Objection to NYC Wi-Fi Payphone contract with CityBridge

8/10/2019 Objection to NYC Wi-Fi Payphone contract with CityBridge

1/7

~I~~C3I~

~~TI~T~

December-

8,

2014

SUBMISSION

FOR

THE

HEARING

RECORD

L a L i r a Ringelheim, l e r k

F r a n c h i s e and

Concession Review

Com~ittee

125

Wor th

S t r e e t

New

York,

NY

10007

G i b s o n . Dunn

&

r u t r h e r

L I . P

200

Park Avenue

New Y o r k , NY

10166

-0193

T e l 212.351.~i000

www.gibsondunn.com

R a n t l y M. a s t r o

D i r e c t :

+ 1 2 1 2 . 3 5 1 . 3 8 2 5

F a x : + 1 2 1 2 . 3 5 1 . 5 2 1 9

R M a s t r o C

i b s o n d u n n . c o m

C l i e n t : 0 0 0 0 0

- 0 0 0 0 0

Re: Ne~v

York

i t . > >

De

/ ~ a r t ~ r i e n t

o f ' I n f o r t ~ 2 u t i o n .

T e c h n . o l o ~

> y

c ~ n . c l

T e l e c o n i i ~ T . u n i c a t i o l i s

Matter of

CityBridge,

LLC

D e ar M s .

ingelheim:

T h e

New

Y or k

City

D e p a r t m e n t

o f

Information T e c h n o l o g y

and

Telecomml~nications

DoITT) as Coday

r e c o m m e n d e d t h e Franchise

and

Concession

R ev i ew C o m m i C t e e

(

FCRC) o

approve a proposed

12- y e a r

f r a n c h i s e

agreemen t

a l L i e d

i n t h e hundreds

of

m i l l i o n s of o l l a r s

between

t h e City

of

New Y or k and CityBridge,

LLC

(

CityBridge) nder

whic h

CityBridg~

x c l u s i v e l y

w o L ~ l d dismantle

x i s t i n g pay telephone

a c i l i t i e s a n t i

r e p l a c e

t h e m w i t h

commLinications s t r u c t L l r e s

o f f e r i n g

f r e e

Wi- F i s e r v i c e and,

t

s o m e t r t i ~ c t L i r e s ,

t r e e

p u b l i c

pa y

elephone s e r v i c e

thereby

e l i m i n a t i n g

a l l

competition

i n t h e

p r o v i s i o n i n g

of

payphone

s e r v i c e s

and

o t h e r

telecommunications

s e r v i c e s

f r o m

t h e C i t y ' s p u b l i c

r i g h t of

way .

Our

law

firm, Gibson ,

D u n n r L i t c h e r

LLP

GDC ) ,

a r ~ d

s p e c i f i c a l l y , a ~ y

p a r t n e r , M y l a n

D e n e r s t e i n ,

and

I e p r e s e n t

T~lebeam

Telecommunicati on s Corporation

T e l e b e am

) .

On

behalf of Telebean~, we

rovide t h i s

w r i t t e n s L l b m i s s i o n i n

o p p o s i t i o n

t o t h i s

f r a n c h i s e

r e c om m e ndation.

We

e s p e c t f u l l y urge t h e FCRC o

r e j e c t

t h i s

proposed

a g i - e e ~ n e n t

because,

f o r

t h e reasons

explained

h e r e , i t s p r o v i s i o n s

v i o l a t e

t h e

l aw--

e d e r a l , s t a t e , and

l o c a land,

even

a p a r t fr o m

t h a t ,

because t h e

process

followed

b y

DoITT n

reaching l i i s

r e c o m m e n d a t i o n i s t a i n t e d b y

apparent

n f a i r f a v o r i t i s m and

c o n f l i c t s

of

n t e i e s t .

My i g n i f i c a n t

p r i o r ' experience i n City

and f e d e r a l

g ov e r n m e n t

e r v i c e

informs

my

understanding

of h e g r a v i t y of h e

apparent procedural

and s u b s t a n t i v e

flaws n

t h i s

proposed

agreement.

I n p a r t i c u l a r , fr o m

1994

o

1998,

served a s

M a y o n

Rudolph G i n l i a n i ' s

Chief of

t a f f and t h e n as

New

Y or k C i t y ' s

Deputy

M a y o r o r

Operations. In t h o s e

c a p a c i t i e s ,

oversaw

t h e

C i t y ' s

f r a n c h i s i n g process and

wa s

h e D ep u t y

M a y o r o whoan

DoITT

e p a r t e d . And s D ep u t y

M a y o r , w a s

u t h o r i z e d

t o a c t

o n t h e

M a y o r ' s

b e h a l f .

