Controversy and criticism over contracts shadow the midway at the Del Mar Fairgrounds

When the San Diego County Fair, battered by plummeting revenues due to the coronavirus pandemic that led to the layoffs of 85 percent of its staff, abruptly canceled a five-year contract for a single company to manage the iconic midway it seemed to be a logical step.

The day before the March 10 announcement, the board of directors of 22nd District Agricultural Association — the agency that oversees the Del Mar Fairgrounds and the fair— had decided there would be no county fair with rides, games and entertainment this summer, the second year in a row that the fairgrounds would be nearly empty. In its place: “Homegrown Fun,” a scaled-down agricultural-themed event.

But the decision to pull the contract was just the latest development in a troubled, controversial three-year period when the fair has attempted a sweeping transition, from a midway populated by as many as three-dozen contracts with independent food, ride and game operators, to one run by a single company.

In those three years, the district has tried to enter into a series of separate contracts — for ticketing, games and management — all without success. The process has been dogged by accusations of favoritism, backroom meetings and bid-rigging.

Twice, the district withdrew the contracts after the process for scoring and awarding the contracts came under protest and attacks of favoritism.

Once, after awarding a contract, a state administrative law judge took the rare step of upholding the protest, concluding the fair had not followed its own contracting rules — negating the contract award.

The most recent cancellation on March 10 came just two weeks after the fair board was on the verge of awarding a five-year contract to Ray Cammack Shows, or an Arizona-based company that provides rides, games and food to fairs around the country and is a powerhouse in the carnival industry.

Just as the district announced its intention to give the deal to RCS, a protest was filed by Talley Amusements, a Texas company that was the only other bidder. The formal protest took aim at the scoring process that determined the winning bid.

The protest said that the panel of scorers, which included the fair’s two top staff executives Carlene Moore and Katie Mueller, made errors in nearly a third of the scores for Talley in the technical scoring of the bid. If those were properly scored, then Talley would have won.

Moreover, the protest alleges that scorers had improperly rounded up the financial score component for RCS. The contracting rules laid out in the request for proposals don’t allow for rounding up, or down, and in previous years of scoring contract proposals the fair had never done so.

If the scoring panel had not rounded up RCS’s score, then Talley would have had the higher score — and won the contract, according to the protest.

As it was, RCS was deemed the winner by a miniscule 0.17 points.

For the cash-strapped fair, which in the past year asked the Orange County Fair for a $5 million loan and is seeking emergency assistance from the state, the Talley proposal would have been a more lucrative deal.

Under the terms of the Talley bid proposal the fair would have earned $9.5 million more over five years than under the proposal from RCS, records show.

John Moot, a lawyer who has represented two different companies since 2018 in protests over the contracts for the fair, said he was stunned at how the district conducts business. He said a broader investigation into contracting procedures was needed.

“Any objective person looking at the contracting process at the fair for the last three years would conclude that someone with the power to issue subpoenas and question people under oath needs to take a long hard look at what the heck is going on out there,” he said.

Carlene Moore, the chief executive of the Del Mar Fairgrounds, declined a request for an interview about the contracts. In a statement issued through the marketing director, the fair said the decision to move to a single operator was the result of the reduced staffing at the organization.

“Overseeing the operations of an independent midway is labor intensive, and with our reduced staffing this was an area that made sense to outsource to a master (single-source) midway operator, a common practice in the fair industry,” the statement read.

It noted the organization has the authority to cancel a request for bids at any time. The statement said the district plans to issue another request for bids later this year for next year’s fair, and flatly said that “there is no preferential treatment” given to any companies.

The statement did not address questions raised in the protest from Talley about the scoring for the contract or other issues raised by Moot.

Ben Pickett, the vice president of Ray Cammack Shows, said his company won the contracts because they had the best option for the fair. The company has been the single operator of the midway at the Orange County Fair for more than 20 years and the Los Angeles County Fair since 1985.

“When this RFP went out to bid, we had the most experience and relevance in the market,” he said. He said the company’s winning score was deserved.

“We are the most qualified for this,” he said. “I believe process was to bring out the best operator and most qualified operator, which happens to be us.”

No-Bid Deal

The fair attracts more than 1 million visitors to the sprawling fairgrounds cooled by breezes from the nearby ocean. It is the largest in the state, and the sixth-largest county fair in the nation.

The fair provides more than half of the revenues for the 22nd District Agricultural Association, the government agency that runs the fairgrounds.

After decades as an “independent midway” — one where individual businesses that stage rides or games contract with the agency annually to provide entertainment— the district began moving away from that setup in recent years.

