San Diego city leaders recently halted a contract to replace all the city’s parking meters with new, solar-powered versions that accept credit cards and hold the promise of more revenue for City Hall.
City officials acknowledged that while more than a year and hundreds of city staff hours were poured into the contracting effort, they decided to drop it when a “personnel matter” emerged, along with questions about the process. It marked another strange folly for the troubled city purchasing and contracting department, which for years has cycled through leaders and failed to deliver on important goals.
The parking meter contract was on its way to a San Diego company, IPS Group Inc.
Chad Randall, the company’s chief operating officer, said he did not know why the city aborted the contract after awarding it to IPS Group. He deferred all questions about the process to the city.
“I can tell you that IPS would be honored to have the opportunity to bring our world-class technology to the streets of our hometown at some point in the future,” Randall said.
He may still get the chance. In a peculiar twist, the deal with IPS Group is not dead. City staff is now exploring whether the city can still award the contract to IPS Group by piggybacking on a similar deal the Sacramento City Council recently approved with the company.
In an email, Katie Keach, spokeswoman for interim mayor Todd Gloria, wrote that a problem in the procurement process caused all this trouble.
“The city has the option to cancel a solicitation process if it is in the best interest of the city. It was determined that due to some questions related to the process it was in the best interest of the city to exercise this option. Ensuring the transparency, openness and integrity of all our processes is always our No. 1 priority,” Keach wrote to me.
She would not comment further on whether any city staff has been disciplined. She acknowledged that the city treasurer’s staff spent an estimated 579 hours on the failed project, and procurement staff spent an additional 60 hours.
It all started in October 2012 when San Diego Treasurer Gail Granewich alerted colleagues in the city’s purchasing and contracting department that she wanted to overhaul the city’s parking meters.
She wanted new smart parking meters “capable of providing multiple payment options and connected to the city via a wireless network.” The city could collect real-time information about the meters. The data could also help the city create a smart phone app for helping drivers find spots.
It would help the city serve customers and possibly increase revenue.
The city asked for bids.
City staff wanted to hear ideas from companies on how it could purchase or lease new parking meters.
The city of San Diego manages 5,700 on-street parking spaces. Currently, it has single-space meters on 4,700 of them. These only accept coins and the city’s antiquated pre-loaded card system.
The other 1,000 are grouped with a terminals that manage multiple spaces and accept credit cards. The city’s treasurer oversees all of them.
Enticed by what other cities are doing, city staff requested proposals on how it could replace all of its parking meters with solar-powered terminals that would accept credit cards and payments from mobile phones and transmit data to the city. The data would help the city make adjustments on the fly.
San Diego’s own IPS Group submitted a bid and rose to the top over rival companies. The company is well suited for the job. In 2010, the city of Los Angeles began replacing 35,000 parking meters with the solar-powered ones IPS Group provided.
At first, Los Angeles did not purchase the devices. It leased them and IPS paid for their installation.
Now Los Angeles owns all 35,000 of the new devices IPS Group installed.
Crucially, IPS Group has perfected a system of replacing parking meters that uses existing posts, avoiding the hassle and cost of digging up and replacing them.
IPS Group has been orbiting around City Hall for some time. It donated the red meters downtown that are collecting money meant for homeless services. Its representatives attended multiple public meetings touting the technology and the success of efforts like the one in Los Angeles.
San Diego representatives would not give me the bids they received for the smart meter project. But they did give me the request for proposals and some communications that led to their November 2013 decision to pull the contract.
On Nov. 5, 2013, when city staff alerted IPS Group sales director Lauri Keller that the contract had fallen apart, Keller suggested they piggyback on Sacramento’s contract to do the same thing.
The city is trying to figure out whether this can be done, Keach said in her email.
Public agencies often work together on big purchases to help lower the cost. The city’s municipal code allows the city to piggyback on another agency’s purchase if it can prove that the process that city took was competitive and that it is in the best interest of the city.
Sacramento has 3,825 parking meters and just agreed to a deal with IPS Group to replace all of those meters over six months and purchase 2,000 additional meters at a cost of about $6 million. Unlike Los Angeles, Sacramento is planning to purchase the parking meters outright with financing from Bank of America, which will be paid back in parking revenue.
Sacramento staff projected a 22 percent increase in revenue from the new parking meters, primarily because they can accept credit cards. The Sacramento staff report notes that other jurisdictions that upgrade to smart parking meters report revenue increases of 35 percent.
Why? The average payment for a parking session paid by credit card is twice the amount paid by coins.
“(O)ften, customers paying by coin will pay only for the time the coins in their possession will allow and hope it will be sufficient for their stay, while customers paying with credit card will pad their time so they don’t need to rush back to the meter before it expires,” the Sacramento staff report says.
It is unclear why San Diego scuttled its deal with IPS Group. Keach would not go beyond saying it was a personnel issue. But trouble and frustration with the city’s purchasing and contracting department is not new.
The city hired Dennis Gakunga to run the department in April 2013, in the middle of the effort to contract out the new smart parking meter vision. Gakunga is the latest in a series of leaders of purchasing and contracting at City Hall.
Former Mayor Jerry Sanders was determined to reform the department and he didn’t succeed.
Shortly after he took office, then Sanders announced that he would be subjecting city departments to “business process re-engineering” — a way of comparing how each one worked with other agencies and trying to find savings and more efficient ways of working.
The Purchasing and Contracting Department became the first one Sanders targeted.
Sanders cut 17 full-time jobs and closed two warehouses. He also announced that his team would begin actively monitoring all of the city’s 3,435 contracts at that time. That the city had no idea how many contracts it had out was a minor controversy in the press.
Sanders’ team imposed several other reforms on the department.
Everything was supposed to speed up and the mayor set new performance standards.
Then Sanders fired Lance Wade, who ran the department.
In 2008, Sanders hired Hildred Pepper to run the department. It did not go well. The Union-Tribune revealed that Pepper had been the subject of critical audits when he ran the same functions at Detroit Public Schools.
In 2011, a frustrated Sanders took street repair and capital projects contracting away from the department.
Later that year, Voice of San Diego revealed that the city was struggling to spend money from a $100 million bond it had issued to repair streets. City officials claimed at that time that an inefficient bureaucracy was making it hard to get contracts out the door. But now, they claimed to have fixed it.
Pepper resigned in 2011. No explanation was offered. Scott Reese took over the department temporarily.
Then Ed Plank, a well-regarded staffer who bounced around to different jobs after two decades at the city, became interim director. But he left in February 2013, shortly after then Mayor Bob Filner took office.
Filner hired Gakunga. He’s highly regarded but he’s got a tough job in which few of his recent predecessors have been able to last long.
The department’s failure in the effort to replace parking meters with wireless devices is particularly ironic for San Diego. Not only is IPS Group a local company, it’s also part of a cluster of innovators that have made San Diego a hub for all things wireless.
Just Thursday, Paul Jacobs, CEO of the Qualcomm, which put the city on the map for wireless communication, will speak to the Downtown Partnership about the ways in which wireless technology can transform our lives.
But if for some reason you park on the street at one of the city’s 4,700 single-space meters to attend the event, you still need to bring a bag of coins.