Analysis: Lawsuit heats up election
An election campaign for a public office rarely in the public eye – county clerk-recorder – has exploded in Nevada County with questions swirling around the 2008 acquisition of a software system.
It has brought to the surface processes that typically rouse little attention, including how officials purchase obscure technology that most people don’t see and don’t understand, but which handles information basic to all, including birth certificates, marriage licenses and deeds showing property ownership.
Those processes have come under scrutiny because of a recently filed federal lawsuit. AtPac Inc., the company that formerly provided software to the clerk-recorder’s office, has sued the county, sitting Clerk-Recorder Gregory Diaz and Aptitude Solutions, the company that won the county contract in 2008.
Complicating the scenario: The man challenging Diaz for the post, lawyer Barry Pruett, represented AtPac during the 2008 contract bidding process. Though he no longer represents the AtPac, Pruett has stated the “unfair and improper” practices he witnessed prompted his decision to run against Diaz.
The Union has asked Diaz and Pruett to discuss issues surrounding the 2008 purchase.
At issue is software the county contracted to buy from Aptitude Solutions in November 2008, costing nearly $357,000 over five years. That contract ended a 10-year relationship with AtPac Inc. – during which time the county paid AtPac more than $377,000, according to county figures.
Where does the money come from?
Pruett has criticized Diaz for buying the Aptitude Solutions software at a cost of more than $53,000 beyond the $303,000 proposal offered by AtPac, calling it “a waste … of our taxpayer dollars.”
But no local money is being used to buy or maintain the new recording software, Diaz said.
“Funding to cover the cost of acquiring the Aptitude recording system will come from the Recorders’ Modernization Fund,” established by California law, Diaz said. Yearly maintenance costs also will come from another state fund set up to pay for systems that remove people’s Social Security numbers from documents, he added.
“This acquisition has no impact to the general fund,” Diaz noted.
Local vs. nonlocal
With the recession has come a fierce “buy locally” attitude in Nevada County, with several government agencies, including the Sierra College district and the Nevada Irrigation District, looking for ways to support local businesses by granting them government contracts.
Aptitude Solutions, based in Maitland, Fla., is a subsidiary of Lender Processing Services Inc., a national firm with more than 2,000 employees and at least five offices in California, Diaz said.
Pruett has questioned granting the software contract to an out-of-the-area firm.
AtPac, owned by Grass Valley resident Linda Maclam, had been based in Nevada County until October 2009, when Maclam moved the company to Auburn and consolidated there with the Sacramento office.
“When it comes to trying to support our local economy and provide jobs for our local citizens, I will always put Nevada County first and do my best to keep our tax dollars in our local community,” Pruett said, “especially when our local small businesses will provide the best value for the taxpayers.”
Value in dispute
But AtPac did not provide the best value for Nevada County, Diaz has argued.
In September and October of 2008, five Nevada County employees evaluated the systems provided by AtPac, Aptitude Solutions and four other firms. Diaz participated in the evaluations, but not in the scoring process, which was handled by the purchasing department.
“There is a separation of duties in county government, and purchasing handles procurement, not the clerk-recorder,” Diaz said.
“We scored each proposal on a number of different criteria, including ease of setting up work stations for end users, their plans for migrating and converting data, business resumption features, and the project management plan,” said county Purchasing Agent Mary Ross.
AtPac officials “didn’t demo their system,” instead showing a PowerPoint presentation, according to a county memo summarizing the evaluation process.
“The PowerPoint was not very well done,” Ross said. “I was surprised at their presentation.”
Aptitude Solutions scored the highest. AtPac scored fourth.
The evaluation team also said AtPac was lacking in customer service in its contract with the county at that time. Its system made it “cumbersome to do simple things like changing printers. AtPac would also charge for updating forms, while the other two would not.”
AtPac also did not allow the linking of documents without “specialized hardware and supply needs,” the memo said.
Other problems with AtPac were noted by Diaz, including costs not included in the annual maintenance budget.
“AtPac would nickel and dime us,” he said. “We paid the maintenance fee and also had to budget $10,000 annually for extra costs such as upgrading and renaming.”
Between 2003 and 2008, when AtPac’s contract for maintenance stood at $28,300, the county paid the company an average of $32,147 per year.
RecordFusion offered the best system, Diaz told The Union, but its price tag put it out of the running. Aptitude offered “features very similar to RecordFusion at much lower cost,” the Nov. 6 memo states.
“Sometimes you can’t afford to buy the Cadillac, and you go for a good Buick,” Diaz said.
Oversight or snub?
The bidding process was marred by what Ross has called “a very honest mistake.”
After deciding Nevada County should look at improving its recording software, Diaz sent the purchasing office a list of vendors he wanted the county to contact; the list did not include AtPac.
Diaz assumed the purchasing office also would contact AtPac, the company that had been doing business with the county for 10 years, he said. A request for proposals went out on July 17, 2008 – but not to AtPac.
On July 31, AtPac lawyer David Shafer sent a letter to the Clerk-Recorder’s Office canceling AtPac’s contract to provide recording software. The letter was addressed to Kathleen Smith, who had left the office in early 2007.
That was despite Diaz’ meeting with AtPac President Kirk Weir and CEO Wayne Long shortly after he was appointed Smith’s successor in June 2007.
AtPac’s failure to properly address a letter of such importance added to Diaz’ opinion the county might be better served by a firm offering more advanced options, Diaz said.
But in August 2008, AtPac officials returned to the table.
