DID WISDOT APPROVE ILLEGAL TEST BID?

Applus Technologies Upsets the Cart

Did Governor’s Associate Influence Emissions Inspection Deal?
Proposal and Contract Violate State Law, Firm Alleges

Thursday, July 24^th, 2008 – The Wisconsin Department of Transportation is embroiled in another controversy, this time about the state’s decision to award a vehicle emissions inspection contract to Applus + Technologies, a division of the privately held, $81 billion-asset Carlyle Group.

The Milwaukee Journal Sentinel wrote that Foley & Lardner attorney Marc J. Marotta [Harvard ‘87] arranged a special presentation with a 5-member contract review panel and his client, Applus. A similar presentation was not made available to other bidders, the paper reported. During the meeting, transportation secretary Frank J. Busalacchi dropped in to say “hi,” the paper reported. Busalacchi did not meet with other contenders for the contract.

Envirotest Systems Corp., a division of Environmental Systems Products, Inc., which had held the contract since the state began requiring tests in 1984 appealed the contract award to the Wisconsin Department of Administration.

Donald Leo Bach [UW ‘74], of DeWitt Ross & Stevens, attorney for Envirotest, said the Marotta – Busalacchi meeting gave an unfair advantage to Applus. Bach also said the department’s plans to allow emissions to be tested at commercial service stations in addition to 12 dedicated facilities violates state law.

According to Section 110.20 (8) of Wisconsin Statutes, “No officer, director or employee of the [Emissions Inspection] contractor may be … engaged in the business of selling, maintaining or repairing motor vehicles or selling motor vehicle replacement or repair parts.”

The provision was added to prevent possible abuse of the inspection system by repair shops, and seems rather clear.

However, the Department of Transportation attempts to get around the provision by saying a repair shop performing emission inspections would be an Applus contractor, and not an “officer, director or employee.” Envirotest says that is absurd and that the contractor / subcontractor distinction is irrelevant.

The appeal letter says the face-to-face meeting, held on May 19^th, 2008 including 9 staffers of Applus “from the CEO down” constituted an “improper and unfair advantage.” It also said both the Request for Proposal #2635861 and Intent to Award “result in a totally flawed bidding process and ensuing invalid award.”

A letter from the Legislative Fiscal Bureau dated June 28^th, 2008, calls for a $1,119,200 expenditure for transition costs to the new vehicle testing system, which will now test only non-exempt vehicles built after 1995. All those vehicles are equipped with onboard computers, a technological revolution that makes testing by repair shops feasible – but hardly advisable.

The test in retail shops is part of the system employed in Illinois by Applus under a recently granted contract. Results have been dismal, with reports of long waiting times and other concerns. WisDOT, which conducts its business Chicago-style to begin with, sees no irony in this. Clearly, if the state wanted to create a new paradigm for testing automobiles including overturning legislative intent for consumer protection against conflict of interest in vehicle testing, it should have arranged to get the law changed first, rather than parse the current one out in nuances.

If Envirotest loses the appeal, the firm will sue.