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City Extends Red-Light Camera Contract With Controversial Vendor

By Mike Brockway | April 26, 2013 12:59pm | Updated on April 26, 2013 4:31pm
 One of Chicago's nearly 400 red-light cameras, at the corner of Damen and Division in the Wicker Park neighborhood.
One of Chicago's nearly 400 red-light cameras, at the corner of Damen and Division in the Wicker Park neighborhood.
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Mike Brockway

CHICAGO — Delays in the bidding process for the city's red-light camera contract have led the city to indefinitely extend its current contract with Redflex Traffic Systems, city officials said Friday.

The original deadline for the submissions of bids to replace Redflex, which has been banned from rebidding on the contract after a bribery allegation, was April 15, but that deadline was later extended. On Thursday, the deadline was pushed back again to May 10.

As part of the bidding process, the Department of Procurement Services told potential vendors that the delays mean Redflex's contract will have to be extended — again.

"While we anticipate awarding a new contract in July of 2013, it should be assumed that the City will continue to operate under a transitional contract with the current vendor for a limited period of time as the new vendor completes the changeover and assumes full operation of the system. The transitional contract with the current vendor will allow for operational continuity," the memo to vendors states.

The delay comes after the city amended the bidding requirements to make sure whoever wins the contract does not attempt to simply subcontract with Redflex and use its existing network of cameras.

Last fall, Redflex's multi-million dollar contract  to run the city's red-light cameras came under scrutiny after the Tribune reported that John Bills, the former Chicago Department of Transportation official who oversaw the program, had received trips and hotel accommodations from the company.

While Bills denied wrongdoing, the revelations led the city to prohibit Redflex from bidding on Chicago's impending speed camera program and led to an investigation by the Inspector General's Office.

Redflex hired former Inspector General David Hoffman to conduct a $3.5 million investigation of the program. Hoffman's report found many instances of freebies given to Bills and concluded legal authorities would consider the behavior acts of bribery.

Mayor Rahm Emanuel then forbid Redflex from bidding on the new red-light camera contract — a contract Redflex held for 10 years since the program began and which had generated tens of millions of dollars for the Australian-based company.

Company officials with Redflex say they will fully cooperate with the city and whatever new vendor is chosen.

"Redflex Traffic Systems is fully supporting the City’s transition to a new vendor," spokeswoman Jody Ryan said via email Friday. "We are actively working to exceed the City’s expectations in this process, and in every other element of our support. As the City's procurement process defines a new vendor, we will work collaboratively to support the City’s desired transition plan."

But with delays in the process to find a new vendor, the city does not know how long Redflex will continue to run the program.

"That has yet to be determined," said a city spokesman. "The transitional period will be laid out in proposals from potential vendors. That will be a factor in awarding the contract. I can assure you it will be as quick as possible."

The transitional contract extension is good news for Redflex as it will continue to generate hundreds of thousands if not millions of dollars in revenue while it remains the vendor. The Chicago contract is worth $17 million a year to Redflex and represents it's single largest source of revenue.

But the fallout from the Chicago contract has damaged the company's business nationwide. And Redflex plans cost cutting measures to survive without Chicago's significant chunk of revenue.

"Given the expected revenue decline, the Company will implement cost reduction actions that will yield approximately $10 [million in annual] cash savings," a report on the Redflex website says.

Chicago’s red-light camera program is the nation’s largest with 384 cameras at 191 intersections, and has generated $375 million dollars in revenue for the city since its inception in 2003.