chico.medic
12-17-2006, 11:54 AM
From the front page of the Sacramento Bee today.
Here's the link, but you have to register.
http://www.sacbee.com/111/story/94060-p3.html
Investigative Report: CHP contracts: The favored few
Agency chiefs received perks from vendors that got preferential status
By John Hill - Bee Capitol Bureau
Last Updated 12:24 am PST Sunday, December 17, 2006
Story appeared in MAIN NEWS section, Page A1
The California Highway Patrol replaced its motorcycle and helicopter fleets over the past decade in a series of limited-bid contracts made during an era of unusually close relationships with the favored companies, a Bee investigation has found.
All told, the state spent nearly $50 million on the new equipment, effectively excluding competition from other brands. As a result, California's sky and highways today are branded: Eurocopters monitor its cities and landmarks from above, while BMW motorcycles patrol below.
As the CHP assembled those fleets, its bosses accepted hospitality from the companies, including visits to the companies' European headquarters, dinner at an upscale Sacramento restaurant and a party at the home of a company lobbyist that featured a flyover by a CHP helicopter, the investigation found.
Commissioner Dwight "Spike" Helmick, the CHP's top boss at the time, even got a jacket from BMW the same month the department awarded a contract to a BMW dealership.
The CHP's interactions with the vendors -- during the key time span between initial agreements with the vendors and new contracts -- may have violated several laws and regulations. The contract process itself ran counter to state policies encouraging competitive bidding.
"It's patronage and privilege that's being granted in the dark of the night," said state Sen. Gloria Romero, D-Los Angeles, who twice this year has called for audits of CHP contracting. "It's just time to say, 'No more.' "
Even one of the officials who went to France on Eurocopter's dime said he felt uncomfortable about it.
Deputy Chief Stan Perez recalls opening the curtains in his Paris hotel room in 2002 and being surprised at the view of the Eiffel Tower. He had initially turned down Eurocopter's invitation, he said, but Helmick told him to go.
"Once you're into it, it doesn't pass the smell test," Perez said.
The department claims that it has now opened up the contracts to competition. But in the past year, vendors have continued to complain the CHP offers preferential treatment to BMW and Eurocopter.
And even if the department were to choose new suppliers now, the former vendors would continue to profit for years supplying parts for the CHP fleets.
Current CHP Commissioner Mike Brown said he would not have permitted companies seeking business with his department to finance the CHP officials' trips.
"I don't think we would allow something like that," he said. "I guess the question is, why would it be needed?"
In its review of the helicopter and motorcycle contracts, The Bee found:
? Eurocopter and BMW paid for CHP chiefs to travel to their European headquarters, even though the department's guidelines prohibit accepting gifts or extraordinary hospitality from vendors and the Department of Finance never approved the trips, as required by state law.
? Helmick and one of his top deputies dined at the Esquire Grill in 2003 with an executive from Eurocopter and the company's Sacramento lobbyist, Jerry Haleva, according to Perez, who said he also attended the dinner. Perez said Haleva paid for the meal and two bottles of wine. State law bars lobbyists from making gifts to officials worth more than $10 but, in 2003, Esquire Grill entrees ranged from $9 to $27 and the cheapest bottle of wine cost $20.
? Haleva hosted a party at his Fair Oaks home for CHP bosses to meet the Eurocopter executive, Perez said. A CHP Eurocopter hovered overhead to demonstrate various features -- not one of the deployments of the copters outlined in the CHP's list of acceptable aircraft uses.
The Bee attempted to reach Helmick and Haleva numerous times, via telephone, mail and, in Helmick's case, in person. Both were sent summaries of The Bee's findings. Helmick left a voice mail message saying, "I disagree with about 99 percent of the stuff. It's simply not factual." But he declined to specify what was wrong and Haleva did not comment at all.
Told about the trips to Europe, Ned Wigglesworth, an advocate for California Common Cause, said that if they truly served a public purpose, taxpayers should have paid for them."The reason private interests shouldn't is that you totally compromise the integrity of, in this case, state contracting," he said.
The hospitality was a backdrop for a series of single-brand contracts for BMWs and Eurocopters, which, over the past decade, the CHP frequently championed on grounds of safety for officers and the public.
