WNYC's Kathleen Horan is reporting the Taxi of Tomorrow will be Nissan -- and already there are calls for an investigation of a conflict of interest in the contract-letting. Public Advocate Bill de Blasio, Brooklyn Borough President Marty Markowitz, and Assembly member Micah Kellner are calling for an investigation -- their letter to NYC Comptroller John Liu is after the jump.  Karsan -- one of the losing entrants (the other was Ford) had promised, if selected, to build its taxis in Brooklyn.  It had one of the most intriguing designs (moon roof, sleek lines), but city officials had expressed concerns about the Turkish company's ability to fulfill the contract.

May 3, 2011

New York City Comptroller John C. Liu

Office of the Comptroller for the City of New York
1 Centre Street

New York, NY 10007

Dear Comptroller Liu,

In December 2009, the New York City Taxi and Limousine Commission TLC issued a Request for Proposals (RFP) inviting auto manufacturers and designers to submit their best ideas for a purpose-built vehicle to serve as a New York City taxicab. Recent events have led us to believe that the TLC and a consultant involved in the project, Ricardo, Inc. may have been in violation of conflict of interest provisions in the ‘Taxi of Tomorrow’ RFP. The purpose of this letter is share with you the facts and circumstances that have led us to this conclusion, and thereby ask that you investigate whether major violations of the RFP have occurred when reviewing the final bidder determinations for awarding the ‘Taxi of Tomorrow’ contract.

The first potential conflict of interest centers on the dissemination of confidential materials relating to the project. Section 5 of the ‘Taxi of Tomorrow’ RFP states:

2. A conflict of interest will exist if, at any time before the award of a contract, respondent, or any member or employee of respondent, or any consultant or other private organization retained by or compensated by respondent, obtains confidential information about the Taxi of Tomorrow project from TLC, Ricardo, Inc., Smart Design, or Design Trust for Public Space. A respondent with a conflict of interest as defined in this paragraph may be disqualified.[1]

According to a recent New York Times article, “In Contest for New York’s New Taxis, Turkish Entry, the Karsan, Is Rejected,” confidential information about the ‘Taxi of Tomorrow’ was obtained from an official of the Bloomberg administration[2]. The article states:

“[A] report prepared by an automotive consultant, Ricardo Inc., put it bluntly: While Karsan had demonstrated ‘the will and technical capability’ to build its proposed taxi, the company was ‘a new manufacturer, with a new manufacturing paradigm, not familiar with the U.S. regulatory framework, with no current sales, service or support infrastructure’ in the United States, according to the report, excerpts of which were obtained by the New York Times[3].”

The New York Times obtained confidential information about the ‘Taxi of Tomorrow’ program from a City official before the awarding of the contract, which is a potentially serious breach of the conflict of interest clause of the RFP because this information is now prematurely available to the competitors and the public at large. This type of selective leak is especially damaging to the procurement process because it simultaneously creates an unfair prejudice against one competitor while gifting the other competitors with access to valuable information concerning the competition.

This report was so confidential in nature that not even Karsan Automotive was made privy to its contents. Upon hearing of its release, Jan Nahum, executive director of Karsan said, “he was shocked that he had not been directly notified of the decision, and he described the premature release of the report as inappropriate…we are unaware of any such report, and the concerns reportedly raised in it has never been expressed to us[4].” The City official leaked specific excerpts of the report outlining Karsan’s failings, which are clearly designed to create a prejudice against the Karsan bid. In fact, the City official speaking on anonymity to the New York Times stated that the Karsan van was rejected due to this damning report[5].

The second instance of a conflict of interest arises from Ricardo Inc.’s past dealings with Ford and Nissan, the other finalists in the ‘Taxi of Tomorrow’ contest. Again, Section 5 of the ‘Taxi of Tomorrow’ RFP states:

1. A conflict of interest exists if respondent, or any member or employee of respondent, or any consultant or other private organization retained by or compensated by respondent, was involved in the development or issuance of the Request for Information issued by the TLC on February 20, 2008, other than as a member of the TLC Taxi of Tomorrow Stakeholder Committee, or the development or issuance of this Request for Proposals, by work with TLC, Ricardo, Inc., Smart Design, or Design Trust for Public Space. No proposal submitted by a respondent with a conflict of interest as defined in this paragraph will be considered[6].

