Since the 1970s, the North County Transit District has served as an essential link along the second-busiest rail corridor in the country. It’s responsible for 12 million boardings annually between Oceanside, Escondido, and the city of San Diego. It runs seven locomotives, 144 buses and, until last month, 12 light-rail vehicles.
It endured the great recession, when the threat of massive federal and state funding cuts led transportation agencies around the country to cut services and downsize staff. It survived, undeniably, due to the bold decisions of the agency’s executive director, Matthew Tucker.
Through outsourcing, Tucker transformed the organization from a public transportation agency to what he described as a “contract-management” agency. The majority of North County Transit’s services — including bus operations, maintenance and dispatch — were privatized, with laid-off employees given hiring preference within the new contracting companies.
In a speech the year following the downsizing, Tucker explained how, given the circumstances he inherited and such a weak economy, outsourcing was the best option.
Tucker’s leadership was applauded by many, and as expected, vilified by those left in his wake.
But what happened next is the subject of our newest investigation.
As a contract-management agency, oversight was paramount. Oversight for the bus contractors to perform as required; for the safety and security operations to run smoothly; for the SPRINTER light-rail vehicle to be maintained; and for the district’s bus services for the disabled to be safe and on time.
Yet, as recent news stories and internal audits have confirmed, it isn’t happening.
Bus service has been cut while on-time performance has continually failed to reach district benchmarks. The budget for security was cut in half during Tucker’s first year, and just last month, an internal audit found severe deficiencies in both the training and contractual obligations between North County Transit and its private security contractor.
The SPRINTER was shut down March 9, 2013, since state inspectors found brake rotors worn beyond compliance. An audit last year found the district’s “paratransit” service — which shuttles the disabled — was not only running well below contractual standards, but supervisors didn’t even know where their contractor’s office was located.
Both the problems cited in the audit and the SPRINTER situation can be linked to a high rate of turnover among upper level managers responsible for oversight.
In her resignation letter, the director of technology referred to a “vacuum” of knowledge. Since Tucker arrived in 2009, 21 of the agency’s top 25 positions have turned over at least once, with some positions turning over as many as five times. Tucker says the high turnover was caused by the magnitude of the changes going on inside the agency and by the budget crisis that sapped NCTD of needed expertise.
The exodus took its toll. Within three years, NCTD paid out more than a quarter-million dollars in severance payments among just ten of those managers, and has paid an executive search company hundreds of thousands of dollars to replace them.
A triennial review by the federal government last year found more deficiencies within the district’s operations than at any point in its history. One of the deficiencies cited was the misuse of half a million dollars of federal funding.
Throughout our months of reporting, NCTD’s Board of Directors — representatives who are ultimately responsible for the agency — have been almost entirely silent. Despite multiple attempts, nearly every board member has declined to answer any of our questions about the state of the agency, its operations or its accountability.
Interviews and public records, as well as confidential letters and data analyses, are the foundation of our reports on issues of oversight, turnover and money.
Matthew Tucker started his new job in Oceanside in January of 2009, moving west from Virginia, where he had run the state’s public transportation agency.
Before that, he’d been in charge of transit operations in San Jose at the Santa Clara Valley Transportation Authority.
Tucker was used to facing down budget crises like the one he was inheriting, and he knew his solution — outsourcing — would be unpopular among the agency’s 500-plus employees.
“I said to folks, ‘Here’s a suggestion box,’” he later told a reporter, “If you come up with an idea better than the ideas I have, let us know about it.”
Apparently no one did, and Tucker morphed the North County Transit District from a public transportation agency into what he described as a “contract-management” agency.
Its payroll went from 533 employees to 99.5. Private contractors now drive buses, maintain vehicles, and provide other services.
The San Diego County Taxpayers Association honored NCTD with its Golden Watchdog Award for the district’s “Sound Fiscal Decision Making” during the crisis. Tucker was profiled in the local papers, lauded in transit publications, and given a $20,000 bonus — in addition to guaranteed pay raises over the next few years — by the district’s board of directors.
Tucker’s performance evaluation is on the board’s agenda today behind closed doors. His salary was scheduled to increase last December to $249,000, about double the industry standard for running an organization the size of NCTD.
Today, it’s unclear exactly how much the outsourcing has saved the transit agency. And there are many in the industry who question whether it was worth it.
North County is still ultimately responsible for making sure the trains and buses run on time, meet consumers’ needs, and are safe.
That’s the part that hasn’t gone so well.
Hours in the dark
One of the most chilling indications that contract oversight was a problem came in August 2012, when auditors found the agency was failing some of its most vulnerable clients — the disabled.