Since

t h e n , i n p r i v a t e p r a c t i c e ,

I have

e p r e s e n t e d

m a n y

c l i e n t s

c h a l l e n g i n g gove~

n m e n t a l a c t i o n s ,

i n c l u d i n g

f r a n c h i s e d e c i s i o n s,


2/7

Laura

Rii~gelheim,

Clerk

December

,

2014

Page

2

Simply

p u t , t h e

FCRC h o u l d

n o t approve

t h i s

proposed

agreement

because t h e

p r o c e s s

b e h i n d

i t

and

t s

terms

v i o l a t e

t h e

l ~ l w .

F i f

s t

t h e

proposed

agreement

r e s u l t e d from

a

Request

For

r o p o s a l s

RFP)

r o c e s s

a p p a r e n t l y

t a i n t e d

b y

r n p e ~ - m i s s i b l e

f a v o r i t i s m a c i d

b i a s

i n t h e

award p r o c e s s .

S e r i o u s

a l l e g a t i o s

} g a v e

a r i s e n

concerning t h e

r E l a t i o n s h i p

between t h e

C o n t r o l Group

o n s u l t i n g

f i r m t h a t i s

one of h e

companies

comprising

t h e

p r e v a i l i ~ ~ g

CityBridge

c o n s o r t i L i m

and

Mayor de B l a s i o ' s

a d m i n i s t r a t i o n ,

ma n y

of

which

have

been

p u b l i c l y

r e p o r t e d . I n

p a r t i c L l l a r , a c c o r d i n g t o

p u b l i s h e d

a c c o L ~ n t s ,

Robert

Richardson,

a

former

s e n i o r

e x e c u t i v e a t

t h e

C o n t r o l Group,

e f t t h e

C o n t r o l G r o L ~ p

a t t h e end

of

t i i l y 2014 o t a k e

a s e n i o r

technology

p o l i c y m a l < i n g p o s t

t c ~

help

d i r e c t technology

s t r a t e g y from C i t y

Hall t

t h e s u i n . e t i r i i e

t l 2 . a t

DoITT

was

d e l i b e r a t i n g

o n

: h e

r e s p o n s e s t o

t h e RFP.

S e c '

E x l l . A.

Indeed, h e

New

York Daily

News e p o r t e d

j l ~ s t

t h i s

p a s t S a t u i

d a y ,

Dec emb er

6,

2014,

h a t

e

- m a i l s

s h o w

Richardson was

n v o l v e d

i n

C o n t r o l

Group's

b i d f o r

t h e Wi

- F i

j o b ,

and

he

t h e n

i n t e r v i e w e d

f o r h i s

c u r r e n t

h i g h

- l e v e l

C i t y

government ob

while h e

b i d d i n g

c o n t i n u e d .

See

Exh. B.

Richardson's

2014 m o v e

o

C i t y

H a l l

p l a c e d

h i m

a t t h e

NYC

echnology

Development

C o r p o r a t i o n and

p l a i n l y p r o v i d e d

h i m t h e

o p p o r t u n i t y

t o

work

w i t h

DoITT

o f f i c i a l s

o n technology

~ ~ a t t e r s

a c t t h a t

a e q u i l es

s p e c i a l

s i g n i f i c a n c e

h e r e g i v e n

t h a t ,

p r i o r

t o

j o i n i n g

t h e

C o n t r o l

Group,

ichardson

h e l d a

managemen t

o s i t i o n a t

DoITT.'

A d d i C i o n a l l y , o n

n f o r m a t i o n

and

b e l i e f ,

w h e n

Richardson

l e f t DoITT o

j o i n

t h e

C ~ r i t r o l Group

n

September 20 l 2, he

c o n t a c t e d ahigh

- l e v e l

DoITT

o f f i c i a l

nn

b e h a l f

of

Contro] T ~ o u p

i n a

manner

m p l i c ~ i t i n g

S e c t i o n

2604(d)(2)

~ f

t h e

New

York

C i t y

C h a r t e r ( p i

o h i b i t i n g

a

u b l i c s e r v a n t

from

a p p e a r i n g

b e f o r e t h e

C i t y

agency

s e r v e d

by

t h e p u b l i c s e r v a n t

w i t h i n

a

p e r i o d

of

on e

y e a r

a f t e r

C i t y

employmen t

n d s j , an d

t h a t c o n t a c t

was

e p o r t e d t o

t h e

New

York

C i t y

Department

~ f

I n v e s t i g a t i o n .

Moreover, o n t r o l

Group has

been a

v a l u e d

s u p p o r t e r

of

Mayor

d e

B ~ l a s i o ' s

A d m i n i s t r a t i o n

p r e d a t i n g

i t s p a r t i c i p a t i o n i n

t h i s

RFP.