State law seeks to avoid even the appearance of a link between gifts and contracts by prohibiting workers from taking anything of value from people seeking to do business with the government if it could be seen as an attempt to influence the official.
Each department must adopt its own "statement of incompatible activities" related to gifts. The CHP's statement specifically prohibits officers from accepting "gifts, benefits, gratuities or unusual hospitality that may in any way tend to influence them."
Roots of a sole-source helicopter contract
Landing a CHP contract is considered a coup for businesses that sell products to law enforcement agencies. The department is one of the nation's most prestigious, known as a trendsetter, and among the largest.
In August 1998, American Eurocopter hired lobbyist Haleva and his firm Sergeant Major Associates Inc. The next year, the CHP started buying its helicopters.
On his Web site, Haleva would cite his work for Eurocopter as a key accomplishment. The CHP not only replaced its fleet: it expanded it by a third.
The Web site also features an endorsement from Helmick, quoting him as saying, "Integrity and hard work are the hallmarks of Jerry Haleva's leadership at Sergeant Major Associates."
Haleva's timing was good. A 1998 CHP evaluation indicated its fleet -- made up of five models from different manufacturers -- was inadequate to support the department's growing responsibility for providing emergency medical aid.
The department argued for a sole-source contract, telling state contracting officials that the Eurocopter, with a cabin big enough to install a victim hoist, was the only brand that met its needs. That justification was approved by the Business, Transportation and Housing Agency, which oversees the CHP.
Over the next seven years, the CHP bought 12 helicopters for about $29 million total -- all but one purchased through sole-source bidding.
Haleva became known during Helmick's tenure as a regular visitor to CHP headquarters. On at least one occasion, in 2000, he traveled as a guest on the CHP's executive plane from Sacramento to San Luis Obispo with Helmick and others, according to an itinerary obtained by The Bee.
This year, the CHP opened the helicopter contract to competition but ended up with Eurocopter anyway.
Initially, Agusta Aerospace Corp. offered the low bid: $3,079,900, $28,000 less than Eurocopter's lowest bid. But the Department of General Services canceled the contract, saying that neither Agusta nor Eurocopter had complied with specifications.
In the second round, a smaller model of Eurocopter won, drawing a protest letter from Agusta.
"We do not believe that we have received fair treatment," wrote Robert Cleland, Agusta's sales and marketing director.
A trip to France, and a pricey dinner
Vendors were not the only ones who challenged the CHP contract decisions. Over the years, various state contracting officials also questioned the CHP's rationale for repeatedly selecting Eurocopter. But the department kept choosing the company -- and accepting its hospitality.
During the CHP's 2002 purchase of five helicopters for $14 million, a Department of General Services worker involved in the contract expressed skepticism about the CHP's contention that Eurocopters were the only ones that met its needs.
"Here is what I got from CHP," the worker wrote to a colleague in an e-mail contained in a contract file reviewed by The Bee. "I'm not sure it's sufficient, and I have told them they have not really explained how public health and safety is at risk."
Two weeks later, however, the Department of Finance, which oversees budget operations, concurred that the sole-source purchase was justified, citing CHP arguments about the unique qualities of the helicopter and the efficiencies to be gained by standardizing its fleet. "There appears to be justification for the exclusive use of this aircraft at this time," the department wrote.
Even as that debate unfolded in 2002, Eurocopter hosted two CHP officials on a trip to its plant in France. The two, Perez and Assistant Chief Tim Clark, stopped in Paris on their way back from Ukraine, where they had worked with the National Guard advising local officials about setting up a law enforcement agency.
Perez said that he learned of the side trip from staff members as he prepared to travel to Ukraine.
"I told my staff I was not going to do that," he said.
Within a day or so, Perez said, he was called to Helmick's office on another matter and brought up his misgivings about the Eurocopter detour.
"He said, 'I'll take care of it, do it for me,' " Perez recalled.
(Perez is suing Helmick and other former CHP bosses, alleging they retaliated against him after he applied to be commissioner and objected to what he believed were illegal activities unrelated to these contracts. He declined to speak publicly about the Eurocopter hospitality until Commissioner Brown authorized him to.)