NCTD had outsourced its services for the disabled a year earlier to a business called American Logistics Company, based in Utah. This “paratransit” service is required of all public transit agencies by the federal government.
Within North County, it’s called LIFT. On-call buses shuttle disabled passengers who can’t make it to bus stops or are unable to navigate the public transportation system.
The audit, commissioned by NCTD, found that disabled passengers throughout San Diego County waited hours for buses after their workday, and were dropped off hours before their employer ever opened their doors. This was a liability for employers and frustrating for passengers.
Dispatcher attitudes were “horrible,” according to one supervisor at a frequently-visited LIFT destination.
The audit found a long list of problems, among them: NCTD didn’t monitor American Logistic’s drug and alcohol testing for its drivers, had no supervision in place for tracking bus performance, and wasn’t receiving full reimbursement from the state for providing trips to Medi-Cal recipients.
There were 13 key findings altogether.
The auditors never reached anyone from American Logistics Company during the entire week of of their inquiry.
In response to the audit, North County drafted an internal manual, distributed a “Rider’s Guide” to LIFT customers, and hired a new administrator to oversee the program.
According to two representatives from local businesses whose clients depend on the LIFT service, on-time performance has since improved.
Yet the root problem — contractual oversight — reared up again within the agency only a few months later.
This time, it involved men with guns.
Security breach
In October of 2012, a private security guard with military history asked inewsource to look into what he called a Homeland Security issue, one he said had been ignored by NCTD for years.
The guard worked for Universal Protection Service, one of the few private companies in the country tasked with protecting a public transportation system.
It’s a dangerous job, and over the last few years, officers have been shot, beaten, and held hostage while on-duty. They have said again and again that they don’t have adequate training or equipment for the job at hand.
NCTD pays $3.5 million a year to Universal to provide a couple dozen security officers who patrol the district’s property, arrest and detain criminals, respond to emergencies along the rail lines and who aid local law enforcement during crises.
Universal took over the security contract last May from a company that had provided officers to NCTD for decades — Heritage Security Services. Universal kept all Heritage employees in their same positions, changing the organization in name only.
Ken Moller, who was president of Heritage Security Services and is now Universal’s Regional Vice President, wrote an email to all his officers in 2010, addressing their concerns.
“These deficiencies were brought to the attention of supervisors in the past but they apparently fell on deaf ears,” Moller wrote, adding “It is our intention to immediately correct the issues…”
An internal email from Ken Moller, Universal’s Vice President of Regional Operations.
Moller said training would be given, equipment would be provided and standards would be upheld.
However, inewsource found little had changed in a months-long investigation called “Security Breach,” which was published in February.
As part of its report, inewsource cited a state investigation conducted in 2012, which found severe deficiencies in the training of the officers, in equipment, and in safety protocols.
The state fined Universal tens of thousands of dollars, although the penalties are still under appeal. According to an official, at least two more cases concerning Universal have been opened since the start of 2013.
North County’s Chief of Security, Tom Zoll, declined to comment throughout the course of the inewsource investigation.
Multiple phone calls and emails to Moller at Universal went unanswered.
Tucker — who cut the security budget almost in half during his first year with North County — wouldn’t speak to inewsource during three months of fact-finding. He did respond after “Security Breach” was published, saying the issue was under internal investigation. A district audit has since confirmed the seriousness of issues reported by inewsource.
Within a month, NCTD was in the hot seat over another contract. This time, the problem would affect thousands of people who rely on public transit.
Catastrophic failures
On March 9, 2013, NCTD took the SPRINTER light-rail service, serving passengers between Oceanside and Escondido, out of service due to bad brake rotors. Buses are shuttling customers while the worn parts are replaced.
Richard Berk, the lead engineer with NCTD on the project, saw the problem coming years ahead of time, as did Berk’s colleagues within the private industry. Berk said he prepared for the inevitable by working with the contractors and suppliers to have the specially-designed parts delivered in time.
But he didn’t track his work in writing, and when the SPRINTER was sidelined, Tucker and others at NCTD placed the blame entirely on Berk, a man who spent years at NCTD and who is respected by his colleagues throughout the industry.
Berk resigned on March 1, a week before Tucker made the announcement that the SPRINTER would be shut down for months.
In an interview with inewsource yesterday, Tucker lay fault with the contractors who manufacture the train and maintain it.
“Ultimately, the responsibility is Bombardier’s. We hired and paid them for maintenance, they should have made that happen,” Tucker said. He called Berk a “distraction” for the media.
