R2003-84 AUTHORIZING ASSIGNMENT OF A CONTRACT

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Assignment of Management Contract-Progressive Transportation Services, Inc. page 2 First Transit has assured the City that the services,personnel, and operational support now provided by Progressive under this contract will continue to be provided by First Transit. Since our contract would be assigned to the purchasing company, all of the provisions of that contract will still be in effect and will be honored by First Transit: General Manager, Richard Foiles, will continue as our resident manager; the dollar amount of the contract will not change; the existing labor union which represents most of the employees of DPTS will be recognized; and the current labor agree- ment will be honored. The personnel assigned to a contract are the most important element in the success of a management firm. The City has been very fortunate to have excellent general managers assigned here by Progressive, especially Richard Foiles who has served us for the past two years. The Transit System had been managed by Ryder/ATE before Progressive took over on December 1, 1999. Ryder/AT'E's transit division, ATE, was sold at about that time to First Group, plc., and ATE became First Transit, Inc. Decatur's poor experience with Ryder/ATE in the late 1990's naturally leads to questions about First Transit,particularly their management personnel. If they were essentially the same as those who managed Ryder/ATE, then staff would have serious reservations about assigning the contract to First Transit. Richard Dunning, Senior Vice President, had worked for Ryder/ATE as the supervisor for management contracts and he now works for First Transit in the same position. However, First Transit has added a new layer of management, assigning the General Manager for the Duluth (MN) Transit Authority as the Region Vice President to serve as company liaison for Decatur, Peoria, Racine (WI) and Davenport(IA). Staff thinks that this new layer of management, represented by someone with years of experience working as the General Manager of a transit system in a medium sized city, is a very positive step. This sale means that we will have a new management company running the Transit System very soon, but the City has two options. First, the City can refuse to assign the contract to First Transit. In that case Progressive/Coach USA would be forced to honor the con- tract with Decatur, even if it has sold all of its other transit assets. The two major problems with this option are that Progressive may no longer be able to provide the services and operational support that we expect under the contract, and that Progressive and Coach USA may both cease to exist, or would cease to function and merely void the contract, before the end of the contract period.