Miami-Dade County has mismanaged one of its largest contracts, a $208 million deal to provide door-to-door transportation to the disabled, NBC 6 Investigators have uncovered.
At various times, the county paid too much when prices should have decreased, missed deadlines to seek damages from its contractor for alleged substandard performance, and failed to accurately calculate the most basic of contract functions -- cost of living adjustments, or COLAs.
missed deadlines to seek recovery of more than $200,000 in damages from TA for what the county claimed was substandard service.
After being informed of its mistakes by NBC 6 Investigators, the county recalculated the COLAs and – after revising $65 million in inaccurate billings – determined it owes TA about $151,000 through late March.
Despite those shortcomings, the county employees who oversee transit and procurement deny any mismanagement occurred.
"There are numerous checks and balances and controls that detect an instance where an index was applied in a manner that needs to be updated or corrected,” said Miriam Singer, chief procurement officer.
When NBC 6 Investigators pointed out the county did not detect the mistakes until NBC 6 questioned the calculations, Singer continued, “In this case we really appreciated that you raised it and brought it to our attention."
While Singer’s Internal Services Department improperly calculated the cost-of-living adjustments, Miami-Dade Transit employees failed to bill TA for $85,000 in overpayments accumulated over several weeks beginning in November 2013 and November 2014.
"You know, every once in a while adjustments need to be made and this is one of those cases and we’ve made that adjustment,” said transit director Ysela Llort.
The county only billed TA for the amounts in March 2015 -- after NBC 6 Investigators informed county officials of their apparent oversight more than two years into the contract’s term.
Yet, Llort and Singer say they’re confident the county would have eventually uncovered their mistakes.
"We would have found it,” Llort told NBC 6. “There’s a lot of oversight over a contract like this -- audit services, ourselves -- a lot of things would have happened, but we appreciate that you brought it to us sooner than we would have found it on our own. Thank you."
Longtime government observer Daniel Ricker said the county clearly mismanaged the contract and likely would not have discovered its errors on its own.
"I don’t think so. I think that’s kind of a standard bureaucratic line,” said Rinker, who runs the watchdogreport.net website. “That’s their standard get out of jail card: ‘Oh, we would have caught it eventually,’ or whatever."
In a statement to NBC 6, TA attorney Miguel de Grandy said the contractor did nothing wrong in not discovering it was being overpaid at times and voluntarily alerting the county and refunding the money.
“It was the county’s responsibility to invoice TA, or deduct the amount claimed to be owed from an invoice payment,” he said.
It was also the county’s responsibility to properly set TA’s prices, but NBC 6's investigation found it repeatedly used the wrong months to calculate COLAs.
Through March 21, the county now estimates, those cost of living miscalculations resulted in the county underpaying TA by $151,862 since the company began the service in April 2013.
In his emailed statement, de Grandy said, “It is the county’s obligation (not TA’s) to determine the correct methodology for” price adjustments.
The county staffer in charge of paratransit operations conceded in an email to a colleague last July he was “at a loss” when it came to calculating price changes.
His loss, it turns out, will be TA’s gain, based on the recalculated COLAs.
And, if those mistakes weren’t enough, the county also may have lost its right to seek nearly $211,000 more in damages from the company over what the county claims were failures to meet performance standards, because county staff failed to seek those so-called liquidated damages until after deadlines passed.
Exactly how much the mistakes, sloppy oversight and missed deadlines will ultimately cost taxpayers is unknown, as the county and TA negotiate how much liquidated damages should be paid.
It turns out, NBC 6's investigation found, both the county and TA were benefiting at times from the county’s mistakes.
In November 2012, Miami-Dade County Commission unanimously awarded TA one of its biggest contracts with any vendor, a five-year $208 million paratransit deal that, with its five-year option, could bring TA $416 million over 10 years. TA submitted the lower bid and earned higher scores from county staff than its lone competitor, First Transit.
The task for TA and its two subcontractors: deploy nearly 400 vehicles to ferry about 35,000 disabled clients to and from doctors’ offices, grocery stores and wherever else they need to travel.
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Passengers, who are asked to pay a $3.50 fare, are pre-certified as being so disabled they’re unable to use public transportation. Most have diabetes, cognitive impairment or neurological or motor disabilities and 75 percent of them are over 61 years old.
The company’s pay from the county is based on two per-trip prices: one for clients who can walk (currently $23.79); and another one, 45 percent higher, for those in wheelchairs (currently $34.40). The prices are supposed to be adjusted for inflation or deflation every six months, under specific terms of their contract.
