Ana Garcia, James Hourani
"That's supposed to go to companies like mine, and it's going to foreign companies," says Maurice Venegas, president of Tezo Systems in Sun Valley. Venegas says the city of Santa Clarita awarded a stimulus-funded contract to a New Zealand company over his. Ana Garcia reports.
The owner of a Sun Valley company is furious that he lost a Santa Clarita City contract worth more than $817,000 to a company in New Zealand. And it’s perfectly legal.
“That’s supposed to go to companies like mine, and it’s going to foreign companies,” said Maurice Venegas, the president of Tezo Systems, which employs 100 people in Sun Valley.
Venegas’ Sun Valley company installs and maintains TV monitors on transit buses. Their biggest contract is with Los Angeles County Metro, where Tezo is on 2,000 buses.
The city of Santa Clarita asked for bids to install TV monitors on 86 of its buses. The project is funded by federal stimulus money from the American Recovery and Reinvestment Fund.
The City of Santa Clarita said the New Zealand Company, Connexionz, was the only other company that submitted a bid. The city says Connexionz had the lowest bid and the best proposal at $398,352 – compared to Tezo’s bid which was $840,192.
“We always prefer to do business with a local company,” said Jason Crawford, manager of the Santa Clarita manager of economic development. “In this instance the contract still follows the Buy America policy.”
Buy America refers to a requirement to buy American-made parts. It does not require that the company getting the contract is a U.S. company.
“With us it goes to local employees and is spent at local businesses,” Venegas said.
The city and Connexionz said they will use mostly U.S. workers and parts and still provide a savings.
Crawford said the New Zealand deal “saves the taxpayer several hundred thousand dollars.”
The bid was indeed lower, however the contract the city ultimately awarded the New Zealand company was for a lot more. In fact, the final figure of $817,438 was closer to Tezo’s original bid. The city tossed in an extra $419,000 for maintenance, extra parts and sales tax.
Connexionz already has more than $3 million in existing contracts with the City of Santa Clarita.
When asked if there was a U.S. company that could have done the work, Crawford answered “any and all companies had an opportunity to bid on it.”
Americans shouldn’t be upset because Connexionz “will hire US workers and use US products,” Roger Carruthers, the company’s CEO, said in a phone interview.
Carruthers said he could not say exactly how many people would be hired yet but stressed that he offered the best deal.
City officials said they believe, based on past experiences, that local workers will be hired from subcontractor in nearby Lake Hughes.
The Sun Valley Company filed a formal protest which has stopped the clock on the project until the city responds, which should happen next week.
Venegas admitted his bid had deficiencies. The city said it was incomplete.
Venegas added the city should have notified him in writing if there was a problem.
A spokeswoman for the city of Santa Clarita sent NBC 4 a spread sheet. She said it shows more than 90 percent of the money will stay in the U.S., and the New Zealand company will make only $70,000 on the entire $817,000 contract.