VTA’s Contract Missteps Risk Derailing Diridon Station Project

The renderings marked a pivotal step to turn San Jose’s humble brick depot into a world-class transit hub—the catalyst for a dramatic transformation of the city’s urban core.

Though light on specifics, the digital sketches released late last year offered the first glimpse of how the Diridon Station, built in 1935 to serve the city’s 60,000 residents, could scale alongside Google’s planned development along downtown’s western edge.

Passengers would board Caltrain, high-speed rail and Amtrak atop an elevated expanse of 10 tracks on a curved platform the shape of a 1,200-foot-long flattened banana. Riders would descend beneath Santa Clara Street to hop onto BART. Shops and cafes would line two concourses. Cyclists and pedestrians would spill onto San Fernando Street’s bike paths and palm-shaded promenades leading into downtown.

The redesigned station is a linchpin of the city’s economic future and its efforts to improve residents’ quality of life. Parks, schools, roads and libraries in San Jose lag behind job-rich Silicon Valley communities like Mountain View and Palo Alto because the city of 1 million must pay for costly residential services with an underdeveloped corporate tax base. Transit-enabled job growth is expected to correct that imbalance, spreading prosperity and improving public amenities.

The promise of Diridon’s transformation is also what attracted one of the world’s most valuable companies to plunk a corporate headquarters at the train station’s front doorstep in the first place. San Jose’s economic development director calls the transit hub expansion a “once-in-a-lifetime opportunity” to evolve with Google’s planned development. Others bill it as “the Grand Central Station of the West.”

However, as the European architects hired to create the initial sketches for the massive public works project enter into the final phase of a two-year, $6.4 million contract, there are signs of trouble that could jeopardize the initiative. It appears the Santa Clara Valley Transportation Authority (VTA)—the agency spearheading the station’s renaissance—neglected to follow its own bidding rules for contractor selection.

Records recently unearthed by San Jose Inside suggest that the transit authority broke laws and violated conflict-of-interest rules in an ambitious effort to secure world-class transportation design talent. One expert even believes the apparent contract breach exposes VTA to legal liability and could force it to sever its relationship with Netherlands-based Benthem Crouwel Architects and Arcadis Design and Consultancy.

Official documents also shed new light on Google’s outsized role in a process meant to be driven by the public sector—namely by VTA, the California High-Speed Rail Authority, Caltrain and the city of San Jose—with the search-and-advertising giant providing talking points for public officials and inserting itself into early design team discussions.

In order to fix the botched contract selection process, VTA officials may have to pause work and find a new design firm—a move that could potentially force delays. Rebidding the contract could be costly for taxpayers, who already subsidize 90 percent of the transit agency’s operating expenses.

Bill Souders, a member of the Station Area Advisory Group—a 38-person city committee assembled to guide Diridon area’s redevelopment—now has serious doubts about the VTA’s ability to pull off the project. “It just seems that this is dangerously under-planned,” he says, “and it lacks clear accountability and authority.”

Preliminary sketches of the reimagined Diridon Station. (Image via City of San Jose)

RAIL TALK

Teresa Alvarado, SPUR’s San Jose director, recalls how the Rotterdam Central Station took her breath away. Blonde wood paneling overhead and blush-toned tile below lent warmth to the natural light pouring through the main terminal’s expansive windows.

The urban planning non-profit’s July 2017 study tour brought reps from several public agencies—VTA, the city of San Jose, Caltrain and BART—to explore Europe’s renowned railways as they prepared to boost the 17,000 daily passenger station to accommodate 140,000 riders by 2040.

Alvardo says SPUR hoped to inspire decision-makers as they delved deeper into imagining San Jose’s future. Nuria Fernandez, VTA’s general manager, was accompanied by a slew of public officials on the SPUR and Knight Foundation co-sponsored trip that included San Jose Mayor Sam Liccardo, Councilman Lan Diep and Santa Clara County Supervisor Cindy Chavez.

Employees of Benthem Crouwel and Arcadis, the architecture-and-engineering duo acclaimed for rebuilding the Rotterdam Central Station as well as bus terminals in Amsterdam and The Hague, were on hand during the delegation’s visit—answering questions and providing insights. VTA officials welcomed the guidance and the conversation continued after the delegates returned home.