While the Ukraine trip was cleared by the Department of Finance, as required for state employee travel outside California, the form seeking that approval does not mention the Eurocopter visit.
The CHP acknowledged that the trip occurred, but could produce no record of what the chiefs did, what they learned or how much was spent.
The side trip included a night in the Paris hotel, a train ride to the plant near Marseille in the south of France, a tour of the factory, dinner at a restaurant and another night in a hotel near the plant before heading back to Paris, Perez said. Haleva, the lobbyist, came along, he said.
Both Perez and Clark were involved in the CHP's business transactions with Eurocopter. The year before the trip, for instance, Clark notified a CHP procurement official that Eurocopter had deemed too high a $465,000 helicopter trade-in deal the department hoped to get as part of a bid.
Late in the year of the France trip -- just before the CHP bought five helicopters for $14.1 million in a no-bid contract -- Perez wrote to assure the Department of General Services that his division had no problems with some changes in specifications contained in Eurocopter's bid.
Within months of returning from France, Perez said he was invited to a dinner at the Esquire Grill along with Helmick, Haleva, a new executive from Eurocopter and then-Assistant CHP Commissioner Manuel Padilla.
The group ordered hors d'oeuvres, entrees and two bottles of wine, Perez said. When the bill came, he said, Haleva paid with his credit card. Haleva, however, did not itemize the spending on his quarterly lobbying reports, which require lobbyists to report any expenditures on officials.
Haleva then hosted a reception for the same Eurocopter executive at his Fair Oaks house. A few dozen guests, including other top CHP officials, were served dinner and wine, Perez said. A CHP helicopter appeared briefly for the occasion, so that the partygoers could observe its features.
The road leading to BMW motorcycles
The history of CHP's motorcycle purchases featured similar elements: the company chosen to replace the fleet in a limited-competition bid, BMW, also hired Haleva -- though as a sales advocate, the company says, not as a lobbyist -- and paid for CHP officials to visit its European facilities.
Assistant Commissioner Douglas Orr and an officer from the CHP training academy visited BMW facilities in Munich, Berlin and a vehicle test track north of Munich, according to Frank Stevens, the manager of BMW's police motorcycle program. Haleva and a board member from the California Association of Highway Patrolmen joined the trip, Stevens said.
The company wanted CHP officials to see models in development that couldn't leave company premises, Stevens said, and it wanted to show the difficulty of changing specifications. The CHP is the top U.S. customer for BMW police motorcycles.
"It was a quality trip; this wasn't a junket," Stevens said. Orr could not be reached for comment.
From an official perspective, it's almost as if the trip never happened. The CHP has no documentation of it and the Department of Finance has not approved any travel by CHP officials to Germany over the past several years, according to spokesman H.D. Palmer.
The initial move to BMWs predated the trip by many years. In 1994, the CHP had begun a four-year study and concluded that the anti-lock brake system, then offered only by BMW on police motorcycles, greatly improved stability on slippery or uneven road surfaces.
For the next nine years, the CHP bought motorcycles exclusively from a BMW dealership, systematically replacing its fleet of Kawasakis.
A BMW dealership in Roseville won the contract in 1998, 1999, 2002 and 2004. On Christmas Day 1999, BMW gave then-Commissioner Helmick a jacket he valued at $95 on his conflict-of-interest forms.
In 2004, Harley-Davidson complained that it was excluded from the bidding process. "As a U.S. manufacturer of an American designed and engineered product, we believe we should at least have the opportunity to bid," the company wrote.
Earlier this year, a Harley-Davidson dealership, offering motorcycles equipped with new anti-lock brakes, put in the lowest bid for the new CHP contract to supply 200 motorcycles over two years.
But CHP testers reported that the Harley wobbled at high speeds and the department refused to approve it. Then, the Department of General Services canceled the bid, characterizing the CHP's criteria for testing the motorcycles as ill-defined and inconclusive.
The Santa Cruz dealership that lost the bid blamed the cancellation on the CHP's preference for BMWs.
