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Board Approves Revised Contract With Pacific Bell
LOS ANGELES--The Board of Supervisors Tuesday approved a $250-million, five-year contract with Pacific Bell for the telecommunications giant to provide local service to county phones and link county computers into a centralized network. County officials told supervisors they had significantly toughened the county's contract with PacBell since October, when a Times report revealed that the state blamed PacBell for a spree of devastating computer crashes. Those provisions require PacBell to promptly disclose problems with its systems, hike its liability and allow the county to terminate the contract faster in the event of breakdowns, said David Michaelson, the county lawyer who worked on the deal. Supervisors praised the deal but warned PacBell and their own staff that they did not want to hear of problems first in newspapers. "There is nothing that will incur my wrath more than finding out about [trouble] through the back door . . . or from a newspaper article," Supervisor Zev Yaroslavsky said.
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Tuesday, April 18, 2000 | Print this story
County Poised to OK Revised PacBell Deal Finances: Supervisors rejected first proposal after the firm's problems with its state government service were revealed.
By NICHOLAS RICCARDI, ELIZABETH DOUGLASS, Times Staff Writers
Six months after yanking a $250-million contract with Pacific Bell from its agenda because of problems with the telecommunications giant's work for the state government, the Los Angeles County Board of Supervisors is poised to approve the mammoth deal today.
County officials say they have toughened their contract with PacBell and believe the deal remains the best for the taxpayers. "It's a far better package than we had before," said Supervisor Zev Yaroslavsky, who sharply questioned the contract when it came before the board last October.
The deal would give PacBell exclusive rights to local calls from county phones for five years, as well as responsibility for linking disparate county computer systems. Pacific Bell had been only the second-cheapest option in a 1998 bid, but the lowest bidder, AT&T, submitted such a brief proposal that it was deemed unresponsive and the job was awarded to Pacific Bell.
But supervisors held up signing the contract in the wake of a Times report on problems that the state government was experiencing with Pacific Bell. The state had blamed the telecommunications giant for poor performance that led to state welfare and Department of Motor Vehicle computers crashing. PacBell had not informed the county about the problems, contending there were differences in the two contracts.
County officials have since renegotiated their contract with PacBell to allow for speedier termination, if such problems surface in Los Angeles County. Yaroslavsky said he would have additional questions on the contract, but supervisors' aides have said they expect the deal to be approved. The county says it would save about $14 million annually under the deal due to lower rates and other efficiencies. "We think the proposed contract is terrific," said PacBell spokesman Steve Getzug. The expected award of the contract comes after strong lobbying by PacBell, which has spent more than $130,000 on lobbying since the contract process began, with nearly $30,000 in the last three months of 1999 alone. Some of that money went to a wide range of gifts for a number of county employees, most notably tickets to the 1998 World Series for Jon Fullinwider, the county's chief information officer. Fullinwider admitted that accepting the tickets was a lapse in judgment, but denied that it had any impact on his department's recommendation of Pacific Bell for the contract and last fall criticized the company for failing to alert the county to its problems in Sacramento. On Monday, Fullinwider said he believed those issues had been resolved by the stronger contract.
Cynthia Larson-Schwartz, the assistant deputy director of the state Department of General Services, said that Pacific Bell's contract with the state has similarities to the pending one with the county and that the company's performance has improved. "The service has gotten better," she said. "We're still not willing to say we have utmost confidence in it, but we're very pleased with the progress we're making."
Even as county supervisors prepare to hand PacBell one of the state's largest governmental telecommunications contracts, another arm of the county is battling with the phone company over directory assistance fees.
Since late 1998, county attorneys have fought alongside consumer groups and thousands of customers to persuade the state Public Utilities Commission to reject an up to 84% rate increase sought by PacBell for calls to 411 and several lesser-known services. The phone company, which has implemented the price hike, says it is needed to cover rising costs.
In addition, Fullinwider said the county is closely watching an ongoing case against PacBell at the state PUC, which ordered the company to pay a record $44 million in penalties for using misleading sales practices.
PacBell has appealed the decision and has repeatedly denied any wrongdoing. The expected contract with Los Angeles County is another in a string of victories for PacBell, which has shown itself to be a formidable player for government contracts.
It started a few years ago in San Diego, when PacBell was beat out--by an upstart phone consortium led by TCG (now part of AT&T)--for a $2.2-million-a-year contract with the city of San Diego.
A similar deal, hammered out by L.A. County's Fullinwider before he switched jobs, was already inked for San Diego County. But before supervisors could formally approve the TCG deal, PacBell mounted an all-out assault.
PacBell lawyers challenged the bidding process, company executives visited county officials, while others urged the Chamber of Commerce to write county supervisors on the company's behalf (which it did).
Then PacBell submitted a new, unsolicited bid to the county with lower prices. The result: San Diego County scrapped the TCG contract and PacBell ultimately won a greatly expanded role at the county.
It then snapped up the state contract, its largest. The Los Angeles County contract would be the company's second-largest.
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