A little more than a month later, VTA signed Benthem Crouwel and Arcadis to a $48,800 consultancy contract that would last through the end of the year. Nearly half of the contract covered costs to bring the team of architects out to see Diridon Station. During the first week of September 2017, Benthem Crouwel architects Daniel Jongtien and Laurens Dueling and Arcadis Commercial Director Marjolijn Versteegden strapped in for the 11-hour flight to the Capital of Silicon Valley.

The $23,125 taxpayer-funded excursion included a rental car and several nights at the DoubleTree hotel near the airport. The agreement’s goal was to “gain insight” from the Dutch firms about the station overhaul’s main objectives, each participating public agency’s responsibilities and the “current situation and status of the project.”

Liz Scanlon, a Kimley-Horn Planning and Design Engineering Consultants transit expert recruited by VTA to support the redesign, says the Dutch team helped local officials “understand the complexity and breadth” of the project they were about to undertake.

Armed with the framework drafted by Benthem Crouwel and Arcadis, VTA opened the bid on Nov. 2, 2017 for the station redesign’s initial phase. At the time, the Dutch companies remained under their original consultancy contract. Three firms applied—two of them local—but, apparently, the fix was in.

Not surprisingly, Benthem Crouwel and Arcadis won the job, signing a contract in early 2018 marked by similar language crafted by the firm as part of their earlier agency work.

Local officials traveled to the Netherlands in July 2017 on a trip co-sponsored by SPUR and the Knight Foundation.

BIDDING WARS

In a public bidding process that’s supposed to be marked with transparency and a level playing field, the Dutch firms’ early conversations with VTA raised eyebrows. Joshua Schwartz, who teaches public procurement law at George Washington University, says it seems the consultants’ prior work for VTA undercut the competition and cast doubt on the process’ overall fairness.

“If you want help in identifying the goals of the project, you can’t get that help from somebody who’s then going to bid for the next stage of it because maybe they’re giving themselves an unfair advantage,” he says. “Maybe they’re not, but it would be almost impossible to tell. The law of organizational conflict-of-interest says, ‘just say no.’”

Steven Simas, a California-based lawyer specializing in public contracts law, agrees. “The hallmark of public contracts law is to allow everyone to fairly compete,” he says. “This type of thing defeats that.” After reviewing the documents, Simas says the Dutch architects may have violated their $6.4 million agreement with VTA. The 134-page document says the contractor must have no interest that would “conflict in any manner or degree (or create an appearance of conflict.)”

The preliminary contract creates the impression of a conflict of interest at the very least, Simas says. That could force VTA to halt work and rebid the current contract—a potentially costly undertaking.

VTA also has legal risks, Simas adds. The public contracts expert says that anyone with a stake in the project, including taxpayers, can file a court motion for declaratory relief in which a judge rules on whether it’s a conflict. A losing bidder could also sue the agency, citing California’s unfair competition law.

VTA is supposed to have policies in place to ensure bid integrity in the first place. Request-for-proposals (RFPs) warn applicants to limit communication to written correspondence with a designated contact. Breaking that rule puts the proposal at risk.

Though Jongtien exchanged numerous emails with VTA officials in the months leading up to its bid, transit authority spokeswoman Brandi Childress says the messages don’t necessarily violate policy since “there is no restriction on contact with vendors or consultants who have an existing contract about the work they are performing for the agency.” While both contracts ultimately related to Diridon Station, Childress says the “scope of work” was different for each and that VTA doesn’t prevent bidders from taking other jobs with the agency.

Arcadis did not respond to multiple requests for comment, but Jongtien from Benthem Crouwel insists his team gleaned no insights that gave them a leg up as bidders.

Schwartz, however, contends that VTA’s rationalization misses the point. “An organization shouldn’t be able to serve as a consultant at the stage of drafting an RFP and then serve as a competitor at the stage of competing to get that contract,” he says. “If they play those two roles we may not be able to know whether they wired it.”

Bob Staedler, a principal at Silicon Valley Synergy, agrees. The land use and government relations consultant says it would have been more pragmatic for VTA to enlist the help of an independent non-profit. “That way it would be transparent and you would allow all of the best consultants in the field to not have any conflict issues,” he said. “It’s not like they’re creating a brand new structure that’s never been done before.”

