City of Ione water

The PERC water facility in Ione.

In 2009 a “Request for Qualifications” (RFQ) to operate and maintain the City of Ione’s Wastewater Treatment Plant and Tertiary Treatment Plant plus the wastewater collection system was conducted by Ione City Manager, Kim Kerr on behalf of the City of Ione. Eight responses were received and the Ione Wastewater Advisory Committee asked four selected contractors to prepare presentations for the Ione City Council. After the presentations, the City of Ione chose PERC Water Corporation, based out of Fountain Valley, California, to negotiate a 2-year term contract beginning July 1, 2009, with options for three 2-year term extensions.

A request for qualifications is a step sometimes used in the formal process of procuring a product or service, typically used as a screening step to establish a pool of vendors that are then qualified, and thus eligible to submit responses to a request for proposals (RFP). In this two-step process, the response to the RFQ will describe the company or individual’s general qualifications to perform a service or supply a product, but generally will not include specific details or price proposals.

For the City of Ione, the RFQ provides a pre-screening step, so there are fewer proposals to evaluate. The RFQ becomes a means by which the purchasing agency, in this case the City of Ione, can add vendors to their select sellers list, the list of vendors eligible to bid. For the responding party, they do not need to spend the time and effort to write a full proposal only to find they were not qualified as a firm.

The problem? The City of Ione never conducted the second step, the RFP, which some say makes the contracts with PERC null and void from the very beginning of the contract term, July 1, 2009.

“The process the City of Ione used is about as far removed from the competitive bidding process as I have ever heard of,” said David Anderson, a contractor who has worked with numerous California municipalities. “The principal reason that it is not allowed is because of the extraordinary temptation for contractors to provide favors, bribes, kickbacks and other inducements for favorable treatment. A public works contract, one such as this, is not exempt from competitive bidding statutes.”

While City of Ione Vice-Mayor Dominic Atlan has stated the contract is valid in its entirety and has gone through the correct legal process, with public notice and bids solicited, there is a lingering issue with the original contract outside of its questions of legitimacy. The term of the contract with PERC was from July 1, 2009, for two years with options for three 2-year extensions.

“Even if the original contract was valid, which it is not, the maximum term that PERC could have maintained the contract was July 1, 2017,” said Anderson. “A new contract would have had to been noticed to the public and bids solicited. They added additional extension options in 2013, but not with a new RFQ or RFP. Which is to say, no authority exists for the Ione City Council to arbitrarily extend PERC’s contract.”

And that is only part of the problem.

“PERC was obligated to pay Prevailing Wage. It is common practice for the public agency to obtain certified payroll reports that prevailing wages were paid before the contractor gets paid. That was never done and one can presume no certified prevailing wages were paid,” said Anderson.

“The California Department of Industrial Relations establishes the prevailing wage amounts and they are escalated two times annually. PERC established fee increases at no less than 4 percent per year. Since there was no City of Ione contract (contract of adhesion), negotiation to PERC terms without consideration for any other bidder makes the entire process invalid.”

Atlan said: “Ten years later and PERC is saving us over $200,000 and Voice in Ione wants them out. Diane Wratten and I had PERC lower the price by $62,000, but don’t let facts ruin a bogus recall effort. Income from users fees: $1,488,111 plus $264,963 from Tertiary Fees including Castle Oaks Golf Course. All this from the last audit of 2017, city documents and rate studies. $1,150,000 is what the 2002 costs are valued at today without CALPERS, etc. More income and less expenses. Do the math before you bash.”

In reviewing the original RFQ and contract with the City of Ione, attorney Greg Morris, a former City Councilmember for the city of Sunnyvale, noted a few other issues that have not been addressed.

“The PERC contract is devoid of bid bonds, payment and performance bonds. This is inconsistent with California Public Contract Code,” Morris said. “All of these irregularities and violations of established California PCC protocols is inexplicable considering the participation by the City of Ione Attorney. Even the most recent ‘contract extension’ is invalid and PERC should be considered as not having a valid contract of any kind.”

If that were found to be true, payments made to PERC recently, and possibly going as far back as 2009, could be forfeited under California case law.

“The Ione City Council and the City of Ione Attorney have some explaining to do,” Morris said. “I would think that this item would take front and center stage at the earliest possible Ione City Council meeting. There is a question of contract validity, California laws being violated, and the Ione City Council that has not followed proper procedures and has put the future of the City of Ione at risk.”

In the Ione City Council meeting on Tuesday, September 7, Anderson outlined issues and concerns with the contract between the City of Ione and PERC. Despite these issues being brought forth, not a single councilmember spoke on the subject. The only comment came from Michael Rock, Ione City Manager, in an email to the Ledger Dispatch: “The City of Ione and PERC have a valid and legal agreement.”