“…The bottom line of it is we pay Veolia and Bombardier for maintenance,” Tucker said.
NCTD has not announced a date when the SPRINTER will be up and running again.
North County Transit District’s revolving door costs big
In September of 2012, Angela Miller — who was in charge of information technology for North County Transit District — had finally had enough.
Miller had been named one of Computerworld’s “Premier 100 Information Technology Leaders for 2012,” and through her five years with the agency, she had helped deliver positive press, grants, and industry recognition to North County.
She saved the district $1 million in energy costs through solar projects, built the transit industry’s first “Green Data Center,” and launched the COASTER’s wireless internet and electronic ticketing systems.
In resigning, Miller said she felt she had no choice. The district was in peril.
“I must convey how disappointed I am in the circumstances that led to my departure,” she wrote in a confidential email sent anonymously to inewsource. “The critical reason for choosing this path is that I believe the NCTD is now at risk and that I could no longer support its direction.”
Miller wouldn’t go on the record, but in her resignation letter, she blamed management turnover for “instability, lack of transit experience, a vacuum of basic understanding of federal requirements, dissention and contention among colleagues, and disruption to the organization…
“I have been vocal to the internal organization about safety and security risks I believe now face the agency as a direct result of this attrition. Eventually, mistakes will be made.”
Twenty-one of the top 25 senior level employees have left NCTD since Matthew Tucker, once head of transportation for the state of Virginia, took over as CEO in 2009.
Some, like Miller, left on their own. Many others were laid off but then replaced with employees who would be laid off and replaced again.
It’s a given in business that losing employees and having to replace them is a costly proposition. There are cash payments for such items as severance and accrued vacation, not to mention the loss of experience and familiarity with the workplace and processes. Then there is the search for qualified replacements, the interviews, the vetting and finally the hiring and training.
Tucker explained the whirlwind turnover at NCTD was caused by the magnitude of the changes going on inside the agency and by the budget crisis that sapped NCTD of needed expertise.
Following are examples of positions that have turned over at NCTD:
—In three years, the district’s Manager of Human Resources turned over three times, and the current employee has no transit experience, no government experience, and no California pension experience.
—The Americans with Disabilities Act Administrator had five supervisors in three years. An audit of the district’s bus service for the disabled pointed to the high turnover as the main problem plaguing the operation’s oversight.
—The Chief of Transit Enforcement was let go resigned in 2010 and was replaced by Tom Zoll. A state investigation found that Zoll’s employment agreement violated state pension rules, and both Zoll and North County had to pay fines to the state.
NCTD paid every upper-level employee who left a hefty severance, and full-pay for months after their departure as long as they remained “on-call” and signed a nondisclosure agreement.
An inewsource analysis of severance agreements shows NCTD has paid out at least $220,000 in severance lump-sums to former employees since January of 2010.
That doesn’t count the “on-call” time because in most cases, those amounts are not specified in the agreements. Conservatively, based on average salaries of top managers, those payments would account for additional hundreds of thousands of dollars.
The costs of recruiting new employees also added up. Those costs could exceed half a million dollars by 2014, but Tucker defended them as necessary.
”Some of these positions, particularly rail positions, are very complex, very nuanced positions” he said.
“We do have to do specialized recruitments to identify the best and brightest talent to bring into an agency. I don’t apologize for that, because hiring the right person is the most efficient thing for the taxpayer.”
Tucker said it was “absolutely” worth the recruiting fees “to bring in well-talented, well-skilled people with the requisite knowledge and ability to perform their job.”
He was stymied, however, when asked by inewsource about spending $25,000 to recruit someone who already worked at NCTD.
Tucker: Are you sure you’re accurate?
inewsource: Yes, I have all the invoices.
Tucker: Huh?
inewsource: I have all the invoices.
Tucker: no response
NCTD hired Tucker in late 2008 through the recruitment firm KL Executive Search. Since then, Tucker’s used recruiting firms extensively, paying them more than $200,000. Last July, the board gave Tucker the OK to spend $372,000 more on the services.
It’s not unusual for government agencies to use executive search firms to find upper-level managers.
But the amounts of the recruiting fees NCTD is paying are out of sync with what other local agencies are reporting.
For example, in June of 2010, Tucker paid KL $32,000 to find a Government Affairs Officer. A year and a half later, the city of San Marcos paid a firm $17,500 to find a manager to run the entire city.
San Diego’s Metropolitan Transit System — which employs about 1,300 more people than NCTD and has an operating budget nearly three times as large — spent $96,750 on recruitment services over the last four years.
