Beware of “Bundling”
Ever wonder why government transportation projects seldom get done on time, and the price for completion keeps going up and up? Getting tired of the propositions on the ballot for additional funding to finish the tunnel, freeway or light rail system? One of the major reasons for this common phenomenon is the inequitable, unethical bundling of transportation design and general consultant contracts.
A general design consultant contract involves the development and coordination of the design up to and through construction. General design consultants are not qualified or licensed to build structures, appraise right-ofway property, perform geotechnical surveys, detect and remove hazardous waste, or dig potholes for utility location and designation. If they were, they would have competed for and been awarded a design/build contract or a contract for the privatization of the transportation project.
Unfortunately, over the past 10 years, there has been an alarming trend in government transportation design and general consultant contracts to bundle all the tasks mentioned above under an existing contract, without appropriate design/build or privatization contract competition.
Following are two classic examples of illegal and noncompetitive bundling currently occurring in the Southwest. One is a $100,000 general design consultant contract for a metro light rail project that has received approximately 10 modifications and grown to approximately $25 million prior to the start of construction.
The other is a general consultant contract for a freeway project that was awarded for a five-year period for a stated $14 million, which is now in its tenth year (without competition) having spent approximately $50 million.
Amazingly, there is a proposition for a sales tax on the November 2004 ballot to provide further funding. How did this happen? Why hasn’t it been stopped? Who’s responsible?
In my opinion, one of the most obvious reasons is the absence of certified public procurement professionals in the process. In most states, the design and construction of transportation projects is wholly exempt from local procurement laws and rules because federal acquisition regulations govern federally funded transportation projects. As a result, government transportation contracting has been predominantly carried out by engineers, not procurement professionals.
Alarmingly, government transportation officials claim that because they are exempt from local government procurement laws, there are “no laws or rules” that apply to the design and construction of locally funded transportation projects.
It hasn’t been stopped because “this is the way things are done.” I’m sorry to say that government transportation officials and large engineering design consultant firms share the spotlight for this prostitution of the public trust nationwide.
In addition to bundling, there’s a lot of featherbedding going on via the revolving door. Government engineers responsible for administering design consultant contracts leave government service to work for the very contractors and contracts they administered in blatant disregard for state laws that explicitly prohibit them from doing so.
To further undermine the public’s trust, the contract oversight that government engineers were performing has been outsourced and bundled under the general consultant contract. Now, contract oversight (supposedly) is being performed by those same former government engineers and charged back to the government under the general consultant’s contract at an enormous mark up. The public is now paying design and general consultants to monitor themselves.
How can this be stopped?
- Immediately revise state and local procurement laws that provide wholesale exemption of all transportation design and construction contracting, and eliminate the no rules loophole. Enabling legislation is what gives government officials the authority to spend public money. If there are no laws or rules, transportation officials have no authority to spend public money.
- Reputable and qualified engineering firms that are essentially being eliminated from competing for work that is being non-competitively bundled under existing contracts need to rise up and be heard. You can and must make a difference—for the public good and for the integrity of your valued profession.
- Federal Highway Administration (FHWA) and state and local government elected officials should require that a formal contract performance audit be performed by the Government Accountability Office (GAO) or a qualified outside auditing firm (that includes a public procurement professional) before any additional funding request is put to a public vote.
- Government procurement professionals must get involved, ask the questions that need to be asked, and demand answers.
- Transportation officials at all levels of government need to avoid bundling and featherbedding in order to stay out of bed with their contractors.
- Government legal agencies are duty bound to ensure the fulfillment of government’s responsibility for fair and equitable competition in the expenditure of public funds and serve as stewards of the public trust.
The deceptive and fraudulent practices of many of America’s largest corporations have destroyed the public’s faith, respect and confidence in the sacred cow professions of finance and accounting, which has resulted in a major review and ongoing overhaul of laws and rules governing how they do business.
Accordingly, the arrogant, unethical and bullish actions of some sacrosanct government transportation officials and large engineering firms, who consider themselves untouchable and exempt from fair and equitable competition, may lead to the same fate. I think it’s about time, don’t you? ?
Editor’s Note: Beau Grant, CPPO, is a Master Instructor for the National Institute of Governmental Purchasing (NIGP) and President of Beau-Geste Enterprises. Readers can reach Grant by e-mail at: [email protected].