For

example, h i l e

R i c h a ~ ~ d s o n

worked

a t

C o n t r o l

G r o t i i p ,

he

p a r t i c i p a t e d

i n

a

March

201A s e s s i o n

a d d r e s s i g

use

of

technology

t o

e n s u r e a

smooth

r o l l o u t

of

h e

1 V I a y o r ' s

s i g n a t w - e

expansion of

l

e -

k i n d e r g a r t e n

e n r o l l m e n t .

See Exh.

I n

J u l y 2012, while

Richardson

worked a l

D o I ' T1, l ~ e

agency s s ~ i e d a

R e q ~ i e s t

For

n f o r n ~ a t i o i ~

I 2 F I

j ,

p r e s a g i n g

t h e

2014 R F P ,

n

t h e

F u C ~ u e

of ~ i b l i c Pay

Telephones

o n New

York C i t y

Sidewalks ~ ~ d

. P o t e n t i a l

A l t e r n a t i v e or

A d d i t i o n a l F o r m s

o f

Telecommunications

< l c i l i t i e s

o n New

York

C i t y Sidewalks.

To h e e x C e n t

Richardson

~ ~ e r s o n a l l y

and

s u b s e a n ~ i a l l y p a r t i c i p a t e d

i n t h e

p r e } ~ a r a t i o i l o ~ P

t h a t

RFI

or n

e v a l u a t i n g

responses

o

i t he

s

b a r r e d

from r e c e i v i n g

compensation

F o r

p r i v a C e -

s e c t o r s e i v i e e s

r e n d e r e d

i n

r e l a t i o n

to

h e

RFI,

which would

i ~ c ( u d e

any

work he

l i d

o n

b e h a l f

o i ' t h e

Control Group

~ ~

i t s

r e s p o n s e

t o

t h e

RFP.

See

C h a r t e r

6 0 4 ( d j ( 4 ~ j

(former

p u b l i c

s e r v a n t s a r e .

permanently

b a r r e d

from

a p p e a r i n g ,

whether n a p a i d

or unpaid

c a E ~ a c i t y ,

before

t h e

c i t y ,

or receiving]

o m p e r ~ s a t i o n f o r

auy

s e r v i c e s

rendered,

n r e l a l i o ~ ~

t o

any

p a r t i c u l a r m a t t e r

involving t h e

wi ne p a r t y

or

p a r t i e s

w i t h r e sp e c t t o

which

p a r t i c u l a r

m a t t e r such

p e r s o n

had p a r t i c i p a t e d

p e r s o n a l l y

and

s u b s t a n t i a l l y

a s

a

p u b l i c

s e r v a n t

through

c l e e i s i o r ~

a p p r o v a l ,

r e c o m n ~ e n d ~ i t i o n ,

i n v e s t i g a t i o n

o i

o c h e r

s i m i l a r a c e i v i t i e s . ) .


3/7

t~l~(~1~1T

~l`~~

Laura

Ringelheim, Clerk

December 8,

2014

Page

3

C .

I n

a May 014

speech

while

Control

Group was

presumably

working

o n t s

proposal i n

i - e s p o ~ l s e t o

e h i s

RFP

the a y o r

himself

a l l e d

s p e c i a l

l t t e n t i o n

t o

t h e

C o n t r o l Group's

e f f o r t s

a s a

p a r t n e r [ ] i n

t i n e

C i t y ' s

pre

-

k i n d e r g a r t e n expansion.

See Exh. D.

There

i s

n o

i n d i c a t i o n o n

t h e p u b l i c r e c o r d

t h a t t h e

New

York

City C o n f l i c t s

o ~ f

I n t e i e s t

Board

advised

Control

Gro up t h a t i t could

p a r t i c i p a t e

i n

t h e

RFP

hile

~ a s a

p a r t n e r [ ] t o

t h e

Administration i n

t h i s

manner.)

In l i g h t o f

i c h a r c l s o n ' s

r o l e

a t

Control G r o L ~ p

( e s p e c i a l l y i n

connection

w i t h

t h e

CityBridge

p r o p o s a l ) ,

Control

Group's Unique

r e l a t i o n s h i p w i t h

t h i s

A d m i n i s t r a t i o n

( e s p e c i a l l y i n

connection

w i t h

i t s

high

-

p r i o r i t y

pre -

k i n d e r g a r t e n

p r ~ ~ ~ r a r n ) ,

and

Richardson's

o t h e r apparent

p r i o r

l a p s e s , t h e r e

a r e

now e r i o u s

q u e s t i o n s

about h e

bona

i d e s

o~ h i s p r o c e s s

t h a e need t o

be n v e s t i g a t e d

f u r t h e r

b e f o r e

C h i s

body

a c t s

o n D o ITT's

recommendation.

