Inside the Consulting World

Last Saturday the Antiplanner participated in a conference about the Columbia River Crossing, a government-planning effort aimed at replacing a bridge that doesn’t need to be replaced so Portland can sneak its light-rail system (and associated land-use planning) into Vancouver, Washington. One of the more fascinating presentations at the conference came from Tiffany Couch, a forensic accountant who has been studying the budget of the planning team called the Columbia River Crossing.

It is public knowledge that this team has already spent $130 million doing nothing but pushing paper around. Since the bridge itself could be built for less than a billion dollars, that’s a healthy share of the cost. Of course, the planners’ goal is to spend well over $3 billion on the bridge, which would include money for light rail and other bells and whistles that are probably just as unnecessary.

What the public didn’t know, until Ms. Couch’s presentation (4 MB PPTX file), was that almost all of this $130 million was paid to one consulting firm. In 2005, Couch revealed, ODOT and WSDOT issued a “notice to consultants” that they wanted to hire someone to write the environmental impact statement for the project (page 17 of Couch’s presentation). “The project team anticipates the total cost of the environmental phase to be in excess of $20 million.” It asked consultants to submit and proposal with a list of their qualifications.

It isn’t clear how many consultants responded to this notice, but only one, a Portland company called David Evans and Associates (DEA), was considered “qualified” and so it got the contract. Curiously, DEA’s bid did not say how much it expected the project to cost, but the initial contract was for $50 million (page 18).

Three years later, the states modified the contract, adding $45 million to the amount that would be paid to DEA (p. 21). Curiously, the change in the contract specifically said that DEA would not do anything more than it was originally expected to do (p. 22). All of the “proposed services” were “within the scope of the original contract,” state WSDOT, but “we needed the additional dollar amount to continue working on the project” (p. 23).

Three years later, in 2011, another modification was made adding $10 million more to the contract (p.24). So when the original notice said the cost would be “in excess of $20 million,” it meant $90 million–and counting–more than $20 million.

So we have what amounts to a one-bid contract whose original bid did not specify a cost and whose cost so far has more than doubled from the original contract even though the amount of work to be done hasn’t changed. If being a government contractor is so lucrative, it is a wonder that no one else submitted a qualified bid.

This raises all sorts of questions and speculations. Was the bidding process rigged so that only one firm would qualify? According to Couch, DEA makes major contributions to all sorts of political campaigns. Is it possible that making such contributions is an unspoken part of the contract? Or does DEA make those contributions because it has an incentive to promote the project because it is likely to get a large share of contract for engineering the actual bridge?

This whole EIS process has become a giant scam that spends lots of transportation dollars without improving transportation–and often the end result is extremely waste projects. Interestingly, both Democrats and Republicans have proposed various ways of streamlining the planning process so it costs less and takes less time. The Antiplanner supports such streamlining but insists that it also should be accompanied by fiscal incentives designed to insure that any fund projects are truly cost effective.

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16 thoughts on “Inside the Consulting World

  1. Andy Stahl

    Quote from David Evans & Assoc homepage:

    “The bottom line is we work hard but we manage our own time. That’s another great aspect of DEA. There’s no micromanagement.”

    Indeed.

  2. Sandy Teal

    How much of the $130 million is for engineering work and other physical science data? How much of it is for social science data? How much of it is overhead?

  3. bennett

    Sandy Teal asks: “How much of the $130 million is for engineering work and other physical science data? How much of it is for social science data? How much of it is overhead?”

    Not looking in to it at all, none of what was paid to the consultants should be “overhead.” Seeing as most of the $130mil went to them I would bet that little was overhead, but all I know about the project is written above. This doesn’t seem like a project that would require much social science (demographic) data, but the addition of rail transit to the project will likely result is some more rigorous demographic studies.

    From Mr. O’Toole’s account, this reeks of cronyism. It doesn’t seem like the consultant team has produced much to date. Production is the name of the game. They’d better get on it.

  4. thislandismyland

    It would be interesting to know precisely how much money the consulting firm has been contributing politically and who is receiving funds from them.

  5. msetty

    Of course what The Antiplanner didn’t mention is that the listed speakers at the conference were highly skewed against light rail to Vancouver, e.g., Wendell Cox, Tom Rubin, John Charles, some engineer I don’t recognize, and lo and behold, Randal O’Toole. Hardly any balance that I can see.

    I suspect they mainly railed (sic) against extending MAX to Vancouver, rather than the excessive cost for the road portion ($3 billion+). The presentation by the forensic accountant was probably just a bonus.

