Is the city’s shiny new bike-sharing program a dirty deal?

By Deanna Isaacs

Source: TheChicagoReader

Bike Chicago’s Josh Squire smells an inside job

Squire alleges that the city's bike rental contract didn't go to the lowest bidder.

Squire alleges that the city’s bike rental contract didn’t go to the lowest bidder.

Longtime local cycling entrepreneur Josh Squire has a sorry tale to tell about the city’s new plan to put thousands of rental bikes on the streets of Chicago.

Kick-started by an $18 million federal grant, the program rolled through a green light last month when the City Council approved a five-year contract with an Oregon company, Alta Bicycle Share, to create and run it. [UPDATE: According to information posted on the city website this week, the contract was awarded to Alta on May 7, for up to $65 million.]

But Squire, whose Bike Chicago was a competitor for the contract, claims that the bid process was corrupted by insider relationships, and that the deal—which awarded the job to the most expensive bid—will cost the city millions more than it needs to pay.

As the plan stands, by the end of the year Alta will have 3,000 bicycles at 300 automated, solar-powered stations around the city. For an annual membership of no more than $85 (or a maximum $7 one-day pass) riders will be able to teeter around in Chicago traffic for an unlimited number of jaunts of up to 30 minutes each. (Except, that is, on the west or far-south sides, where there won’t be any docking stations.) The contract with Alta puts the total cost to get those wheels on the street and operate them for the first year at $28 million.

That’s $9,600 per bike.

On April 26 Bike Chicago filed a protest. Foremost among its complaints: both the head of the city’s Department of Transportation and the intern who wrote Chicago’s request for proposals had recently worked as consultants for Alta, and the intern is now an Alta employee.

According to Squire:

  • Chicago Commissioner of Transportation Gabe Klein collected a $10,000 consulting fee from Alta shortly before his appointment by Mayor Emanuel last spring.
  • Chicago’s bike-share request for proposals (RFP) was written by Jeremy Pomp, a CDOT intern who claimed to previously have been an Alta consultant. Immediately after the two-month internship, Pomp was hired by Alta as head of its bike-sharing program in Chattanooga.
  • Klein was director of transportation for Washington, D.C., when Alta was given a no-bid contract for a bike-sharing program there.
  • CDOT deputy director Scott Kubly, brought to Chicago by Klein to be his second in command, was also Klein’s deputy director in D.C. when Alta got the contract there.
  • Because of his past work with Alta, Klein recused himself from the Chicago bid process, but appointed Kubly, his deputy, to the bid-evaluation committee.
  • The original request for proposals, issued last September, was canceled after its deadline, ostensibly because it needed tweaks. Squire suggests a more important reason may have been that Alta didn’t have a Chicago business license when its first bid was submitted, which would have disqualified it.
  • Alta’s bid partner, Montreal-based Bixi, a manufacturer of bike-sharing equipment and systems, is struggling with financial and legal problems and is currently up up for sale. Bixi took a bailout worth more than $100 million from the Canadian government last year, and two weeks ago was sued by its software supplier for $26 million.
  • Alta’s winning proposal is significantly more expensive than Bike Chicago’s. (A third competitor, Tracetel, the U.S. subsidiary of a French company, describes the Alta proposal as “grossly out of proportion . . .  to the prevailing commercial market.”) Alta’s bid for equipment, installation, and start-up costs came in at $21 million; Bike Chicago’s was $13 million.

“These people came from D.C. and took over CDOT, and they’re moving jobs to their friends,” Squire alleges. He wants Alta disqualified and thinks the hometown company deserves some respect.

CDOT spokesman Peter Scales, speaking for Klein (who refused an interview), says “the Commissioner recused himself.” Kubly “was never an employee of Alta,” and the intern, Pomp, “put on his LinkedIn page that he wrote the RFP, and that is not the case at all.” According to Scales, “This is a unique operation, and price was not the deciding factor. The quality of the equipment and the experience of the operator were most important. Alta is the industry leader in bike share. And Alta projected the highest revenues.”

Scales also says the evaluation committee determined that “Bike Chicago’s proposal suggested a lack of appreciation for the resources, both human and equipment, required to handle a bike-sharing system of this size.”

Bike Chicago rents bikes at Navy Pier, Millennium Park, the Riverwalk, Foster Beach, and 63rd Street Beach; manages commuter stations here and in other cities (through a sister company, Bike and Park); and is a 20-year concessionaire with the Chicago Park District. Its team of suppliers and subcontractors for the Chicago bid contract includes B-Cycle, a Wisconsin-based manufacturer, and I-GO, the local nonprofit car-sharing company, which would have handled customer relations, creating jobs here. Under Alta, Squire claims, those jobs will go to Montreal.

Squire, who started his bike-rental business in 1993, when he was a student at UIC, says he’s “passionate about bike share,” and has long advocated for it. “I invented the automated bicycle-renting machine in 1997,” he claims, “and introduced Chicago’s first bike-share program.” That’s Chicago B-Cyclestarted in 2010 with a $350,000 loan he took out from the U.S. Small Business Administration and now operating 100 bikes at seven stations (four near or on the downtown lakefront, two on the IIT campus, and one at the Peggy Notebaert Nature Museum). Squire claims the pilot—which operates without public funding and pays 15 percent of its revenue to the Park District—has been successful as a demonstration project, with more than 10,000 trips logged through 2011.

Last week Chattanooga’s bike-sharing program, run by Alta and Jeremy Pomp, missed its May 1 launch date because of unspecified technical issues; at deadline, no new start date had been announced.

In response to a request seeking comment for this story, Pomp wrote, “We at Alta Bicycle Share maintain that we have competed fair and square in a highly competitive process for the Chicago Bicycle Sharing system.”

That same day, the LinkedIn description of Pomp’s accomplishments as a CDOT intern changed. Where he’d previously claimed to have “Drafted $20M Chicago Bike Share RFP and financial model; Conducted interviews of bike share coordinators and consultants across the U.S. and developed strategic plan for a successful launch of Chicago Bike Share in 2012,” he now claims only to have “conducted bike sharing research.”

On April 27 Tracetel filed its own protest to the bid process.

The city’s only response to the protests so far is a stumper: “The bid protest protocol doesn’t apply here because the contract was approved by City Council. It was not a Dept. of Procurement Services contract; therefore the Chief Procurement Officer doesn’t have the authority to void the contract or review allegations of wrongdoing.”

So who does?

Word is that Chicago’s inspector general is considering a ride.