"We were experiencing a bias," said dealership owner Mike James, " not a problem with the vehicle."
Here's the link, but you have to register.
http://www.sacbee.com/111/story/94060-p3.html
Investigative Report: CHP contracts: The favored few
Agency chiefs received perks from vendors that got preferential status
By John Hill - Bee Capitol Bureau
Last Updated 12:24 am PST Sunday, December 17, 2006
Story appeared in MAIN NEWS section, Page A1
The California Highway Patrol replaced its motorcycle and helicopter fleets over the past decade in a series of limited-bid contracts made during an era of unusually close relationships with the favored companies, a Bee investigation has found.
All told, the state spent nearly $50 million on the new equipment, effectively excluding competition from other brands. As a result, California's sky and highways today are branded: Eurocopters monitor its cities and landmarks from above, while BMW motorcycles patrol below.
As the CHP assembled those fleets, its bosses accepted hospitality from the companies, including visits to the companies' European headquarters, dinner at an upscale Sacramento restaurant and a party at the home of a company lobbyist that featured a flyover by a CHP helicopter, the investigation found.
Commissioner Dwight "Spike" Helmick, the CHP's top boss at the time, even got a jacket from BMW the same month the department awarded a contract to a BMW dealership.
The CHP's interactions with the vendors -- during the key time span between initial agreements with the vendors and new contracts -- may have violated several laws and regulations. The contract process itself ran counter to state policies encouraging competitive bidding.
"It's patronage and privilege that's being granted in the dark of the night," said state Sen. Gloria Romero, D-Los Angeles, who twice this year has called for audits of CHP contracting. "It's just time to say, 'No more.' "
Even one of the officials who went to France on Eurocopter's dime said he felt uncomfortable about it.
Deputy Chief Stan Perez recalls opening the curtains in his Paris hotel room in 2002 and being surprised at the view of the Eiffel Tower. He had initially turned down Eurocopter's invitation, he said, but Helmick told him to go.
"Once you're into it, it doesn't pass the smell test," Perez said.
The department claims that it has now opened up the contracts to competition. But in the past year, vendors have continued to complain the CHP offers preferential treatment to BMW and Eurocopter.
And even if the department were to choose new suppliers now, the former vendors would continue to profit for years supplying parts for the CHP fleets.
Current CHP Commissioner Mike Brown said he would not have permitted companies seeking business with his department to finance the CHP officials' trips.
"I don't think we would allow something like that," he said. "I guess the question is, why would it be needed?"
In its review of the helicopter and motorcycle contracts, The Bee found:
? Eurocopter and BMW paid for CHP chiefs to travel to their European headquarters, even though the department's guidelines prohibit accepting gifts or extraordinary hospitality from vendors and the Department of Finance never approved the trips, as required by state law.
? Helmick and one of his top deputies dined at the Esquire Grill in 2003 with an executive from Eurocopter and the company's Sacramento lobbyist, Jerry Haleva, according to Perez, who said he also attended the dinner. Perez said Haleva paid for the meal and two bottles of wine. State law bars lobbyists from making gifts to officials worth more than $10 but, in 2003, Esquire Grill entrees ranged from $9 to $27 and the cheapest bottle of wine cost $20.
? Haleva hosted a party at his Fair Oaks home for CHP bosses to meet the Eurocopter executive, Perez said. A CHP Eurocopter hovered overhead to demonstrate various features -- not one of the deployments of the copters outlined in the CHP's list of acceptable aircraft uses.
The Bee attempted to reach Helmick and Haleva numerous times, via telephone, mail and, in Helmick's case, in person. Both were sent summaries of The Bee's findings. Helmick left a voice mail message saying, "I disagree with about 99 percent of the stuff. It's simply not factual." But he declined to specify what was wrong and Haleva did not comment at all.
Told about the trips to Europe, Ned Wigglesworth, an advocate for California Common Cause, said that if they truly served a public purpose, taxpayers should have paid for them."The reason private interests shouldn't is that you totally compromise the integrity of, in this case, state contracting," he said.
The hospitality was a backdrop for a series of single-brand contracts for BMWs and Eurocopters, which, over the past decade, the CHP frequently championed on grounds of safety for officers and the public.