Richardson's

course o f

conduct

and

c L i r r e n t h i g h

- l e v e l

p o s i t i o n w i t h i n

t h e

A d m i n i s t r a t i o n have

a i s e d

] e b i t i m a t e c o n e ~ , r n s

t h a t

CityBridge

p r e v a i l e d i n t h i s

RFP

r o c e s s

through

f a v o r i t i s n ~ i

g r i d

b i a s

oncerns t h a t

r e s p o n s i b l y

have t o

be

a l l a y e d

b e f o r e

any

f i n a l

d e c i s i o n i s

m a d e h e r e .

See

Exh . E. bldeed,

t i s

f l a t l y

impermissible

t o

award f r a n c h i s e s

t ~ i i n t e d by

a v o r i t i s m

and

b i a s : Public

employees

m u s t m a k e

e r t a i n t h a t

t h e i r

conduct

does

not

r a i s e

s u s p i c i o n

or

g i v e

t h e

appearance

t h a t they a i e

i n

v i o l a t i o n o f

h e i r p u b l i c

t r L ~ s t ,

i l ~ e a n i n g

t h a t

they

m u st

prevent

a v o r i t i s m

i n

p u b l i c

c o n t r a c t i n g ,

among

t h e r

e s p o n s i b i l i t i e s

under

Procurement

Policy Board Rule

-

03(a)(]

.

F u r t h e n Y ~ o r e ,

t h e

New Y o rk

City

c o m p t r o l l e r

a u d i t

r e s p o n s i b i l i t i e s

i n c l ~ l d e

a d d r e s s i n g

u n ~ a i r ~ n e s s ,

f a v o r i t i s m ,

or

impropriety

n

c o n t r a c t i n g .

S e c t ,

e . g . ,

Procurement

Policy

Board Rule

~

- 0 3 ( a ) ( 2 1 ) .

Indeed,

r i e

o f

h e

c e n t r a l

motivating

f o r c e s

behind New

Y o rk

procurement

law i s

to

guard

a g a i n s t

f a v c ~ r i t i s n ~ , imps

o v i d e n c e ,

extravagance, r a u d

and

c o r r u p t i o n .

Assoc.

e ~ t i .

C o i l . t j s . g f A s ~ ~ i . v .

N.Y.

t a t e

T l a f u v v u y

A c ~ t l ~ z . , 8 8

N.Y.2d 56,68

1996).

This

proposed

agreement

s

o f

i g n i f i c a n t

scope,

u r a t i o n ,

and

importance t o

t h e

b e n e r a l

p u b l i c .

Given t h e s t a k e s , t h e

FCRC

hould not

r i s k

undermining

p u b l i c

confidence

i n

t h e

i n t e g r i t y o f h e

proceedings by

approving

C h e

proposed agreement

w i t h o t i i t

a t

t h e very

e a s t

conducting a

thorough and

meaningful f a c t u a l

i n v e s t i g a t i o n i n t o

t h e

d i s t r e s s i n g

and

s u s p i c i o u s

c i r c u r n s t a n c e s concerning

Richardson's

e m p l o y m e n t

i s t o r y and

t h e

Control

Gl

o u p ' s c l o s e

t i e s t o

t h e

Administration

t o

e n s L l r e

t h a t

t h e

proposed

agreement s

not

h e

r e s u l t

o f

improper

n f l u e n c e .

Second, h i s

p a o p o s e d a g i

cement v i o l a t e s

t h e

Telecommnnicatiot~s

Act

of 1996, L i b .

L. N o .

104-104, ' 1 0

S t a t . SC,

n which

C ongress

l i m i n a t e d the

m o n o p o l y r a n c h i s e s

o f

o c a l

telephone

s e r v i c e

p r o v i d e r s

by

e n a c t i n g

47

7 . S . C .

~

253,

which p r o h i b i t s s t a t e

and

l o c a l

r e g u l a t i o n

t h a t

impedes

t h e

p r o v i s i o n

o f

t e l e c o m m ~ n i e a t i o n s

s e r v i c e .

'

V e r i z c ~ 1 1

C o n i ~ n c ' n s

I n c .

v .

FCC

3 5

U.S. 467,

491 (2002)

c i t a t i o n

o m i t t e d j .

As

elebeam

has

explained i n i t s

complaint seeking

d e c l a r a t o r y

r e l i e f

a g a i n s t t h e City

under

S e c t i o n 253,

i l e d

i n t h e

United


4/7

Laura

Ringelheim, lerk

December

8,

2014

Page4

S t a t e s

D i s t r i c t

Count

o r t h e

E a s t e r n

D i s t r i c t

of New

Yor k on

Deeembei- 4,

h e

C i t y

cannot

f o r c e

Telebean

and

o t h e r c L U - r e n t

payphone

r a n c h i s e

h o l d e r s t o e x i t

t h e

market n

favor

of

CityBi i d g e

a s a

monopoly

s e r v i c e

p r o v i d e r . T h e City

i s

doing so

n

v i o l a t i o n

o i ~

f e d e r a l

law,

which

pre

-empts

t h e C i t y ' s

p u r p o r t e d

a c t i o n

h e r e .