In 2018 the fair went to a cashless, digital ticketing system for games on the midway, and issued a request for proposals for companies to bid on providing such a system. Two companies bid, but when the losing bidder filed a protest, the fair withdrew the entire proposal.

But the fair still wanted to get a digital ticketing system in place, according to a trove of fair records obtained by Moot under the Public Records Act.

In September 2018 the fair’s concession manager Donna Ruhm wrote in an email to a colleague at the Minnesota State Fair, “With a bad taste in our mouth for the bid process, we’d like to find a way to enter into a service agreement/equipment rental agreement/purchase agreement (???) to avoid the whole bid process.”

The emails show that soon after, fair staff began to quietly work out a deal with RCS: the company would provide a digital ticketing system for free in 2019 and in exchange get 80 percent of all the spaces for games offered at the fair.

Under the fair’s own policies, companies that provided games were limited to a maximum of seven locations in the midway. But doing the deal with RCS required the district to abandon that policy.

At a meeting on Dec. 11, 2018, the board approved such a proposal. It eliminated the seven-location limit. A memo to the board said doing so “will allow flexibility in filling spaces with qualified individuals and thereby maximizing revenue potentials to the District.”

Minutes later the board unanimously approved a “Midway Games Agreement” with RCS. It was a one-year, no-bid contract for the 2019 fair.

The companies that operated games, unaware that the deal was being negotiated, were taken by surprise and largely left out of the 2019 fair, records show. While some protested only a handful ended up with spaces at the event. RCS ended up going from having five spaces allotted for games in previous years to 45 for 2019.

That year the total gross from games came in at a little more than $4 million. The fair earned either $335 per foot of space rented by a game operator or 24.5 percent of the gross revenue, whichever was greater, and netted about $1 million.

Following the 2019 fair, the district staff again crafted a new proposal. This was for a multi-year contract for one company to provide at no charge to the fair a digital ticketing system for all rides and games, and to manage 100 percent of the game operations.

While this was publicized through a normal request for proposal, it was met with a storm of protests from game operators. In emails to the district the game operators said bluntly that the proposal was tailored to favor RCS, in large part because few if any game operators have the technology to provide a digital ticketing system.

“This RFP obviously favors RCS because the small operators have no chance (T)o comply with the way it is written,” wrote Stephen Merten of Laurie’s Concessions, a Yuma, Ariz. company that Merten said had been at the fair for 35 years.

Another veteran operator said in a declaration that the proposal linking the digital ticket system with game operations was “unlike anything I have ever seen.”

“I have seen proposals for the carnivals to provide the entire midway with rides, games and food, including a digital ticketing system, but never one where a game operator has to provide a digital ticketing system,” wrote Frank Zaithshik of Wade Shows, one of the largest carnival companies in the nation.

“The cost of providing the system would be prohibitive for a game operator and severely limits the number of responders,” he wrote.

Two companies, RCS and All State 38, put in bids, and when the district announced it was going to give the contract to RCS on Dec. 27, 2019, All State quickly filed a formal protest.

In it Moot, the company’s lawyer, argued the award should be thrown out on a variety of grounds including that it favored RCS. Such protests are rarely successful.

But this time a hearing officer with the state Department of General Services upheld All State’s protest. The officer ruled that because RCS had not provided proof its subcontractors were licensed to do business in the state, they had not complied with the terms of the contract proposal. (The decision also faulted the district for allowing All State’s bid to be considered because that company had also omitted information required under the proposal).

That April 23 ruling had no practical impact, however. Three days earlier, the district canceled the entire fair for 2020 because of the coronavirus pandemic.

A new proposal

In crafting the single operator midway proposal, records show that Mueller, the deputy director of the fair, worked on developing the request for proposals to “streamline efforts,” as Mueller wrote in an Oct. 22 email.

Moot said it was wrong that someone who would not only be scoring and evaluating the bids would also be involved in formulating the request for such bids — and also be a judge who scored the proposals.

One issue Moot also raised in his protest: RCS again had failed to submit required documents in its proposal. It was the same mistake made the year earlier, which was the reason why the contract protest was upheld. And both Moore and Mueller were scoring on both years.

Mary Talley of Talley Amusements, which protested the 2021 contract award, said she was “bewildered” with the district’s decision to give the contract to RCS. Her bid proposal ran 343 pages and cost thousands to put together.

“We did follow all the rules,” she said. “We spent a lot of money following all the rules and submitting everything they asked. All I can tell you is I think they should be honoring that Talley Amusements is the winner of the contract.”

— Greg Moran is a reporter for The San Diego Union-Tribune