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Board Won't Open Data Processing to Bids : Budget: Supervisors opt in 3-2 vote to seek savings by renegotiating contract instead. Critics say it's business as usual.


SANTA ANA — After much debate, a divided Board of Supervisors decided Tuesday to try to save money by renegotiating a multimillion-dollar contract with its current data processing operator instead of offering the contract to other competitive bidders.

The issue split the board 3 to 2, with Supervisors Jim Silva and Marian Bergeson wanting to offer the contract to the least expensive, qualified operator, and Supervisors William G. Steiner, Roger R. Stanton and Donald Saltarelli voting to renegotiate the annual $11-million contract with Lockheed-Martin to save about $1.1 million a year.

To some county activists, the board's action symbolized the "business-as-usual" attitude that landed the county in the worst municipal bankruptcy in U.S. history last December.

"We see this as part of the continuing dysfunction in the county," said Bruce Whitaker, a member of the Committees of Correspondence, an anti-tax group. "We think it's very unhealthy not to give competitive forces a shot at it."

For the Record
Los Angeles Times Tuesday October 24, 1995 Orange County Edition Metro Part B Page 3 Metro Desk 2 inches; 42 words Type of Material: Correction
County investments--An Oct. 18 article misstated the maturity of securities that the Orange County treasurer-tax collector is authorized to purchase under a new investment policy approved by the Board of Supervisors. The average maturity of the entire investment portfolio cannot exceed 90 days.

Silva and Bergeson agreed.

"The taxpayers deserve to know that they are getting the best deal possible," Silva said.

The board majority, however, said that Lockheed-Martin, which still has two years remaining on its contract, has done an excellent job with the data processing business and that changing operators could jeopardize the integrity of the county's data processing services.

Furthermore, the county plans to work with Lockheed-Martin to lease a portion of the county's data processing facility, which currently isn't being used, to other vendors. The arrangement could bring more than $1 million into the county over the next five years, county officials said Tuesday.

Although Stanton, Saltarelli and Steiner said they generally supported competitive bidding, they thought the data processing contract was an exception.

Saltarelli, who was attending his first meeting after being sworn into office earlier this week, said the county could pursue cost savings immediately by renegotiating now, instead of waiting for the contract to expire in two years.

The board's decision to keep Lockheed-Martin followed the recommendation of County Chief Executive Officer Jan Mittermeier, and rejected the findings of the consulting firm, Arthur Andersen and Co., which studied the county's data processing system and favored an open bidding process.

The county ordered the study earlier this year after questions were raised about whether Lockheed-Martin--formerly Martin Marietta--was giving the county its money's worth in handling most of the county's data processing services.

The data processing review by Arthur Andersen examined a variety of options, from relying on a single firm to handle the bulk of the county's record-keeping to handing over the work to a nonprofit organization, something that has rarely been tried. The potential savings range from $1 million to $3.5 million a year.

On Tuesday, county staff argued that renegotiating the current contract was the least risky and most reasonable option.

"We've all seen that the highest potential payoff also has the highest potential risks," said General Services Agency Director Robert A. Griffith.

Awarding the contract to another operator, Griffith said, could jeopardize security and confidentiality of county records. Additionally, such a change could complicate the current routine of record-keeping.

The data includes everything from payroll and accounting to tax records, Superior and Municipal Court records, local arrest warrants and state Department of Motor Vehicles information.

In other action, the board approved a conservative investment policy that prohibits the county treasurer from engaging in the type of investments that caused the county to lose $1.7 billion.

Treasurer-Tax Collector John M.W. Moorlach told the board the new policy prohibits investing in derivatives, or in securities with maturity dates that exceed 90 days. He added that he won't be able to borrow funds for investing, nor be allowed to leverage county assets.

"We've done everything to ensure that this [bankruptcy] cannot happen again," Moorlach said. "We're restoring credibility in the office."

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