See g e n e r a l l y N . J .

Payphoize

Assn .

T o w n of

West

New

o ~ ~ k ,

299

. 3 c l

235,

247

3d

C i r .

2002).

Notably,

r i o r t o

t h e

r e l e a s e

of

t h e

RFP he

managi~~g

m e m b e r

company

of h e

C i t y B r i c l g e

c o n s o r t i L n n ,

T i t a n

Outdoor LLC

Titan

) ,

explained t h a t

very p o i n t t o

DoITT

namely, h a t

S e c t i o n

253

o r b i d s

t h e

s i n g l e -

f r a n c h i s e e

monopoly scheme

e n n ~ a l t o

t h e

RFP.

See

Eah. F.

T e l e b e a r n ' s

complaint

( a t t a c h e d a s

Exhibit Gj

l l e g e s

m u l t i p l e

independent

v i o l a t i o n s

of

e c t i o n 253

based

on

t h e

RFP

nd

r e s L ~ l t i n g

award, and

r a t h e r

t h a n

compounding t h e

l e g a l e r r o r i n

t h e

RF'P

p 1 - o c e s s

so

f a r ,

t h e FCRC

hould,

t

a

m i n i ~ n L i m ,

d e f e r

any

a c t i o n

on

l ~ e

proposed

agreement

u n t i l

t h e

City

has

answered t h e

~ i l l e g a t i o n s

i n t h e

f e d e r a l

a c t i o n . '

T l a i ~ d ,

even i F

( c o n t r a r y

t o

f e d e r a l

I~w)

t

were

s o m e h o w p e r m i s s i b l e

under

S e c t i o n

253 o

pursue

a s i n g l e -

f r a n c h i s e e

model i n t h e

telecommunications s e t t i n g ,

DoITT

xceeded

i t s

a u t h o r i t y

~ l n d e r

t h e

City

C 1 l a r t e r i n

proceeding t o

reach

a

d e t e r m i n a t i o n on

an

RFP ased

on

such a mo d el

without

s p e c i f i c

a L ~ t h o r i z a t i o n from

t h e

C i t y

Council.

Section

363(a) of

h e

C h a r t e r '

provides

t h a t a r a n c h i s e

s h a l l

be

a w a l - d e d

only

i n accordance

w i t h

t h e

p l - o v i s i o n s

of

an

a u t h o r i z i n g

r e s o l u t i o n adopted by

t h e

Council.

T h e

RFP

e r e

p u r p o r t e d t o

cobble

t o g e t h e r C h e

necessary

a u t h o r i z a t i o n

from two

such

i - e s o l u t . i o n s :

Resohition 2309

of

2009

(which

a t i l t h o r i z e s t h e

g r a n t i n g of

r a n c h i s e s

f o r t h e

i n s t a l l a t i o n

of

u b l i c pay

telephones

and

a s s o c i a t e d egLlipment

on,

over,

and under

t h e

i n a l i e n a b l e

p r o p e r t y of

h e C i t y ) ,

and

Resolution

191 o i '

2010

which

a u t h o r i z e d

t h e

g r a n t i n g

of

r a n c h i s e s

f o r

i n s t a l l a t i o n

of

telecommunications

equipment

and

f a c i l i t i e s

on,

v e r and

Under t h e

i n a l i e n a b l y

p r o p e r t y

of

the

City i n

connection

with t h e

p r o v i s i o n

of mobile

telecommunicltions

s e r v i c e s from

t h e

p u b l i c

r i g h t of

way). B L ~ t

n e i t h e r of

h o s e

Resolutions

can be

c o n s t r u e d t o

a t i ~ t h o r i z e

a

s i n ~ l e -

f r a n c h i s e ~

model Y i e r e .

Indeed,

on

J L ~ I y 29,

2014,

a l e t t e r

signed by

24

m e mb e r s

of

h e

City

Council c a l l e d

DoI TT's

a t t e n t i o n

t o

e x a c t l y

t h a t

f a t a l flaw,

t r e s s i n g

t h a t .

t h e

c r e a t i o n

of any

t e l e c o m m L l n i c a t i o n s

and

technology

monopoly

would

w o r k

a

L l s u T p i n g

of

h e

Council's

T h e

m o n o p o l i s t i c c l ~ a r a c l e r

o l ' t h e

proposed

agreemenC

s ~ ~ o t

cured

by t h e

p r o v i s i o n i n

S < ; c t i o n

3 . 5

o i ' t l i e

proposed

agreement

allowing

t h e

C i t y

L o

seek

o t h e r p r o v i d e a s

a f t e r

afour

- y e a r

e x c l u s i v i t y p e r i o d

F o l l o w i n g

t h e e f f e c t i v e

date

of

h e

agreement d e f i n e d as

a

d a t e w h e ~ ~

a p p r o v a l s a r e

r e c e i v e d

f r o n ~ ~

government

commissions,

which

could t a k e ,

upon

i n f o r m a t i o n

a i

d b e l i e f ,

12

o

18

months).

