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Transit Board to Review 'SuperBus' Deal : Contract: Questions about $4-million agreement will likely lead to more intense financial checks in the future. But Transportation Authority officials say it's unlikely that pact will be rescinded.

February 05, 1992|JEFFREY A. PERLMAN | TIMES URBAN AFFAIRS WRITER

GARDEN GROVE — Orange County transportation officials are scheduled to review a $4-million agreement today to buy a fleet of "SuperBuses" from a Northern California company whose financial background has stirred questions.

No matter what contract recommendations the officials make, they are likely to require that companies involved in future Orange County Transportation Authority deals be placed under a more intense financial scrutiny.

"I think maybe we have to make some changes that include getting answers to questions, whether it involves sole-source vendors or not," said James Kenan, OCTA director of finance and administration. "It's hard to open the newspaper every day without seeing that some company the county does business with is in financial difficulty."

OCTA officials said it's unlikely that the agency's staff will move to rescind the SuperBus contract because they believe the vehicle is needed to serve overcrowded routes and costs less to operate than other alternatives.

Orange County Board of Supervisors Chairman Roger R. Stanton, who also serves as OCTA chairman, last week called for the contract review in light of reports in the Times Orange County Edition disclosing that the company was accused last year of failing to pay rent on its former San Jose office, that some officers had been sued on fraud charges in unrelated business dealings and that OCTA officials were unaware of the disputes when they agreed to buy 10 of the 58-passenger buses from the firm last October.

The Times also reported that SuperBus Inc. is now operated out of Chief Executive James F. Elder's home in Saratoga, Calif., and that the firm is relying on money from the Mexican government both to build the buses at a new plant in Baja California and to back a letter of credit to the transportation agency in lieu of a performance bond.

Elder has vigorously defended the company's ability to produce the buses on time and within budget, and said that the civil suit allegations are untrue.

Stanton said he will not prejudge results of today's meeting but added, "The burden of proof is on the staff to show why we should continue with SuperBus at all."

Former Orange County Supervisor Ralph B. Clark--who helped create the Orange County Transit District and served as its only chairman for 16 years--also acknowledged last week that he took stock in lieu of fees while serving as an "adviser" to SuperBus after he left county government in 1986.

Clark said he introduced Elder to Stanton at a restaurant on Aug. 20--two months before the OCTA board approved the SuperBus purchase agreement--but made no other contacts on behalf of the firm.

However, OCTA administrator Kenan said Tuesday that Clark and Elder had breakfast with him last summer to speed OCTA's work on the deal.

"They were registering a complaint about the bureaucracy at OCTD," now a division of OCTA, Kenan recalled. "But later I determined that everything we were requiring of SuperBus was reasonable."

As for the contract review session today, Kenan said: "I have two or three things to put on the table at our management meeting" on the SuperBus contract. He declined to elaborate, except to say that they involve attempts to answer questions about the financial viability of vendors before or during contract negotiations.

OCTA Chief Executive Officer Stanley Oftelie said he would favor making background checks on companies but added: "Show me the costs."

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