Photo by Patricia InsheiwatLast month, county auditor Peter Hughes said there was nothing wrong with John Wayne Airport's (JWA) contract-bidding procedures. To anyone familiar with the care and feeding of corporate hogs at the county Hall of Administration, Hughes' conclusion was laughable. And inevitable.
So in the absence of a real audit of the several messes at John Wayne Airport, we conducted one ourselves.
On March 22, county airport officials made a last-minute decision to yank the county's John Wayne taxi contract from A-Taxi—the firm that has operated cabs at JWA since 1996—and give it to American Taxi, a firm that not only didn't meet the county's five-year-experience requirement, but also was then showing an operating loss of $130,486.57. And though county officials said they made the decision because A-Taxi was inadequately insured, documents show the county was unable to verify American Taxi's insurance.
It's a lucrative deal—it granted A-Taxi and now American a monopoly on airport service—and it drew a small measure of public attention. But officials and the two big dailies have always accepted JWA director Alan Murphy's March 22 claim that his office had “insurance certificates from American Taxi which have been reviewed and approved by the [county] risk manager.”
In fact, documents obtained by the Weekly under the state's public-records act show county officials weren't even sure American Taxi had the right insurance when they gave the firm the monopoly. These records show instead that county officials were working feverishly to produce evidence of insurance on March 22—the very day start-up American Taxi commenced operations at JWA—and didn't understand the full extent of American Taxi's insurance problem until April 4, nearly two weeks after the deadline.
On March 22, the day the first American Taxi cab pulled up to the JWA terminal, two county officials were apparently scrambling to review the company's insurance policies. One of them was JWA property manager David De Leon, who faxed the county's risk management office documents he hoped would provide evidence that American Taxi had the required insurance. “Please consider this an urgent matter,” he concluded.
The other county official was Dennis Bunker, the county's claims manager. Bunker wrote De Leon that American Taxi's insurance coverage was unacceptable. Though the ostensible reason for killing the contract with A-Taxi was lack of insurance, Bunker told De Leon that his office would spend the next week making certain that “the policies are in effect and that no self-insured retentions or deductibles exist on these policies.” In addition, Bunker wrote, the county would give American Taxi 30 days to make sure the county was included in the firm's insurance policies.
Just an hour and a half before the 5 p.m. deadline for the contract announcement, De Leon received a fax from Sherman/Parent Insurance Brokers, listing the insurance carriers for American Taxi.
The frantic search for proof of insurance didn't end that night, despite Murphy's announcement that the deal with American Taxi “met all the terms and conditions required” and that his office had “executed the contract.” Behind-the-scenes, county officials continued to check the new company's insurance policies. Nine days into the contract, on March 31, Scottsdale Insurance Co. finally faxed county risk-management officials, saying American Taxi had a $1 million policy with them effective for a year starting on March 22. And in a memo from risk management to De Leon dated April 4 (but stamped received on April 5), county officials could still only partially confirm that American Taxi had a policy with Golden Eagle through Aug. 4, 2000.
“However, due to the confidentiality laws of their company, they would not give me the policy amounts or if there was an self-insured reduction or deductible,” wrote Mary LoGudice of county risk management. She added the following emphasized warning twice: “Therefore, we need a copy of the declarations page of this policy from the broker.”
When contacted by the Weekly, De Leon said he didn't recall the April 4 memo showing county officials gave American Taxi the airport contract without fully understanding the company's coverage, but he referred to the entire process as “routine verification.”
“I'm pretty sure it was all handled by risk management,” he added.
LoGudice didn't return repeated phone calls for comment. David Markley, one of the three of the five county airport commissioners who wanted the contract to go to A-Taxi, would only say, “We still don't understand everything that went on.”