The newly uncovered information has also led San Jose’s mayor to ask questions of VTA staff—a challenge, as some of the individuals who helped broker the deal have since left the agency. Liccardo, who learned of the allegations when San Jose Inside brought them to his attention last month, called the sequence of events “troubling.” But after numerous discussions with transit officials, he says he’s assured that Arcadis and Benthem Crouwel gained no advantage over other bidders.

However, he says a change in policy may be in order.

“Certainly in hindsight I would hope everyone would agree that this is not the way the agency should be engaging with consultants and that there was certainly clear language that could have been used in contracts to establish clear walls and boundaries,” he said.

While Liccardo—a former criminal prosecutor—wouldn’t offer a legal opinion, he did say that as a member of the VTA board of directors, he’d like to see the project go back to bid when the contract expires in December 2020. According to Childress, Arcadis and Benthem Crouwel’s contract was renewable and could have extended through the final design, permitting process and construction phases of the project.

(Source: Valley Transportation Authority)

GOOGLEVILLE

Google’s more than $450 million in land acquisitions around Diridon Station reflect a broader trend of Silicon Valley tech titans becoming some of Santa Clara County’s fastest-growing property owners. It’s a far cry from the company’s early days in Mountain View when it rented offices from now-defunct Silicon Graphics. Ellis Berns, a consultant and former economic development director for the city of Mountain View, says Google has only just started flexing its developer muscles as it moves forward with its 20,000-job megacampus plans in downtown San Jose.

“In Mountain View, for example, the city requires, in many large projects, community benefits,” Berns says. “Obviously, Google because of its size … they can provide a certain level of community benefit that probably no other developers can provide.”

Those benefits, however, accompany Google’s gentrifying effects, prompting affordable housing advocates to demand greater transparency over the interactions between the tech company and San Jose public officials. Bern says a similar dynamic played out in Mountain View. “There was some tension between the city and Google,” he says, “because they wanted to expand so quickly and the city had a process they had to follow.”

Google cloaked its early talks with San Jose in secrecy. In the months leading up to the June 2017 announcement that it negotiated to buy land parcels from the city, nearly 20 officials at City Hall signed non-disclosure agreements at the company’s behest, prompting criticism from labor and anti-displacement activists. Union think tank Working Partnerships USA even sued the city of San Jose over the closed-door meetings.

Representatives from the California High-Speed Rail Authority and VTA joined their counterparts in San Jose by signing the secrecy pacts. And since Benthem Crouwel and Arcadis were under VTA contract, members of its redesign team signed NDAs of their own, to “facilitate conversations regarding Diridon Station and Station Area planning.”

At the time that Jongtien, Deuling, Versteegden and Stephen Truman of Arcadis signed Google’s NDA, the design team prepared to lock in its early consulting deal with VTA. But while that first contract’s scope was meant to be limited to advising planners on the Diridon redesign, records indicate that the Dutch firms may have had access to information that Google tried to keep under wraps—and to which other prospective bidders may not have had access.

Jongtien says his team signed the NDAs after meeting Google’s lead urban designer, Michael Flynn, who joined SPUR on its 2017 Netherlands trip. The Benthem Crouwel architect says Google also took part in meetings he attended a couple months later at VTA’s North San Jose headquarters.

Scanlon says VTA’s initial discussions with the search-and-advertising business were purely for brainstorming purposes and that Google was “not included in any of the partner decision-making pieces.” Correspondence obtained by San Jose Inside, however, paints a different picture.

On June 28, 2017, Jim Isaf—Google’s development director of major projects—crafted an email entitled “Information exchange” to officials with VTA, the San Mateo County Transit District, California High Speed Rail and the city of San Jose. He wanted to share “visioning and guiding principles” that the corporation’s real estate team had already handed to its consultants. “Forgive me for being forward,” Isaf wrote. “And I know this is aggressive … but if we understood your schedule correctly, we are going to try to create some programming scenarios we can all agree on by mid-September.”

Isaf added that by early August he hoped to send over some “planning scenarios” for the Diridon area that would take into account Google’s development. The new scenarios would be based on proposals that VTA and BART had already shared with the tech giant. And with the SPUR study trip just two weeks away, Isaf said he wanted to suggest “common language” for public officials to use during discussions in the Netherlands.

Google spokesman Michael Appel downplayed the significance of the exchange, saying it came early in the process when the company was still gathering input about the feasibility of a San Jose headquarters.