But a months-long review of thousands of pages of invoices, contracts and emails by NBC 6 Investigators found those contract requirements were not being followed.
When NBC 6 first raised questions about Miami-Dade Transit’s oversight of the contract in March, transit director Llort said, “We need to go back and look at the contract and how some of these numbers were calculated.” Llort has since announced her resignation, effective next month. Her departure is unrelated to the handling of this contract, the county mayor’s office said.
With $40 million paid to TA for about 1.7 million trips annually, even small discrepancies can quickly add up to big money.
Here’s how the contract was supposed to work: Every six months, prices were to be adjusted based on the percentage change in two components of the most recent consumer price index, or CPI, for the Miami-Fort Lauderdale area.
When the first six months ended on May 18, 2013, the most recent CPI data available to the public was for April 2013 -- data released two days earlier, according to the Bureau of Labor Statistics.
But instead of basing the first price adjustment on a six-month change in CPI from October 2012 to April 2013, the county used a four-month period, from December 2012 to April 2013.
TA’s attorney, de Grandy, and the assistant county attorney overseeing the contract, Bruce Libhaber, agree October 2012 could not be used as a starting point for the CPI change calculation because it preceded the contract’s November 2012 effective date.
Because South Florida CPI data is released every other month, the first available CPI figures after the November 2012 effective date were for December 2012, and both sides now agree that month should be the starting point for the first CPI-based price change.
Based on the CPI’s four-month change from December 2012 to April 2013, TA’s first price adjustment was a 1.98 percent increase, effective in May 2013.
But, in what the county now concedes was error, it then based the second price adjustment on an eight-month change in CPI, from April 2013 to December 2013. It compounded that error by basing subsequent price changes on six-month CPI changes from December 2013 to June 2014 to December 2014.
After NBC 6 Investigators questioned the use of four-month and eight-month time periods for the first two price adjustments, TA’s attorney de Grandy wrote a letter to Libhaber arguing that using the April 2013 CPI numbers would be “factually and legally incorrect.” And, he continued, “the analysis for the first CPI increase cannot be conducted over a period of time less than six months."
But the county attorney’s office disagreed on both points, even though de Grandy’s suggested December-to-June-to-December CPI cycle could have led to TA owing the county about $80,000 when the books were reconciled, instead of the county owing TA $151,861.
The months used to calculate CPI are crucial; a change in just one month could shift millions of dollars to or from the county over the course of the contract.
For instance, had the county used an October 2012 to April 2013 CPI change for the first price change, and remained on that six-month CPI change cycle, taxpayers would have saved nearly $850,000 over the first 28 months of the contract.
But – again – attorneys for both the county and TA now agree October 2012 could not be used as a starting point because it preceded the contract’s effective date.
Once NBC 6 started questioning the contract’s CPI cycle, the county determined it erred in calculating three of the contract’s first four price changes.
It then recalculated the prices – continuing to base the first price change on the four-month CPI change between December 2012 and April 2013.
But the next three price adjustments were reset based on six-month CPI changes: April 2013 to October 2013 to April 2014 to October 2014.
When the ledger was finally reconciled -- for all trips provided through March 21, 2015 -- the bottom line came out in TA’s favor by $151,861.92.
In addition to the miscalculated COLAs, NBC 6 Investigators found, the county failed to properly bill TA $85,000 in the weeks after prices decreased, an oversight that stemmed from the county not following its own contract language.
“Prior to the end” of each six-month cycle -- on May 18 and November 18 -- the contract states the county is supposed to set the next cycle’s prices based on “the most recent” CPI.
That would allow everyone to know the next cycle’s new prices by the time the vans started rolling on the mornings of May 19 and November 19.
But the county based three price changes on CPI data released weeks after the new prices were supposed to take effect.
By basing them on CPI changes between June and December, the county created a nearly two-month delay between when the COLAs were supposed to take effect (in May and November) and when the CPI data they were based on were released.
The June CPI data released in mid-July were used to set prices that took effect in May; the December data released in mid-January affected prices that took effect the previous November.
That left a weeks-long lag between when the new prices took effect and when they were reflected in the invoices TA sent to the county.
When the data called for price increases, TA properly billed the county retroactively for the difference between the new, higher price and the prior contract period’s lower price, which it continued to bill until the new CPI data were released.
But when the CPI changes called for a reduction in the price, the county never demanded TA issue refunds or credits for the amounts the company was overpaid for trips it already billed under the prior contract period’s higher price.
