FEDERAL AGENCY ORDERS CALIFORNIA HIGH-SPEED RAIL TO OPEN UP CLOSED CONTRACTING SYSTEM FOLLOWING CIVIL RIGHTS COMPLAINT BY MINORITY-OWNED BUSINESSES

Decision Cites Evidence of Agency Misrepresentations, Incompetence

For Immediate Release
Media Contact: Candice Francis / Communications Director, LCCR / 415.543.9697 x216 / cfrancis@lccr.com

SAN FRANCISCO, CA – In a 12-page decision issued today, the Federal Railroad Administration (FRA) ordered California’s High-Speed Rail Authority (CHSRA) to open up its closed contracting system to resolve a civil rights complaint filed by small minority-owned businesses. Citing evidence of insular bidding practices and misrepresentations regarding receipt of federal funds, the FRA ordered far-reaching reforms to CHSRA’s system for awarding contracts to private businesses.

The complaint, filed last December by the Lawyers’ Committee for Civil Rights of the San Francisco Bay Area on behalf of the Associated Professionals and Contractors (APAC), asserted that minority-owned small businesses are being largely excluded from contracting opportunities available through the California High Speed Rail, the country’s largest public infrastructure project. Although CHSRA is mandated to ensure that 25 percent of contracting business is allocated to small businesses, over the past five fiscal years, less than four percent of contracting dollars have gone to small or micro-businesses, with nearly all contracting dollars begin funneled to large, majority-owned firms. The complaint asked federal agencies to open a formal investigation into the CHSRA’s contracting practices under Title VI of the Civil Rights Act of 1964.

When and if completed, the controversial California High Speed Rail will travel through 14 regions throughout the State and cover over 800 miles from Sacramento to San Diego. Nearly half of the estimated $43 billion cost for the project is expected to come from federal funding, with more than $3 billion already awarded.

Today’s decision by the FRA orders far-reaching reforms in CHSRA’s contracting practices. Among other requirements, the order requires CHSRA to appoint within 60 days a high-level official “with direct, unfettered access” to California High-Speed Rail Authority CEO Roelof van Ark to oversee the needed reforms to its bidding practices. Also within 60 days, the agency is required to submit a “comprehensive plan” for opening up its contracting processes that sets goals for small and disadvantaged business utilization and that ensures broad outreach. The complete list of required actions is on pages 10 and 11 of the decision. 2

“This is a great victory for minority-owned businesses who want the opportunity to compete for contracting opportunities, particularly on an enormous public works project such as this one,” said Oren Sellstrom, attorney and Associate Director of Policy and Programs with the Lawyers’ Committee. “The federal oversight ordered in today’s decision is definitely needed to break open CHSRA’s closed procurement system.” Mr. Sellstrom also acknowledged the “unwavering support” of Congresswoman Barbara Lee in advocating for full inclusion of small and minority-owned businesses in the high-speed rail project.

Diana LaCome, President of APAC, stated: “We have been appalled by the complete failure of CHSRA to open up contracting opportunities to the full diversity of California’s business community. We are gratified that the Federal Rail Authority has validated our concerns and has ordered CHSRA to take specific steps to break down barriers to fair and open competition. ” Ms. LaCome highlighted the urgency of rectifying the flawed contracting system, with billions of contracting dollars to be awarded imminently.

In reaching its decision, FRA cited evidence of misrepresentations and incompetence by CHSRA. Specifically, FRA criticized CHSRA for incorrectly representing when it began receiving federal funds. FRA noted that the agency had in fact received federal funds as far back as 2002, yet represented in correspondence to FRA and in statements to the public that it had only recently begun doing so (Decision, page 5, 6). The decision also found a “disconnect” between official statements of FRA concerning its contracting and the on-the-ground reality of contracting opportunities being put out to bid with little to no public notice, and the absence of a “coherent policy” for ensuring a fair and open contracting system (Decision, page 8, 9).

The original complaint can be found here: http://lccr.com/TitleVIMinorityBusinessComplaintAgainstCAHighSpeedRail.pdf