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Packed House Explores Privatizing $745-Million Agency : Bankruptcy: Proposal to put EMA to bid draws more than 100 engineering executives. Idea has many critics.


SANTA ANA — More than 100 engineering executives packed a conference room Friday to consider the possibility of taking over the Environmental Management Agency in what would be Orange County's largest attempt at privatization.

The Board of Supervisors approved a proposal last month by Supervisor Roger R. Stanton to explore putting the entire agency to bid. The plan has drawn criticism from labor leaders and members of the county-appointed privatization task force, who say placing the agency in private hands could violate state law and prompt an avalanche of lawsuits.

Vic Opincar, an engineering executive who is chairman of the county's privatization task force, said many in attendance Friday were skeptical of the county plan.

"Everyone's trying to ferret out the truth. Is this political? Is this a show and tell for the tax measure coming up?" Opincar said, referring to the ballot on a half-cent sales tax increase.

"If you're going to do this, you need to have the employee unions on your side. You have to figure out what the legalities are, whether you're going to be hit with lawsuits."

But some who came to conference say the idea of turning over EMA to private companies, while not finely tuned, could signal an exciting new partnership between private and public sectors.

"This kind of a trend is going to be coming in the future, with belt-tightening at both the federal and state level," said Perry Maljian, senior regional vice president and manager of Law/Crandell Inc., an engineering firm. "We have a good level of excitement. However, there are going to be some roadblocks."

EMA's current annual budget is $745 million, 70% of which already goes to contract services, according to agency figures. EMA operations are largely funded by state and federal money, and service fees.

The agency performs a number of critical services, including land management, overseeing low-income housing efforts, and running the county's harbors, beaches and parks. The agency also is involved in flood control, and land use and environmental planning.

Stanton's proposal to privatize EMA came as a slap to the privatization task force, which was convened to explore putting county services to bid but was not consulted on the EMA plan. The proposal also has been criticized by the Orange County chapter of the Consulting Engineers and Land Surveyors of California as unnecessarily hasty and unlikely to realize a cost-savings--the prime goal in the wake of Orange County's bankruptcy.

Stanton said the critics are being unfair.

"We have two choices: Do nothing and be criticized, or do something and be criticized," Stanton said.

County officials are merely trying to garner suggestions from private firms, he said.

"We're asking for ideas. It should almost be called a 'request for concepts,' " said Stanton, who wants the process to be open also to groups of county employees interested in bidding. "Every agency and every department is going to have to go through the same questioning. The answer might be that it can be done better on the outside, or it may be that it can be done better by employees."

Dan Miller, a former Stanton aide who has been hired as a consultant to help review the bids, said 110 prospective bidders and other interested people showed up Friday morning to learn more about the process. About 80 contractors have picked up bidding packets, made available to them May 9, he said.

"We know that there are issues out there," Miller said. "We need to see what approaches and concepts are provided to us by the private sector. Then we'll get into more detailed discussions on how to make it work, if the Board [of Supervisors] feels it's a good idea."

Proposals from interested firms are due by June 5. A panel that will likely include staff from EMA, Chief Executive Officer William J. Popejoy's office, and members of the privatization task force will then select the top three candidates. Those names will be submitted to supervisors, who will make the final selection and vote on the matter June 20.

Among the issues the county is asking private firms to address: how to deal with the EMA's diverse funding sources and use of public funds, what will become of all the agency's existing private contracts, and how to deal with employee relations issues as well as state law that currently restricts government agencies from contracting out certain services, according to the county guidelines.

"The county has to be careful because we've got labor contracts covering all these employees," John H. Sawyer, general manager of the 11,000-member Orange County Employees Assn. said Friday.

"We think it's a violation of state law and the county is inviting a proliferation of lawsuits that might go on interminably. I question whether contractors want to get involved in that."

Miller said private firms may be able to resolve those issues.

"Obviously laws can be changed," Miller said. "There are also different opinions of what you can or can't do. A consortium that's going to [make a proposal] obviously have access to attorneys who can give them opinions on this. We're asking the private sector: Do you have some creative ways to deal with this and still respect the letter of the law?"

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