The result: the county paid TA the money the company was due when prices increased, but did not seek to recover $84,917 the county was due when the prices decreased, until NBC 6 Investigators pointed out the discrepancies in March.
Miami-Dade Transit, or MDT, staff oversee the contract, while employees from the county’s Internal Services Department (ISD) are responsible for calculating the price changes based on CPI.
Public records reviewed by NBC 6 reveal county staff were sometimes confused about how to calculate and apply price changes.
In July 2014, 13 employees of MDT and ISD engaged in a meandering discussion of which CPI months should be used to calculate the price changes that were to take effect two months earlier, in May 2014.
One MDT staffer sent ISD the CPI release for May 2014 – which does not even include CPI measurements for Miami-Fort Lauderdale. (They are released only for even-numbered months: February, April, etc...).
William Velez, MDT’s paratransit chief, mistakenly said the increase would take effect June 1, though he quickly corrected it to May 19.
Days later, Velez tells the contract’s manager in ISD “the issue of the CPI … was brought to my attention again today” – by whom, he does not say – and asks if it was based on May 2014 CPI data.
Told it was based on the June CPI, Velez asks it be based on the May numbers, adding, “It seems as though my staff’s request was incorrect.” Remember: there is no South Florida CPI data for May.
It’s taxpayers who are at a loss when it comes to the county collecting all of what it has claimed it’s owed in liquidated damages --amounts assessed against TA for what the county claims was substandard performance.
The problem: Miami-Dade Transit often failed to seek payment for liquidated damages until after deadlines set out in the contract had passed.
The county had 180 days to notify TA of its intent to assess damages during the first year of the contract and 120 days thereafter. But a review of records by NBC 6 found about $211,000 in damages appear to have been claimed by the county after those deadlines elapsed.
The county concedes it cannot collect $99,230 in claimed liquidated damages for other reasons.
Just how much TA may wind up paying the county in liquidated damages remains in dispute.
The county says it has sought $904,862 in what it claimed were liquidated damages against TA since the contract began.
As of April, TA attorney de Grandy said, TA was appealing nearly $320,000 in such claims.
TA has paid or had deducted from its invoices $293,391, including about $70,000 the county concedes was improperly assessed.
In February, county officials told NBC 6 more than $400,000 in disputed liquidated damages was being held by TA while the company appeals.
Asked again in April about the status of the liquidated damages dispute, de Grandy said the $400,000 figure provided by the county in February was incorrect.
The county and company continue to argue over how much liquidated damages should be paid.
The county can seek to assess damages whenever it believes TA denies or misses requested trips. Penalties are also allowed for certain late pick-ups, prolonged travel times, and excessive complaints, among other shortcomings.
Liquidated damages are standard provisions in contracts of this type and, the company states, the amounts in dispute do not, in proper context, reflect poor service. De Grandy also noted that, historically, about half of the claimed damages are found to have no merit after the appeals process.
It claims drivers are involved in only about one accident per every 100,000 miles driven, less than the industry standard.
The original contract called for the county to retain all assessed liquidated damages, until TA won any of its appeals of those amounts. But the arrangement was amended in July 2014 by a “standard operating procedure,” allowing TA to keep the money until appeals were resolved.
The key pricing provision of the contract, approved in November 2012 by the county commission, is entitled Article 8 - Pricing.
It states: “Prices shall remain firm and fixed for a six-month period from the effective date of the contract.” Both the county and TA agree the effective date was Nov. 18, 2012, even though a transition period prevented TA from performing any services under the new contract until April 1, 2013.
The contract continues: “Prior to the end of the initial six-month period and for each six-month period thereafter … the county will review price adjustments.” The initial six-month period ended May 18, 2013, meaning the review of adjustments should occur on or before May 18 and November 18 of each contract year.
And the contract goes on to state the adjustments must be based on “the percentage change in the value of the most recent Consumer Price Index.” The most recent value of the CPI, as of May 18, 2013, would have been for the previous month, April 2013, released by BLS two days earlier, on May 16.
The adjustment ultimately is based on a weighted sum of the percentage change in two components of the CPI for the Miami-Fort Lauderdale area: CPI for all urban consumers, not seasonally adjusted, which carries 75 percent of the weight; and the CPI subcategory for private transportation, which carries 25 percent weight.
About 36 percent of the program’s funding comes from the county’s general fund, essentially county property and other taxes; another 36 percent is from a county transportation bond fund; fares and fees cover about nine percent of the costs, and state and federal money fund the rest.
TA earlier this year expanded into Broward County, winning a five-year, $34 million contract to provide half of that county’s paratransit trips.