At NCTD, the contract with KL was quintupled after Tucker hired his government affairs officer.
Tucker then designated himself as the contract’s project manager, and began spending:
—He paid $25,000 to find a Chief Operations Officer, who ended up being an internal candidate. Tucker laid him off after seven months.
—He paid $35,000 to recruit a Chief Rail Engineer, who lasted 18 months before being let go.
—He paid $28,800 for the manager of Human Resources with no prior experience in transit or government.
An audit of the district’s bus service for the disabled underscored the serious effects of turnover at the top.
It was commissioned by NCTD to review the performance of American Logistics Company, the Utah business responsible for “paratransit” services for the disabled. NCTD had outsourced those transportation services, called LIFT, to American in 2011.
The audit found — among a list of deficiencies — that disabled passengers throughout San Diego County waited hours for buses after their workday and were dropped off hours before their employer ever opened their doors.
It pointed to management turnover as a primary reason NCTD was failing its disabled customers.
Inside the agency, the job of overseeing the contract with American Logistics was constantly changing. Five people held the position in three years. The audit said that no one even knew the location of their contractor’s local office.
In an interview Wednesday, Tucker was incredulous when told by inewsource that the audit attributed poor service to his staff’s turnover.
The revolving door of managers was evident among those responsible for the SPRINTER.
Organizational charts show the engineer responsible for maintenance on the SPRINTER worked under a constantly-changing set of supervisors who came and went under Tucker’s direction.
In 2012, Richard Berk, the engineer in charge of the Sprinter, was outranked by the Manager of Rail Services, the Senior Project Engineer, the Chief Rail Engineer, and the Chief of Rail Operations.
In 2013, Berk was outranked by a different mix of titles: the Manager of Rail Services, the Chief of Rail Operations, the Deputy Chief Operations Officer, and the Chief Operations Officer.
Berk quit on March 1, a week before Tucker made the announcement that the SPRINTER would be shut down for months.
North County Transit District’s Smaller Contracts
As head of the North County Transit District, Matthew Tucker can award contracts valued at up to $100,000 without going to his board of directors.
In Tucker’s first four months in office, NCTD awarded more than $1.7 million in consulting and “On Call” service contracts to 13 agencies and consultants — only one required board approval.
Two of those involved his former colleagues at the Santa Clara Valley Transportation Authority — where Tucker was Chief Operations Officer.
—One $50,000 contract — not put out for competitive bid — was given to the former Policy and Administrations Manager at Santa Clara.
——Tucker’s response: “She was an individual who had retired and come in to assist.”
—One $100,000 contract was awarded to an international firm whose Business Development Director was Tucker’s boss at that same agency.
——Tucker’s response: It was “a competitively bid contract from a major international firm Hatch Mott McDonald, and you say, ‘do I view that as a conflict of interest?’ No.”
——Tucker added that to imply awarding the contract was a conflict of interest would be “pretty malicious and defamatory.“
Examples of other spending include:
—$10,000 on a national campaign in 2011 to “leverage national media coverage into sustained interest in the North County Transit District’s operations.” The campaign aimed to highlight the “strong leadership and decisive action of NCTD’s Board of Directors & Executive Director Matthew Tucker.”
—$30,108 to Mundle & Associates in January of 2012 to conduct a “mock audit” to prepare for North County’s Triennial Review by the Federal Transit Administration. The review is an important evaluation for agencies that receive federal transportation funds.
Mundle & Associates found several deficiencies. Tucker then asked the board to quintuple the contract to $157,536.
Months later, the FTA conducted its review and found more deficiencies than at any point in the district’s history — including the misuse of more than half a million dollars of federal grant money set-aside for preventative maintenance.
Matthew Tucker started his new job in Oceanside in January of 2009, moving west from Virginia, where he had run the state’s public transportation agency. Before that, he’d been in charge of transit operations in San Jose at the Santa Clara Valley Transportation Authority.
Tucker left the aforementioned transit companies in bad shape when he departed their employ prior to arriving on scene at N.C.T.D in 2008. All 3 transit companies have since rebounded, including their overall bus, train services in their respective areas.
The NCTD board members should also be held accountable for this mess, a once proud transit company, have found themselves in. Outsourcing has proven to be amongst one of the worst decisions ever made.
Tucker has also shown he can't handle the truth in this entire matter when confronted with documented proof. Tucker genuinely doesn't care about any of his employees who work beneath him, as time has shown.
It's time to remove the current board members & Matthew Tucker before this gets any worse than it already has. NCTD should also toss out First Transit and their miscreant staff members.
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