State law seeks to avoid even the appearance of a link between gifts and contracts by prohibiting workers from taking anything of value from people seeking to do business with the government if it could be seen as an attempt to influence the official.
Each department must adopt its own "statement of incompatible activities" related to gifts. The CHP's statement specifically prohibits officers from accepting "gifts, benefits, gratuities or unusual hospitality that may in any way tend to influence them."
Roots of a sole-source helicopter contract
Landing a CHP contract is considered a coup for businesses that sell products to law enforcement agencies. The department is one of the nation's most prestigious, known as a trendsetter, and among the largest.
In August 1998, American Eurocopter hired lobbyist Haleva and his firm Sergeant Major Associates Inc. The next year, the CHP started buying its helicopters.
On his Web site, Haleva would cite his work for Eurocopter as a key accomplishment. The CHP not only replaced its fleet: it expanded it by a third.
The Web site also features an endorsement from Helmick, quoting him as saying, "Integrity and hard work are the hallmarks of Jerry Haleva's leadership at Sergeant Major Associates."
Haleva's timing was good. A 1998 CHP evaluation indicated its fleet -- made up of five models from different manufacturers -- was inadequate to support the department's growing responsibility for providing emergency medical aid.
The department argued for a sole-source contract, telling state contracting officials that the Eurocopter, with a cabin big enough to install a victim hoist, was the only brand that met its needs. That justification was approved by the Business, Transportation and Housing Agency, which oversees the CHP.
Over the next seven years, the CHP bought 12 helicopters for about $29 million total -- all but one purchased through sole-source bidding.
Haleva became known during Helmick's tenure as a regular visitor to CHP headquarters. On at least one occasion, in 2000, he traveled as a guest on the CHP's executive plane from Sacramento to San Luis Obispo with Helmick and others, according to an itinerary obtained by The Bee.
This year, the CHP opened the helicopter contract to competition but ended up with Eurocopter anyway.
Initially, Agusta Aerospace Corp. offered the low bid: $3,079,900, $28,000 less than Eurocopter's lowest bid. But the Department of General Services canceled the contract, saying that neither Agusta nor Eurocopter had complied with specifications.
In the second round, a smaller model of Eurocopter won, drawing a protest letter from Agusta.
"We do not believe that we have received fair treatment," wrote Robert Cleland, Agusta's sales and marketing director.
A trip to France, and a pricey dinner
Vendors were not the only ones who challenged the CHP contract decisions. Over the years, various state contracting officials also questioned the CHP's rationale for repeatedly selecting Eurocopter. But the department kept choosing the company -- and accepting its hospitality.
During the CHP's 2002 purchase of five helicopters for $14 million, a Department of General Services worker involved in the contract expressed skepticism about the CHP's contention that Eurocopters were the only ones that met its needs.
"Here is what I got from CHP," the worker wrote to a colleague in an e-mail contained in a contract file reviewed by The Bee. "I'm not sure it's sufficient, and I have told them they have not really explained how public health and safety is at risk."
Two weeks later, however, the Department of Finance, which oversees budget operations, concurred that the sole-source purchase was justified, citing CHP arguments about the unique qualities of the helicopter and the efficiencies to be gained by standardizing its fleet. "There appears to be justification for the exclusive use of this aircraft at this time," the department wrote.
Even as that debate unfolded in 2002, Eurocopter hosted two CHP officials on a trip to its plant in France. The two, Perez and Assistant Chief Tim Clark, stopped in Paris on their way back from Ukraine, where they had worked with the National Guard advising local officials about setting up a law enforcement agency.
Perez said that he learned of the side trip from staff members as he prepared to travel to Ukraine.
"I told my staff I was not going to do that," he said.
Within a day or so, Perez said, he was called to Helmick's office on another matter and brought up his misgivings about the Eurocopter detour.
"He said, 'I'll take care of it, do it for me,' " Perez recalled.
(Perez is suing Helmick and other former CHP bosses, alleging they retaliated against him after he applied to be commissioner and objected to what he believed were illegal activities unrelated to these contracts. He declined to speak publicly about the Eurocopter hospitality until Commissioner Brown authorized him to.)
