Transportation in California is, literally and metaphorically, at a crossroads. Congestion is horrible. The people have approved $20 billion in bonds for transportation ($12 billion of that for state highways), plus $1.5 billion per year from the sales tax on gasoline.
The voters also approved Proposition 35 several years ago to authorize expanded outsourcing by state and local agencies for services (design, construction inspection, etc.) to accelerate transportation improvements. The measure also required that increased outsourcing provide “best value to the taxpayers.” The Supreme Court just affirmed that the Legislature has given Caltrans more authority to outsource, rather than use its own employees.
Government outsourcing is controlled by the influence of politics and policy, with economics a distant third. Now that Caltrans is allowed to outsource more services, at least for the time being, will it behave responsibly in doing so? If not, will the governor or the Legislature step in to direct the department to perform its functions, either with employees or through outsourcing, in a manner consistent with the needs and interests of the traveling public and the taxpayers?
Previous law limited contracting to circumstances such as cost savings, an emergency, urgency, a new state function, services not available within civil service, or for other specific reasons. Competitive bidding was not used and cost was sometimes not considered because the contracting circumstances were narrow or urgent.
Now that the authority to contract has greatly expanded, what about Caltrans’ obligation to outsource responsibly? Thus far, the record is not encouraging.
Based on data from the Department of Finance and the impartial Legislative Analyst, outsourcing an engineer costs the state $193,000 per year. A state-employed engineer costs $105,000 to do the same job. Nevertheless, Caltrans has outsourced more than half a billion dollars in contracts for engineering services this year while hiring engineers only to replace attrition.
All of the contracts have been awarded without competitive bidding. In fact, they ignore cost, even between available contractors. Caltrans simply picks the contractor they want and pays what the contractor asks.
Perhaps the most important public-engineering function is construction inspection. When a bridge-construction contractor, for example, pours concrete over reinforcing steel and then covers the concrete with dirt, the inspector is the one who makes sure the contractor is building what the plans require. Just as a city or county inspector checks a contractor’s work to be sure your house is constructed properly according to plan, the same is true for bridges.
At least, that used to be the case. Now, Caltrans is contracting out hundreds of bridge-inspection jobs, at twice the cost, to allow a private contractor to inspect the work of a private contractor, with no one at the job site to represent the public. Even construction inspection of the new span of the Bay Bridge is being outsourced!
Policies like that have caused monumental construction defects on major projects throughout the country, varying from the collapse of Hollywood Boulevard into the Los Angeles Red Line Subway tunnel to the collapse of the tunnel ceiling panels on Boston’s “Big Dig” project, killing a woman motorist. On these and many other projects, private inspection led to public disasters.
Caltrans is also seeking legislation to authorize them to award a single no-bid contract to a private firm to design, build and inspect a freeway project, using the catchy title of “design-build.” That process has consistently proven to cost as least twice as much as the competitive bidding/public inspection model, with a high incidence of delayed completion and defective work.
The Supreme Court’s interpretation of Proposition 35 means that Caltrans now has expanded authority to determine how its work is to be accomplished. With that authority comes responsibility. Thus far, Caltrans has not demonstrated the ability (or perhaps the desire) to understand and implement that responsibility for the benefit of the public it serves. If Caltrans doesn’t get its act together quickly, most of the funding that voters approved will be wasted on overpriced no-bid contracts and subsequent repairs of construction defects. The voters will get yet another demonstration that, when government agencies are given too much authority, they betray the responsibility with which they have been entrusted.
Bruce J. Blanning is executive director of Professional Engineers in California Government.