Companies cannot

put

C l l e i r

b u s i n e s s

o p e r a t i o n s

on

bold based

on l ~ e

mere

p o s s i b i l i t y

t h a C ,

more

t h a n i ' o w ~

y e ~ i r s ,

t h e y may

he

given

a

chance

t o

t a k e o v e r

Prom ashen-

e ~ ~ t r e r ~ c h e d

i n c ~ i r n b e n t

m o n o p o l i s t .

Once

C i t y 1 3 ~ i d g e

o h t a i n s

o w n e i s l ~ i p oP h e

e x i s t i n g

payphones from

Telebe


5/7

Laura

Ringelheim,

Clerk

December

8,

2014

Page

5

r o l e ,

and

emphasizing

t h e

need o r

t h e

agency t o

w i t h d i

aw t h e

R I ~ ' P ,

and submit

u 1

a p p r o p r i a t e ,

new

A L l t h o r i z i n g

R e s o l u t i o n t o

t h e

C o u n c i l .

S i c : Exh.

H.

i s r e s p e c t i n g t h e

s e p a r a t i o n

of powers

and t h e

e x p l i c i t

c o mman d

of h e

C h a r t e r , DolTT'

e v e r t h e l e s s

proceeded C o

i s s u e

a

d e t e r m i n a t i o n

on

t h e

RFP

s

Chough

t h e

C i t y

C o u n c i l ' s

views c o u l d

he

brushed

a s i d e .

F L i r t h e r

i n v a l i d a t i n g

DoITT's

n t e r p r e t a t i o n

of h e

R e s o l u t i o n s i s t h e

p r i n c i p l e

t h a t

such

enactments

must

be

c o n s t r u e d

t o

a v o i d

s e r i o u s

c o n s t i t t i ~ t i o n a l

q u e s t i o n s ,

s e e ,

e . ~ . ,

Mutter

of

Jacob,

6 N.Y.2d

6 . 5 1 ,

667

1995)-

-and t h e

C i t y has s e t

a

c o u r s e i n d i r e c t

c o n f l i c t

w i t h

t h e

r e s t r i c t i o n

on

e d e r a l

and s t a t e

c o n s t i t u t i o n a l

r e s t r i c t i o n s on

i n a d e q u a t e l y

c o ~ ~ ~ p e n s a t e d

t a k i n g s .

' T h y proposed

agreement

a l l s

f o r

f o r c i n g

Telebeam t o

s e l l

i t s

e x i s t i n g

payphone

a s s e t s so

t h a t

CityBridge

can

t a k e

them

and

b L l i l d

on t h e i r ,

which

w i l l

f o r c e

Telebeam

o u t

of

b u s i n e s s

ai

Telebeam

has an

e n t e r p r i s e

v a l u e a s

an

e x i s t i n g

b u s i n e s s

t h a t

no

amount of

a f t e r

- t h e - f a c t

money damages

w i l l be

b l e t o

r e d r e s s

once t s

o p e r a t i o n s

have

wound

d o w n .

Because h e

proposed

agreement

would

r e v e r s e

e s t a b l i s h e d p o l i c y

a f t e r

p r i v a t e

i n d u s t r y

has

a l r e a d y

committed

t o i t s

i n v e s t m e n t s , t

o p e r a t e s

i n r e t r o a c t i v e

f a s h i o n t o s t r a n d

t h e v e r y

i n v e s t m e n t s

t h e

f e d e r a l

government

has

encouraged

t h i

o u g h

S e c C i o n

253

and

~

p r o v i s i o n s

of

h e

Telecommunications

Act)

and ~ l i s e s

grave


concern L i n d e r

P e p i n .

C e n t .

T r a n s ~ ~ ~ . Co. . Ne~v

York, 438

U.S.

1 0 4 , l07

1978),

and

c r . s t e r r z

F , n t e i

s . v .

A p f e l ,

524 U.S. 498,

22

-23 1998]

a

e g u l a t i o n may

o

r u s t r a t e

d i s t i n c t

i n v e s t m e n t -

backed

e x p e c t a t i o n s

a s t o

amount o

a t a k i n g ' ) .

Rather h a n

a v o i d i n g

t h e


t a k i n g s

problems,

h e

C i t y

has

n t e r p r e t e d

t h e R e s o l u t i o n s

t o c r e a t e

t h o s e

problems

which

s

u n a c c e p t a b l e

under

clew

l y -

e s t a b l i s h e d law.