“The bid (time) was extended, pursuant to (AtPac’s) request,” giving the company until Sept. 4 to prepare a proposal, Diaz said.
In an Aug. 20, 2008, letter from the Shafer Law Group – signed by AtPac’s then-attorney, Pruett – the company notes the extension, but protests the overall bidding process.
“AtPac is informed and believes that AtPac was not provided notice of the (request for proposals) for some reason other than a business judgment reason,” the letter states. “AtPac still strongly feels that they are being unfairly treated by the failure to notify them …
“AtPac is informed and believes that employees in the Nevada County Recorder’s Office were specifically told not to inform AtPac of the … relationship with Aptitude Solutions, a probable bidder.”
Diaz has said his prior relationship with Aptitude was confined to meeting company officials at clerk-recorder trade shows – where Diaz also chatted with representatives of the other 10 or so companies that provide such services nationwide.
While other vendors had 48 days to prepare their bids, AtPac had 17 days, the letter stated.
Award for ‘better service’
In November 2008 when Nevada County Supervisors approved the Aptitude Solutions contract, Diaz said Aptitude offered upgraded functions as part of its core service, while AtPac required costly third-party services for some of those processes.
Aptitude contracts with the third-party vendor, so any liability would go back to Aptitude, Diaz said.
And the costs of the third-party vendors are included in the contract, he added.
Diaz brought up another objection to AtPac: The company was not certified by the state to record documents electronically. After losing the Nevada County contract, AtPac did earn that certification.
“We are now providing better service to the public by improving the quality and quantity of information available, providing easier access to the information and increasing staff productivity and efficiency via the reduction of paper handling,” Diaz said recently.
Those changes have allowed Diaz to operate with less than half the staff he had when he was appointed to the post in 2007.
“This acquisition has allowed us to save $165,000 annually,” Diaz added.
AtPac and Aptitude: Both have national presence
AtPac was founded in 1984 and won its first contract in 1985 with the San Francisco County Clerk’s Office.
Gregory Diaz, who worked as assistant county recorder, then assistant county clerk-recorder, for San Francisco from 1990 to 1994 and as clerk-recorder from 1994 to 2003, worked “very closely” with AtPac during much of that time.
But he came to feel AtPac had not kept up with changing technology, Diaz said.
“The functionality in the system, redaction and automatic indexing, that is more advanced now than the people who broke the initial ground,” Diaz said.
San Francisco continues to use AtPac’s CRiis document recording program, along with 13 other California counties, according to the company’s Web page; two in Nevada (Washoe and Douglas); and one in Iowa. (At least 13 California counties also use AtPac software in other government offices.)
The company has stepped up installation of its new redaction software – which was not available at the time of the county’s November 2008 decision – with recent installations in at least 10 California counties, according to AtPac’s Web site.
Officials at two counties contacted by The Union said they are satisfied with AtPac’s system.
Yolo County has used AtPac since 1994 and has been “completely satisfied,” said Assistant Clerk-Recorder Kim Weisenberg.
“They are always available to us,” she said. “That’s a plus.”
El Dorado County Clerk-Recorder Bill Schultz said his office has a “great working relationship” with AtPac, which it has contracted with since 1998.
Pruett characterized Diaz’ support of Aptitude Solutions as showing “a clear lack of judgment.”
Aptitude Solutions has systems in more than 60 counties across the United States, according to its Web page; it has a much larger presence on the East Coast, especially in Florida, but also serves several counties in Colorado and one county in Nevada.
Nevada County is Aptitude’s first California contract.
“During our review process, we learned that Aptitude Solutions has been in competition with AtPac in many jurisdictions outside of California,” Diaz said. “Aptitude Solutions has prevailed in such open bid efforts, due to their advanced technology.”
For Diaz, Aptitude’s relative size also played a role in his decision.
“Aptitude Solutions’ parent company, Lender Processing Services, is a strong and financially stable company with the ability and willingness to continually invest in its technology and offerings,” Diaz told The Union.
A political issue
AtPac’s lawsuit against the county, Aptitude Solutions and Diaz came just as the election campaign for county clerk-recorder got underway.
None of the issues cited in the lawsuit, filed in federal court Feb. 3, have anything to do with the evaluations of which firm offered the best value for the best price.
Rather, AtPac’s complaint alleges Diaz gave Aptitude Solutions access to AtPac’s software and source code after awarding Aptitude the 2008 contract.
Nevertheless, the suit’s timing and Pruett’s relationship to AtPac – the lawyer represented AtPac before the county in 2008 and AtPac has donated $1,500 to Pruett’s campaign – have made the 2008 bidding process a political issue.
Pruett told The Union he has not worked for AtPac since “August or September of 2009.” And he no longer works for The Shafer Law Group, which still does some work for AtPac, according to the south county office.
“I was a witness to the unprofessional and improper way that (Diaz) dealt with our local, small business community,” Pruett said recently. “While my campaign did not lead to this dispute, the facts behind this dispute … most definitely led to my campaign.”
Despite the attacks from his rival, Diaz remains confident in Aptitude, crediting the evaluation team – which included information technology workers led by county Chief Information Officer Steven Monaghan – for a superior choice.
“The county’s IT staff, led by Mr. Stephen Monaghan, are the best I have ever worked with,” Diaz said. “I have been completely satisfied with the performance of the system that the panel selected.”
Staff Writer Dave Moller contributed to this report. To contact City Editor Trina Kleist, e-mail email@example.com or call (530) 477-4230. To contact Staff Writer Liz Kellar, e-mail firstname.lastname@example.org or call (530) 477-4229.
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