While the Ukraine trip was cleared by the Department of Finance, as required for state employee travel outside California, the form seeking that approval does not mention the Eurocopter visit.
The CHP acknowledged that the trip occurred, but could produce no record of what the chiefs did, what they learned or how much was spent.
The side trip included a night in the Paris hotel, a train ride to the plant near Marseille in the south of France, a tour of the factory, dinner at a restaurant and another night in a hotel near the plant before heading back to Paris, Perez said. Haleva, the lobbyist, came along, he said.
Both Perez and Clark were involved in the CHP's business transactions with Eurocopter. The year before the trip, for instance, Clark notified a CHP procurement official that Eurocopter had deemed too high a $465,000 helicopter trade-in deal the department hoped to get as part of a bid.
Late in the year of the France trip -- just before the CHP bought five helicopters for $14.1 million in a no-bid contract -- Perez wrote to assure the Department of General Services that his division had no problems with some changes in specifications contained in Eurocopter's bid.
Within months of returning from France, Perez said he was invited to a dinner at the Esquire Grill along with Helmick, Haleva, a new executive from Eurocopter and then-Assistant CHP Commissioner Manuel Padilla.
The group ordered hors d'oeuvres, entrees and two bottles of wine, Perez said. When the bill came, he said, Haleva paid with his credit card. Haleva, however, did not itemize the spending on his quarterly lobbying reports, which require lobbyists to report any expenditures on officials.
Haleva then hosted a reception for the same Eurocopter executive at his Fair Oaks house. A few dozen guests, including other top CHP officials, were served dinner and wine, Perez said. A CHP helicopter appeared briefly for the occasion, so that the partygoers could observe its features.
The road leading to BMW motorcycles
The history of CHP's motorcycle purchases featured similar elements: the company chosen to replace the fleet in a limited-competition bid, BMW, also hired Haleva -- though as a sales advocate, the company says, not as a lobbyist -- and paid for CHP officials to visit its European facilities.
Assistant Commissioner Douglas Orr and an officer from the CHP training academy visited BMW facilities in Munich, Berlin and a vehicle test track north of Munich, according to Frank Stevens, the manager of BMW's police motorcycle program. Haleva and a board member from the California Association of Highway Patrolmen joined the trip, Stevens said.
The company wanted CHP officials to see models in development that couldn't leave company premises, Stevens said, and it wanted to show the difficulty of changing specifications. The CHP is the top U.S. customer for BMW police motorcycles.
"It was a quality trip; this wasn't a junket," Stevens said. Orr could not be reached for comment.
From an official perspective, it's almost as if the trip never happened. The CHP has no documentation of it and the Department of Finance has not approved any travel by CHP officials to Germany over the past several years, according to spokesman H.D. Palmer.
The initial move to BMWs predated the trip by many years. In 1994, the CHP had begun a four-year study and concluded that the anti-lock brake system, then offered only by BMW on police motorcycles, greatly improved stability on slippery or uneven road surfaces.
For the next nine years, the CHP bought motorcycles exclusively from a BMW dealership, systematically replacing its fleet of Kawasakis.
A BMW dealership in Roseville won the contract in 1998, 1999, 2002 and 2004. On Christmas Day 1999, BMW gave then-Commissioner Helmick a jacket he valued at $95 on his conflict-of-interest forms.
In 2004, Harley-Davidson complained that it was excluded from the bidding process. "As a U.S. manufacturer of an American designed and engineered product, we believe we should at least have the opportunity to bid," the company wrote.
Earlier this year, a Harley-Davidson dealership, offering motorcycles equipped with new anti-lock brakes, put in the lowest bid for the new CHP contract to supply 200 motorcycles over two years.
But CHP testers reported that the Harley wobbled at high speeds and the department refused to approve it. Then, the Department of General Services canceled the bid, characterizing the CHP's criteria for testing the motorcycles as ill-defined and inconclusive.
The Santa Cruz dealership that lost the bid blamed the cancellation on the CHP's preference for BMWs.
"We were experiencing a bias," said dealership owner Mike James, " not a problem with the vehicle."