F o c i ~ - t

/ z

t h e

r e c o r d

p r e s e n t s

s e v e r a l

obvious

shortcomings

n

C i t y B r i d ~ e ' s

p r o p o s a l

n e v e r

a d d r e s s e d by

DoITT,

e n d e r i n g t h e C i t y ' s

s e l e c t i o n of

CityBridbe

~

and

capricious

e s p e c i a l l y

when t h o s e

numerous

a i l u r e s

a r e

c o n s i d e r e d i n

e o m b i n a t i o n . j

A s

an

n i t i a l

m a t t e r ,

t h e C i t y has

a i l e d

t o

u n d e c t : a k e

any

reasoned

e v a l u a t i o n of h e

r e s p o n s e s

t o

t h i s

RFP

by

a s s e s s i n g t h e i r

comparative s t r e n g t h s

and

weaknesses,

n c l u d i n g

such

c o i i c e i n s ~ s

p r i o r

f i n a n c i a l

p e r f o l m a n c e ,

consumer

s e r v i c e

e x p e r i e n c e ,

t e c h n o l o g i c a l

c a p a b i l i t i e s ,

o r

o t h e r

r e l e v a n t f a c t o r s .

The

i t y ' s l a c k

of a

reasoned e x p l a n a t i o n a s

t o

T i t a n ' s

p a r t i c i p a t i o n i s only

one

example

of h i s

wide- ~ i i l u r e .

S e c t i o n

1 0 . 6

of

h e

proposed

agreement

n s t a l l s

T i t a n

a s

t h e

managing

member of

h e

CityBridge

c o n s o r t i L l m , L ~ t t h e

C i t y

has ~ i i l e d

t o

e x p l a i n

ho w

t h a t

choice can

be

s q u a r e d

w i t h T i t a n ' s

documented

f a i l u r e

t o

comply

w i t h

i t s

o b l i g a t i o n s

under a n o t h e r

h i g h -

p r o f i l e

p u b l i c

contract: ne o r

a d v e r t i s i n g w i t h

t h e

M e t r o p o l i t a n T r a n s i t

A u t h o r i t y

(MTAj.

f t e r -

T i t a n

d e f a u l t e d

on t h a t

c o n t r a c t

w i t h MTA by

a i l i n g

t o

pay

about

20

i l l i o n o w e d o r

2009

and

2010 d v e r t i s e m e n t s ,

MTA

rew on

T i t a n ' s

bank

g u a r a n t e e

C f : R i g l e v .

D n i r ~ ~ e s ,

78 A.D.3d

1249, 1251 (3d Dep't

2010}

c o n s i d e r i n g

agency e r r o r s

c u i ~ ~ a ~ i l < i t i v e l y j .


6/7

~

I~

iSC

~N D U

I ~ I I

~ T

Lau

ra

Rin

gelhe

im, l

e r k

Dec

e mb e r

8, 20

14

P

ag e

6

t o

co ve

r

t h e

d

ebt and t e r

m i n a t

e d T i

t a n ' s

c o n t

r a c t . See

E

xh.

For

t

s p a

r t ,

i n

20

12,

h e

L

o s

Angel

es Co un

t y M

e t r o p o

l i t a n

T r a n

s p o r t

a t i o n

A u

t h o r i

t y i d e n t

i f i e d

T i t a n '

s c o n t r a

c t u a l

f

a i l u r e

i n

New

Y

o rk

a s a

weak

ness t

h a t

u

l t i m a

t e l y

c o n t

r i b u t e

d t o

t h a t

agenc

y' s c h o

i c e

o

f

a

compe

titor

o r

an a d v

e r t i s i

n g

c o n

t r a c t :

Ev e

n t

hough

T i t a

n

p

u r p o r

t e d

t o

o f f e

r

a

h i g h e

r f i x

e d

reve

nue

a

mo un t

, h e

ag

ency s t a f

f r e

c o g n i

z e d

t

h a t

[ t ] h

e g r

e a t e s t

r i s k

f a c t o

r i n

aw

ardin

g

Me

tro's

reven

ue- g e n e r

a t i n g

a d v e r

t i s i n g

c o n t r a

c t s i s

t h e

p o

s s i b i l

i t y

of h e s e l

e c t e d

v

endor

be

comin

g

unabl

e

t o

pay M e

t ro t s

g u

a r a n t

e e d r

e v e n u

e ,

an

d T

i t a n '

s t r a c k r

e c o r d

i n N

ew

Yo

rk

i n c r e a

s e d

t h a

t r i s k

.

S

ee E

xh. . B

ut h e

r e c o r

d d o

es

not d i s c l o

s e

any

s t e p

s t h e C

i t y

took

h

e r e

t o

a s s u r

e

i t s e l f t h a t T i t a

n wo u

ld n

ot e p e a t

t s

p r i o

r

w

e ak

perf

orman

ce,

r

t

h a t t h e

proposed

agreement

a s

a

g e n e

r a l

m

a t t e r

w i l l

be p r a c t

i c a b l e

ev

en

w h e n ane

co n o m

ic

d

owntu

rn

red

uces a d v e r

t i s i n

g r e

v e n u e

s .

