Most people believe government wastes money and polls show about 70 percent believe that waste can be significantly reduced. As taxpayers, the folks who pay the bills, wasting our money goes against our grain. Why should we approve more money, even for a worthwhile program like transportation, if we believe that part of what we are paying now is being wasted?
The fact is most transportation dollars have been spent wisely for decades. At the state level, the California Department of Transportation (Caltrans) spends several billion dollars per year to design and build state highways. Caltrans engineers are experienced and do their jobs well. Since 2006, 1,391 of 1,394 projects were delivered to construction on schedule, including 304 of 306 projects in the last fiscal year.
In the normal process, construction companies are awarded contracts based on competitive bids and then they build the projects. Caltrans inspectors, typically with years or decades of experience, make sure the contractor builds the project according to the plans and specifications so that the public gets its money’s worth. Those inspectors work for us, the taxpayer, not a contractor.
In the last 20 years, the process has gradually changed, and not for the better. Some of the design and inspection work is being awarded to private engineering firms, using no-bid contracts. Contractors are inspecting the work of other contractors. The Legislature has determined in the state budget, based on actual data, that the cost to the taxpayer for a Caltrans engineer was $113,000 last year; the cost for a private engineer, a contractor, was $226,000 per year, plus the cost to the public of awarding and overseeing the contract.
Now, an even bigger scam is being promoted by many large investment bankers and construction firms. They want to eliminate competitive bidding for construction contracts. Thus, they invent terms like design-build (D/B) and public-private-partnerships (P3) to combine design and construction into one contract and award it without competitive bidding. These so-called “innovative” ways to deliver projects have only resulted in disasters for the taxpayer.
The current disaster in the making is the Presidio Parkway Project (also known as Doyle Drive), which will replace the existing 1.6 mile south access to the Golden Gate Bridge from San Francisco. The cost of the project more than doubled when it was converted to a P3. Fully funded and scheduled to be delivered using the traditional design-bid-build method, the project was to cost $473 million and likely would have been delivered for far less thanks to a favorable bid environment. As a P3, the project will now cost nearly $1.4 billion and will be funded not with “new money” but with availability payments of $28 million to $43 million a year for 30 years out of the state highway account, which will be paid to foreign investors seeking exorbitant profits from our state highway system. This diversion of funds will mean that hundreds of millions of dollars will not be available to build dozens of critical transportation projects in California over the next three decades.
The Presidio Parkway project was approved in a close vote by the California Transportation Commission (CTC) last year. Several legal opinions and the CTC’s own staff urged the commission to disapprove the conversion to the P3 boondoggle, but ultimately several members of the commission and the chair, Jim Earp, voted to waste money. This decision will result in the waste of half a billion dollars of taxpayer money. In fact, one of the CTC members, who voted against the scam, was fired the next day by Gov. Schwarzenegger.
Transportation needs more money in order to improve mobility, relieve traffic congestion, improve air quality, and convince businesses to relocate to (or stay in) California. However, we can’t expect people to approve more money if the political appointees are wasting what the taxpayers provide now.
First, we need to restore public confidence that government knows what it is doing and will spend the money wisely. Let’s get California’s transportation system right, that means eliminating overpriced contracts awarded without competitive bidding, having the people’s work performed by those who are loyal to the people, prohibiting contractors from inspecting the work of other contractors, and replacing the Jim Earps with those who have more fiscal responsibility and a commitment to use public office to serve the public.