Working directly with Google to transform Diridon Station also appears to be one of Benthem Crouwel and Arcadis’ jobs. As part of phase two of the project, which includes developing a concept plan that gives planners a general idea of what the station could look like, the Dutch firms were vaguely tasked with “collaborat[ing] with Google.”

But between the NDAs, potential bid rigging and an apparently cozy relationship with the tech giant, Rey Lopez-Calderon—now the former head of government accountability non-profit California Common Cause—says there’s plenty of reason to question the process’ integrity. Part of the blame falls on VTA, he says, but some falls on Google. “It’s really very difficult for the public to maintain that this is not cronyism,” he remarks. “Google’s been doing a lot, they pledged a billion dollars to the housing [crisis] … and the public’s not always clear whether there’s quid-pro-quos or not.”

With résumés that boast redesigns of some of the most innovative transit hubs in the world, Benthem Crouwel and Arcadis very well may be the best candidates for the job, Lopez-Calderon concedes—but that’s besides the point. “Well, why couldn’t they win the bid outright?” he wonders. “Why the need to circumvent the process?”

PAST IMPERFECT

This is by no means the first time a critical transportation project has run into trouble. In 1987, the Santa Clara County District Attorney’s Office arrested contractor David Weiss for bribing San Jose Public Works inspectors with Apple computers and expensive Neiman-Marcus gift baskets. The debacle threw the $420 million downtown light rail transit mall project into disarray, causing delays and obliterating the established retailers that once lined South First between San Fernando and Santa Clara streets.

In 2015, delays from mismanagement and a busted gas line on the VTA’s express bus lane from San Jose’s East Side to downtown set the agency years behind schedule and tens of millions of dollars over budget. It also put a host of mom-and-pop shops in Little Portugal out of business, leaving an economic impact felt to this day.

A few years later, the transit authority came under fire for softening bid requirements for the Tamien light rail housing after the project was awarded to two politically connected developers, CORE Development and and Republic Urban, who’d been generous with campaign contributions to decision makers. Then, of course, there’s the interminably behind-schedule-and-over-budget Fremont-to-San Jose BART extension, which—under the VTA’s purview—has stumbled from one years-long delay to another.

The 2018-19 Santa Clara County Civil Grand Jury—after assaying the VTA’s soaring operating costs and stubborn insistence on moving forward with ill-advised capital projects such as the light rail extension to Eastridge—deemed it the nation’s “most expensive and least efficient transit system.”

Neighboring AC Transit, which serves Alameda and Contra Costa County, has struggled for more than two decades to complete 7.6 miles of dedicated bus lanes with raised platforms along International Boulevard between San Leandro BART and downtown Oakland. Citing unanticipated underground infrastructure issues, the nearly quarter billion dollar project missed its 2019 opening date and is still under construction.

SIDETRACKED

For now, Diridon Station remains a vision with many major decisions yet to be made. The information uncovered by San Jose Inside has given some onlookers pause to wonder whether local agencies are up to the task.

Staedler called the station’s redesign “daunting for any group in the world,” noting that the transit agency needs all the help it can get as it navigates through problems like mitigating the impacts trains will have on neighborhoods. The land-use consultant said he’s skeptical about VTA’s project management competency given its history.

With Google in the game, however, he believes the expansion actually has a better chance of success since the promise of a world-class transit system is what drew the tech giant to San Jose in the first place. “The success of this region needs a strong and capable transportation system,” Staedler says. “There needs to be more people held responsible for what they’re doing and there needs to be better oversight.”

Grace Hase is a staff writer for San Jose Inside and Metro Silicon Valley. Email tips to [email protected]. Follow her on Twitter at @grace_hase. Or, click here to sign up for text updates about what she’s working on.

18 Comments

  1. what a waste of time, a bunch of lawyers trying to justify their own existence, while the people who this is actually for hang out to dry. Who gives a f***?

  2. Oh my gosh, having the VTA involved in the Diridork Station Project is beyond being a Mongolian Cluster F**k. Sounds to me as though the bidding process was wired.

  3. The chair of the board of VTA claimed she was a contracts expert. Teresa ONeill, one of the biggest jokes in local government, voted to terminate the 49er stadium contract, and now this dope has approved a illegal contract. ONeill, the Peter Principle.