T

his

a i l u r e

i s

a l l t

h e m

o re u r

p r i s i

n g

g i v e n

t h a t

T i t a n

c

u r r e n

t l y o

w e s

hun

d reds

o f

hous

ands

of o

l l a r s i n

f i n e s

and

p e n a l

t i e s

i

s s u e d

by

DoITT

f

o r

v i o l a t

i o n s of

En v

ironm

ental

C o n t r

o l

Bo a

rd

C o d

e s e c t i o

n s go

verni

ng

t

h e o p e

r a t i o n

o f

p

aypho

nes.

Se

e

EC

B

otice of i o l a

t i o n s

Dat

abase

,NY

C p

e n

Da

ta,

h t t p s :

/

/ d

a t a . c i

t

o~v

ork

us

C i t y -

Go

v e rn

m e n t l

ECB-

N

otice- o f

-

V i

o l a t i o

n s

/v6h5

~vss s e a

r c h

f

o r r e

c o r d s

w i t h

i s s u i n

g ag

ency Uo

ITT).

Amon

g

t h e r

r

e l e v a n

t f a c

t o r s , t h e

C i

t y has a l s o

f a i l

e d t

o c o n s i

d e r t h e

in

adequ

acy

of

h e

d

a t a

p r i v a

c y and

d a t a

s e c

u r i t y f e a

t u r e s

o f

i t

y B r i d

g e ' s p l a n .

C

ityBri

dge

s t r u c t

u r e s

w i l l

i n c l u

d e

US

B

o r t s

f o

r w i r e

l e s s

p h

on e

c h a r

g i n g ,

but

be

cause

25

e r c e n

t

o f

ma

lware

m

a l i c i o

u s

p rog

rams)

s

s p r e

a d tod

ay

thro

ugh

US

Be v i

c e s ,

t h e

r e i s

a p a l p a

b l e

r i s k t

h a t

such

a USB

p o r t

w i l l

be

e x p l o i t e d t o

d i s t r i b u t e

malware

t h a t

co uldm i s a p p r o p r i a t e

p r i v a t e

i n f o r m a t i o n

s t o r e d

o

n

a

co n

nect i

ngsm a

rtpho

ne,

such

a

s h e

p e r s

o n a l

ba n

k a

ccoun

t

n um

bers

or

o t h

e r

p r i v

a t e

or

s e n

s i t i v e

d

a t a .

See

Ex.

K

Fu rthe

rm ore

, i t

a n ' s t r

a c k r e c

o r d

o n d a t a

p r i v a

c y

c o n

t a i n s

a

e c e n

t and

unde

niabl

e

b

l e m i s

h : P u b

l i s h e

d

r e p

o r t s

i n

Octo

ber

2

014

i s c l o

s e d t

h a t

T i t

a n

h

ad

p

r e v i o

u s l y

i

n s t a l l

e d o n

ma

ny o f

t s

t

e l e p h o

n e

bo oth

s

s o -

c a l l

e d

be

acons

h a t

a c

q u i r e d

u

s e r

d

a t a

n

c l u d i

n g

what

w

e b s i t e

s t

h e y v i s

i t e d

o n

t h e

i r

sm

art ph

ones.

See

Ex. L.

Not

ably,

l t h o

u g h DoIT

T

allow

ed

T i t a n

t o

i n s t a l

l

t h e

d

e v i c e

s i n 5

h o

n e

boot

hs

thr

ougho

ut Man

hatta

n

witho

ut

any

f

ormal

a p p r o

v a l p r o

c e s s

becaus

e

t

h e

co

m p a n y

s

a i d

i t

w

as

u

s i n g

t h e m

f

o r

ma

inten

ance purp

ose s

o

n l y , T i t

a n

ac

knowl

e d g e

d t

was

u s i n g

t h e

d a t a

f

o r

n o n-

mai

ntenan

ce pur

poses

a

s w e l l

. See d .

T

i t a n '

s a c c e s

s t o t h e

d a t a

a c q u i

r e d

thro

ugh

t h

e

beaco

ns

r

a i s e s

t r

o u b l i n

g

q u e

s t i o n

s

wh

ether

t

was

a b

l e t o

e x p l

o i t

t h

a t

d a

t a i n

p

r e p a r

i n g t h

e

CityB

ridge

p

r o p o s a

l . A d d

i t i o n

a l l y ,

t h e

C i t y

gav

en

o e x p l a

n a t i o

n i n

r e a c h

i n g

i

t s

d

e t e r m

i n a t i o

n o n

t h i

s RFP how

t

woul d

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