  6. metrosucks

    were highly skewed against light rail to Vancouver

    Awww, poor baby! Imagine the nerve of these people, arguing against a wasteful and destructive boondoggle. Why, how dare they! Michael Setty has blessed archaic light rail transit, so everyone else needs to shut up and get on board!

  7. C. P. Zilliacus

    The Antiplanner wrote:

    This whole EIS process has become a giant scam that spends lots of transportation dollars without improving transportation–and often the end result is extremely waste projects. Interestingly, both Democrats and Republicans have proposed various ways of streamlining the planning process so it costs less and takes less time. The Antiplanner supports such streamlining but insists that it also should be accompanied by fiscal incentives designed to insure that any fund projects are truly cost effective.

    The Antiplanner has a point.

    Should these EIS projects cost so much? On the one hand, there is usually travel demand forecasting and at least some preliminary engineering work done as part of an EIS, if the process ever finishes and results in a record of decision (ROD), such work is needed in order to build it.

    Two projects with long and expensive EISs that I know something about are the reconstruction of the Woodrow Wilson Bridge (which carries I-95 and I-495, a/k/a the Capital Beltway) between Virginia and Maryland (crossing a small slice of the District of Columbia too) and Maryland’s InterCounty Connector (Md. 200).

    The Wilson Bridge EIS started in the early 1990’s, and even though the Sierra Club filed suit against the completed EIS and ROD) and actually won a remand in the U.S. District Court for the District of Columbia (“remand” in this context means that the agencies wanting to do the work cannot build, but must revise the environmental documents as the court directs), the Sierra Club’s victory was reversed on appeal in the U.S. Court of Appeals for D.C. (discussion by Scott Kozel’s excellent Roads to the Future site here and opinion of the court here). But in relative terms the EIS for the Woodrow Wilson Bridge was completed rather quickly (less than 10 years, including litigation).

    The InterCounty Connector is a different story. Now finally well on the way to completion (one section opened to traffic in February 2011), it has been discussed and argued about since the early 1970’s. Environmental impact statements were started in the 1980’s, 1990’s, and after 2002 (only the last one went to a record of decision, and that was upheld after the Sierra Club and others sued in the U.S. District Court for Maryland (opinion here). Discussion by Steve Anderson’s excellent DCROADS.NET site here.

    But in my opinion the courts are not to blame for the many rounds of environmental impact statements – there were only two suits filed (against the ICC’s EIS/ROD, and those suits were consolidated and ultimately rejected by the federal courts). But on the flipside, it seems to me that every highway project that requires an EIS leads to a lawsuit if a ROD is signed, so all requirements must be complied with and every legal “i” must be dotted and every “t” must be crossed. That costs money and takes time.

  8. Andrew

    There are literally dozens of firms that are highly qualified to perform this work besides DEA.

    The total spent on DEA’s work is totally out of line and ridiculous. But that is the way the EIS/EA process has gotten, which is out of control. Unfortunately the environmental study process is democracy in action. The studies are legally mandated by Congress, and neither party has seen fit to repeal the requirement. They are incredibly frsutrating when they involve studies like “Will rebuilding an existing bridge impact the environment?” Probably not. Or “Will running a few more trains on an existing train line impact the environment?”. Again, probably not.

    The total does involve firm overhead. Most firms run a multiplier of 2.4 to 3.0 times raw labor. Overhead pays for employee benefits (health insurance, vacation), non-billable employees (receptonists, HR, accounting, etc.), marketing costs, office space, software, etc. Average compensation in the industry is around $40 to $50 per hour, meaning average billable hours are $100 to $150. Compare that to lawyers at $250 to $500 per hour. That suggests that DEA has spent 1 million man-hours on the project = 500 man years. Hard to believe they couldn’t finish what they are doing with that level of effort.

  9. C. P. Zilliacus

    Sandy Teal wrote:

    U.S. Council on Environmental Quality Regulations

    Sec. 1502.7 Page limits.

    The text of final environmental impact statements (e.g., paragraphs (d) through (g) of Sec. 1502.10) shall normally be less than 150 pages and for proposals of unusual scope or complexity shall normally be less than 300 pages.

    Gee, the ICC’s Final Environmental Impact Statement (FEIS) is thousands of pages long. You can download all of it or some sections here.

  10. palvar

    If geotechnical investigation and bathymetry are included, that could be a big piece of the total cost. Still seems pretty high for a NEPA document on a bridge.

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