  4. Its never gonna happen look at the failing light rail. i offered to help way back when light rail came as i grew up in Germany and used the rail, but no the idiot that ran things wanted to do the usa way which as you can see is a big F, sort of like SCVWD and there board, the rail board is the same suck the money for them and forget the people.

  5. > VTA’s Contract Missteps Risk Derailing Diridon Station Project

    Excellent report, Grace.

    Lots of substance. Plenty to think about.

    My initial take is that this is a very complex planning project with 5,000 variables and a negative 5,000 degrees of freedom. It’s never going to happen and hundreds of people are going to die of ulcers, stress, and strokes. Not to mention fist fights and thrown chairs.

    The ONLY people in the world who could pull this off would be the Chinese Communists. They know how to cut through bureaucracies and make things happen. Watch your toes.

  6. VTA is master of failed ideas, Why are we going overseas for an architect? I suppose the architects in the United States are not adequate. Do we need a world class project with oversight by VTA . We need a function transit center that works and is ascetically attractive. There needs to be a change in leader ship at VTAsoon, very soon.

    • ONeill cannot lead VTA, she is too busy keeping minorities from being elected and interfering in the management of a stadium.

  7. Well said.

    Cortese
    Carrasco
    Chavez
    ONeill

    None of these four dandelions could answer why are we going to Europe to design and build a station in California?

    We have no one in this entire state qualified?

    Four people who need to resign

  8. Grace Haas, excellent article as always.

    A month or two ago, I began hearing rumblings from a Google insider that Google is considering not doing Diradon at all and gave several reasons why they are considering pulling out of the deal.

    • Lemme see. It’s Grace Hase- not Grace Haas. And it’s Diridon, not Diradon.
      No biggie. These 2 spelling errors do nothing to diminish your credibility.

  9. So VTA miscalculated in it’s efforts to do it’s part to engineer society to conform to progressive ideals.
    I’m so surprised at their incompetence.

  10. When was the last time VTA brought in a project without going over budget and over time?
    Our quality of life is rapidly and expensively deteriorating through the Valley.

  11. VTA’s coaches will be known as the “Blunder Bus”
    “How you gonna get to the Sharks game Joe?”
    “I’m taking the Blunder Bus!”

  12. Absolutely pathetic! There’s no story here! Just a bunch of small town thinkers who are trying to derail the Diridon/Google project for their own selfish interests! This train has left the station and real progress for San Jose is coming! Get on board or get out of the way!!

  13. The buses and light rail trains are virtually empty causing traffic jams, dangerous traffic and pedestrian situations, and gridlock causing cars to spew out more pollution. The VTA should have little part in planning something of such huge impact for the next 50-75 years. They can’t run the existing system worth crap.

  14. Grace,

    I’ve always liked your writing, now I love it. This article has taught me a lot. Question: Does spur receive any grants from the city or county? I was always under the impression that the trip to the Netherlands was sponsored by the city, but I didn’t know it was Knight Ridder and Spur. Real eye opener, and it would be interesting to find out if the government is using our taxes to influence it’s own policy. Another question: How much do people at Spur get paid for the privilege of running this non-profit?

    It does bring up a lot of other questions, which I guess you don’t know the answer to, hence the article. It almost reminds me of those job postings that are only open for a few days, because the hiring company already has an employee in mind. Said employee is taken to lunch by the hiring manager, told “Apply on this date, use these keywords in your resume, and the job is yours.” Benthem Crouwel and Arcadi it would seem got to bid unchallenged, and like you said had intimate knowledge of the closed door dealings with Google.

    It seems to me that this was more a choice of prestige, than a bureaucratic choice. Years from now those involved in the project can tell others, “Look at this beautiful transit hub, I made the choice to buy IBM” I mention IBM, because of the old adage that, “Nobody ever got fired for buying IBM” meaning, it was always a clear, safe choice.

    Keep up the good work, I hope to see more stuff like this from you. And thank you thank you thank you for not stooping to write about things that would be on the level of TMZ in your articles.

    • I just finished reading this article and all the comments. Wow. I agree Robert, this is excellent writing and full of important information. SPUR has been on my sh*t list for many years. They are essentially a wing of the San Jose government. This type of “non-profit” should be made illegal. If you hear SPUR “recommend” anything at a city meeting, you can safely assume that is how the city will go. If I had a ton of money and time, my goal would be to take down SPUR.

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