It is therefore of great concern that both Ford and Nissan have been clients of Ricardo Inc. A press release from as recently as March 2011 shows that Ricardo Inc. was named in a select group of global suppliers for Ford’s World Excellence Award for cost reduction achievement[7]. The attached brochures[8] from Ricardo Inc.’s website display clear linkages between Nissan and Ricardo Inc. through Ricardo Inc.’s work with Renault, a company directly associated with Nissan. While Nissan and Renault are not officially merged, Renault holds a 43.4% stake in Nissan, while Nissan holds 15% of Renault shares[9]. Furthermore, a proposal from Ricardo Inc. from 2006 lists Ford and Nissan as part of its worldwide global client base[10]. The fact that Nissan and Ford have both previously retained Ricardo Inc. as a consultant raises questions about potential conflicts of interest due to past client relationships. Ricardo Inc. played an important role in the selection of the finalists for the ‘Taxi of Tomorrow,’ and these prior relationships could have slanted the selection as finalists in Nissan’s and Ford’s favor.

It is for these reasons that we are requesting that the New York City Comptroller’s office investigate whether these conflicts of interest have fundamentally and irreversibly prejudiced the selection process of the ‘Taxi of Tomorrow.’ If this is determined to be the case, we also question whether it is appropriate to then certify a contract if a winner is selected for the ‘Taxi of Tomorrow.’

Sincerely,

Bill de Blasio Micah Z. Kellner Marty Markowitz

Public Advocate for the City of New York Assembly Member Brooklyn Borough President

Attachments:

Exhibit 1: “Request for Proposals for NYC Taxi of Tomorrow,” Issued 12/17/09

Exhibit 2: Ricardo Quarterly Review. “Ricardo helps with new Renault NVH facility.”

2005.

Exhibit 3: Ricardo Quarterly Review. “Hot Stuff.” 2004.

Exhibit 4: Wight, Iain. Ricardo Inc. “Transmission Design the Winning Formula.”

November 2006.

Cc: Edna Wells Handy, Commissioner – New York City Department of Citywide Administrative Services;

Rose Gill Hearn, Commissioner – New York City Department of Investigation

1 Exhibit 1

2 “In Contest for New York’s New Taxis, Turkish Entry, the Karsan, Is Rejected,” New York Times, 5/2/11

3 “In Contest for New York’s New Taxis, Turkish Entry, the Karsan, Is Rejected,” New York Times, 5/2/11

4 “In Contest for New York’s New Taxis, Turkish Entry, the Karsan, Is Rejected,” New York Times, 5/2/11

5 “In Contest for New York’s New Taxis, Turkish Entry, the Karsan, Is Rejected,” New York Times, 5/2/11

6 Exhibit 1

7“Press Release: Ricardo wins gold with Ford’s World Excellence Award for cost reduction” Accessed

5/2/11

8 Exhibits 2,3

9 “Rennault- Nissan Alliance Structure.” Accessed 5/2/11

10 Exhibit 4

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[1] Exhibit 1

[2] “In Contest for New York’s New Taxis, Turkish Entry, the Karsan, Is Rejected,” New York Times, 5/2/11

[3] “In Contest for New York’s New Taxis, Turkish Entry, the Karsan, Is Rejected,” New York Times, 5/2/11

[4] “In Contest for New York’s New Taxis, Turkish Entry, the Karsan, Is Rejected,” New York Times, 5/2/11

[5] “In Contest for New York’s New Taxis, Turkish Entry, the Karsan, Is Rejected,” New York Times, 5/2/11

[6] Exhibit 1

[7]“Press Release: Ricardo wins gold with Ford’s World Excellence Award for cost reduction” Accessed 5/2/11

[8] Exhibits 2,3

[9] “Rennault- Nissan Alliance Structure.” Accessed 5/2/11

[10] Exhibit 4