A 73-page Office of Inspector General (IG) report found that former Mayor Berry’s Chief Operations Officer Michael Riordan allegedly “threatened” to terminate the city’s $22.9 million contract with the manufacturer of the special-order ART buses.
Riordan was said to have demanded a new bus be delivered in time for Berry to ride and have a photo op before he left office so he could say ART was up and running.
The entire June 6, 2018 Inspector General report on the ART Bus project can be read here:
According to the Inspector General report, then Chief Operations Officer Michael Riordan “was adamant about having a bus transported to the City before the end of the Mayor Berry administration.”
An Albuquerque transit employee told the Inspector General that “core processes on manufacturing buses was altered to ensure delivery of the first bus by the deadline.”
The IG report described two city employees interviewed who recounted a “tense” and “unusual” phone call between then-city Chief Operating Officer Michael Riordan and top executives from the manufacturer.
According to the Inspector General’s report the first bus delivered in August 2017, was assembled by the manufacturer using a “frame intended for buses being built for [another city’s transit authority].”
Frames intended for the Albuquerque’s buses had not yet been shipped nor received by the manufacturer.
The Inspector General found that the bus manufacturer used “parts and pieces” intended for another city’s buses for the first ART bus delivered.
The city employee further reported that the first bus was moved to whatever assembly station was available to ensure it was assembled in time in order to get it shipped to Albuquerque before Mayor Berry left office.
The last 4 sentences of the 72-page Inspector General’s findings and report is worth quoting relating fraudulent activity:
“The inspection was proactive in nature and not due to any allegations that were made. While this inspection didn’t identify instances of fraud, it is important to note that it doesn’t mean fraud did not occur. The inspection did identify several problems that offer opportunities to improve and could be vulnerabilities for fraudulent behavior. City leaders should consider the problems identified and recommendations made to develop a more efficient and stronger procurement process that will help prevent and deter fraud, while also ensuring more quality and confidence in the products and services that the taxpayer funds. This is essential to protecting the public’s trust.”
PROBLEMS WITH THE BUSES DELIVERED
After a full 7 months since former Mayor Berry dedicated the project as “up and running” Mayor Tim Keller reported the electric buses still do not hold a charge and the city is in “contract negotiations” with the manufacturer.
The electric buses delivered are supposed to operate for 275 miles but they cannot go more than 180 miles before they need charging, which means more buses or more bus stations are needed.
One month after taking office, Mayor Keller and his CAO Lawrence Rael did a press conference and a few of the many problems with the buses were outlined including:
• Some of the buses could not be charged because the charging system doesn’t work.
• Axles on the buses were leaking oil.
• The buses had not gone through the certification process required in order for the city to be reimbursed for the buses by the federal government. Rael said one of the ART buses put through the certification process did not pass.
• A third-party certification officer wouldn’t certify the chargers that have been installed. “The chargers themselves are not operable because they’ve used what looks like Chinese equipment and probably a different standard for how they built these boxes,” Rael said.
• Fully charged batteries on the buses are supposed to last for 275 miles, but the testing the city did indicated that the charge is only good for 200 miles, which means that the city will need additional buses for ART unless the problem was resolved.
• Restraint belts that are used to keep wheelchairs locked in place while they’re in transit are in different locations in almost all the buses.
• The battery cages that house the bus batteries were already starting to crack and separate.
In the last update of the project, Keller said the city is looking to “divorce” itself from the manufacturer and in the process of renegotiating the contract with the manufacturer.
Keller went so far as saying the buses were like the children where custody is being fought over.
You do not try and take custody of someone else's kids and Keller needs to tell the manufacturer to come and pick up their buses the city can’t use.
If a “divorce” is what Keller really wants, he needs to hire a good lawyer, file suit and seek civil damages for breach of contract for all the delays and breach of warranties relating to the buses.
Keller still desperately clings to hope the buses will be up and running by September or by the end of next year.
After review of the city’s Inspector General’s report, both the Mayor and the City Attorney’s office need to forward it to the New Mexico Attorney General’s Office for review to determine if there has been any violation of the New Mexico Unfair Trade Practices Act, or for that matter, fraudulent activity.
THE NEW MEXICO UNFAIR TRADE PRACTICES ACT
Over forty years ago, the New Mexico legislature enacted the Unfair Trade Practices Act. (57-12-1 to 57-12-24, New Mexico Statutes)
The New Mexico Attorney General has primary responsibility to enforce the Unfair Trade practices Act. (57-12-15, Enforcement)
Under New Mexico the statute, unfair or deceptive trade practices and unconscionable trade practices in the conduct of any trade or commerce is prohibited. (57-12-3)
As used in the Unfair Trade Practices Act [ 57-12-1 NMSA 1978]:
C. “trade” or “commerce” includes … offering for sale or distribution of any services and any property and any other article, commodity or thing of value, including any trade or commerce directly or indirectly affecting the people of this state;
D. “unfair or deceptive trade practice” means an act specifically declared unlawful pursuant to the Unfair Practices Act … , a false or misleading oral or written statement, visual description or other representation of any kind knowingly made in connection with the sale, lease, rental or loan of goods or services … .or mislead any person and includes:
(6) representing that goods are original or new if they are deteriorated, altered, reconditioned, reclaimed, used or secondhand;
COMMENTARY: Berry’s photo op bus would seem to fall into this definition.
(7) representing that goods or services are of a particular standard, quality or grade or that goods are of a particular style or model if they are of another;
COMMENTARY: Berry’s photo op bus would seem to fall into this definition.
(9) offering goods or services with intent not to supply them in the quantity requested by the prospective buyer to the extent of the stock available, unless the purchaser is purchasing for resale;
COMMENTARY: There has only been partial delivery of the buses.
Where a jury finds that the party charged with an unfair or deceptive trade practice or an unconscionable trade practice has willfully engaged in the trade practice, the court may award up to three times actual damages (treble damages) to the party complaining of the practice. (57-12-10, B)
Attorney’s fees and costs can also be awarded to an aggrieved party. (52-12-10, C)
Notwithstanding any of the threats from the city, the bus manufacturer had the legal obligation to manufacture what was ordered in accordance with specification under the purchase contract.
Further, the bus manufacturer did not disclose to the city what they were doing and what they were going to deliver when it came to Berry’s “photo-op” bus.
Based on the many problems identified with the buses and the findings of the City Inspector General’s report, it can be argued that the unfair trade practices act has been violated.
After reading the Inspector General’s report and all the irregularities found, it would be wise if the Albuquerque City Attorney’s office, and for that matter, the New Mexico Attorney General, to take the time to consider initiating a claim under the New Mexico Unfair Trade Practices Act, Section 57-12-1 et. seq. for city taxpayers.
The City of Albuquerque also has the private remedies available to it.
Litigation is why we have a city attorney’s office as well a risk management department.
It would be appropriate for Mayor Keller, City Legal and the Risk Management Department commit City’s resources in putting forth an effort to make taxpayers whole on the ART Bus project.
The Mayor and the City Attorney should also consider forwarding the Inspector General’s Report to the Bernalillo County District Attorney and request the convening of a special grand jury.
The city should at least make a reasonable attempt to hold the Berry Administration accountable for the disaster know as ART that has cost over $135 million and has destroyed historic Route 66.
“This is essential to protecting the public’s trust” quoting the Inspector General report.