. The excursion cost taxpayers $20,133 — and it was just the beginning.
In the years since, travel records show, AC Transit employees have jetted to Western Europe on more than one hundred separate occasions. The vast majority of these junkets were to Belgium, at a total cost to taxpayers of nearly $1 million. The cash-strapped agency has even paid for an Oakland bus inspector to live near Antwerp for more than five years, at a cost in excess of $500,000, not including his salary.
Since Fernandez inked an exclusive $60 million deal with Van Hool to supply the agency's buses, he and other employees also have taken weekend getaways to some of Europe's most popular destinations, mixing in a little rest and relaxation on the taxpayers' dime. In fact, as the general manager was on his way to sign the Van Hool deal in January 2002, he stopped off in Paris and checked into the Normandy Hotel in the heart of the French capital. The Normandy sits in one of the most exclusive sections of the city, not far from the Eiffel Tower, one block from the River Seine, and across the street from the Louvre.
Travel records show that Fernandez' two-day Parisian getaway, including a food allowance and roundtrip train fare to Brussels to sign the bus deal, cost taxpayers $735. Three months later, he did it again, spending another weekend at the Normandy at a total cost of $904. And finally, three months after that, in July 2002, he took a side trip to Amsterdam before going to Brussels. In all, the general manager has made at least seven European trips at taxpayers' expense since 2001, totaling $22,983.
In a recent interview, shortly before he was scheduled to catch a plane this week for his eighth trip to the continent on the taxpayers' dime, Fernandez admitted that he when he goes to Paris or Amsterdam at public expense, he conducts no AC Transit business. The general manager, who is paid $260,000 a year, said he takes the side trips because he needs time before the bus-deal meetings to fend off jet lag and recuperate from long plane flights. "I don't know about you, but it takes me time to get acclimated," he said.
These frequent European excursions represent a substantial yet overlooked public cost of an already expensive bus contract. Since 2002, the Alameda-Contra Costa Transit District has paid more than $97.2 million for 236 Van Hool buses. Last year, the agency obtained an option to buy another 1,500, even though the buses have cost tens of thousands of dollars more than some American-made models in the past and are more expensive to ship.
To bring the Belgian buses to the Bay Area, Fernandez and his staffers had to engage in a series of controversial financial transactions that allowed them to thwart federal laws designed to protect US companies and their union workers. Then last year, without giving American companies a chance to compete for the deal, AC Transit extended its monopoly contract with Van Hool for another five years.
Fernandez raves about the Van Hool buses, arguing that they're more suited to AC Transit's needs and more reliable than their American competitors. He also praises the Van Hool family, which founded and runs the bus company, saying it routinely accommodates the agency's design requests better than any American bus maker would. And he asserts that the employee travel, including stationing an inspector inside the Van Hool bus factory, is necessary to ensure the buses meet his agency's high quality standards.
Nonetheless, there's also little doubt that the agency's costly bus-buying spree and extensive European travel have contributed to AC Transit's financial woes over the past eight years. Since 2000, the agency's costs have skyrocketed, forcing it to repeatedly slash service and raise fares, as it lost millions of passengers. In fact, records show that AC Transit has the worst overall record among the Bay Area's major urban mass transit systems in the past several years. And just last week, the agency's board put off a vote on the general manager's latest proposal to hike fares, which at $2 per passenger would become the Bay Area's most expensive local bus ride.
During that first trip to Belgium, Fernandez was smitten with the Van Hool bus' low floors and three-door design. By the time he returned to the Bay Area, he was convinced the Van Hools were ideal for his plan to create a Bus Rapid Transit system in the East Bay. Known as "BRT," the plan calls for turning the center lanes of some of the East Bay's busiest streets into bus-only lanes.
On May 10, 2001, just six days after returning from that inaugural trip, Fernandez asked the AC Transit board of directors to approve a five-year, no-bid contract with Van Hool. Fernandez told board members that he wanted to buy 135 of the forty-foot, three-door models, and sixty of the sixty-foot accordion-style buses with four doors — each of which had one more door than its American-made counterparts. The sixty-footers would be the workhorses of BRT.
But the sole-sourced deal appeared to violate state contracting laws, so the seven-member board voted to solicit bids for new buses. In response, Fernandez and his staff then tailored their request for proposals to specifically fit the Van Hools, thereby eliminating any serious competition from American manufacturers.