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City Hall withheld $2.1 million from bankrupt Divvy supplier

A full Divvy rack outside Merchandise Mart. | Neil Steinberg/Sun-Times

A full Divvy rack outside the Merchandise Mart. | Neil Steinberg/Sun-Times

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Updated: February 23, 2014 6:39AM

Mayor Rahm Emanuel’s administration acknowledged Tuesday that it has withheld $2.1 million from the now-bankrupt supplier for Chicago’s Divvy bike-sharing program because bikes and station parts were not delivered on time and software was not updated.

In spite of the dispute that helped drive the Public Bike System Company into bankruptcy, City Hall said it hopes to keep Chicago’s bike-sharing program rolling along — and growing to 4,000 bikes and 400 stations later this year.

“We’ll continue to operate Divvy as we determine what impact, if any, this will have on expanding the system into new neighborhoods” and supplying bikes, parts and software parts to existing stations, said Chicago Department of Transportation spokesman Peter Scales.

“PBSC will continue to operate while going through bankruptcy, just like a whole bunch of other companies have done. It’s a legal maneuver to restructure and eliminate debt. But, it doesn’t necessarily affect production or operations.”

Scales said the $2.1 million still being withheld from the supplier, also known as Bixi, stemmed from the fact that, “bikes, station parts and software updates did not arrive” by promised delivery dates.

“It hasn’t impacted operations, but it did delay the rollout of some of the stations. We started with 70 and ended with 300, but it took longer than we had scheduled,” Scales said, refusing to say when the bankrupt supplier would be paid.

City Hall lifted the veil on the behind-the-scenes dispute amid word that a high-ranking city official who helped implement Chicago’s bike-sharing program has been hired by the Oregon company that operates the system.

Until recently, Scott Kubly served as CDOT’s managing deputy commissioner. Now, he has a “contract relationship” with Alta Bicycle Share, Inc. to work on “national operations” projects.

“He recused himself from the Divvy project before any employment discussions and was cleared by the Chicago Board of Ethics before beginning work for us,” Alta Principal Mia Birk said in a statement e-mailed to the Chicago Sun-Times.

“We’ve built provisions into his contract that forbids him from managing and advising Divvy specifically.”

Kubly could not be reached for comment, but his work with Alta is raising eyebrows.

Two years ago, a rival bidder charged that the Chicago bid process was greased for Alta, a company that once hired newly-departed Transportation Commissioner Gabe Klein as a consultant.

The rival bidder charged that Klein and Kubly had conversations with Birk after the city issued its request for proposals, but before bids were due, in violation of city procurement rules.

The competitor further alleged that, during their stint together in Washington D.C., Klein and Kubly had awarded a no-bid bike-sharing contract to Alta by piggybacking onto an existing Arlington, Va., contract.

On Tuesday, Scales refused to comment on the appearance created by Alta’s hiring of Kubly.

But, he said, “He will have to follow multiple restrictions placed on city employees under Mayor Emanuel’s executive orders and the ethics reform law passed last year. It includes a ban on working on the Divvy contract for the life of the agreement and also prohibiting him from lobbying CDOT for the next two years.”


Twitter: @fspielman

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