Rhode Island news
State police to look into DOT spending
01:00 AM EDT on Thursday, June 14, 2007
PROVIDENCE — Governor Carcieri yesterday asked the state police to “begin a preliminary review” of the way business has been conducted by the state Department of Transportation.
The governor made the request at a private 2 p.m. meeting with new state police Supt. Brendan Doherty that was not on his public schedule for the day.
While Carcieri spokesman Jeff Neal said he would have no comment on the meeting, Doherty confirmed the meeting, said the governor gave him “relevant documents” and as a result, “the state police will begin a preliminary review of matters at DOT.”
Doherty would not elaborate, but state-level investigations of largely federally financed programs have, in the past, piqued the interest of federal investigators as well. When asked yesterday whether federal investigators had launched their own inquiry into the escalating controversy surrounding DOT spending and contracting, a spokesman for U.S. Attorney Robert Clark Corrente declined comment.
Meanwhile, more details spilled out of the state snow-plowing and road-building agency about the markups of 100 percent — and more — it has been paying a fleet of consultants.
Bottom line: the now-infamous $102,858 typist was not an isolated case.
And the 145.99-percent markup the DOT was paying Vanasse Hangen Brustlin to provide that typist to an in-house traffic-monitoring center was by no means the highest of the “overhead” rates the DOT has been paying its consultants.
Responding to a public-information request filed a month ago, the DOT earlier this week acknowledged paying “overhead” rates that add anywhere from 65.94 percent to 210 percent to the bills it has been paying private companies for their staff engineers, draftsmen, technicians and typists.
With pay levels averaging $84.73 an hour (including the guaranteed overhead and profit payments), the state, for example, is paying one consulting company — in the middle of the pack — the equivalent of $176,238 a year for each of the engineers and technicians doing wind and traffic studies on a Pawtucket bridge.
One of the highest overhead rates, 201 percent, goes to Plangraphics, a Frankfurt, Ky., company that billed the state for what is broadly described in DOT records as a “plan library archival numbering system.”
The way the Plangraphics contract worked: the company would bill the DOT $260,656 for its direct labor costs and then, more than twice that — $549,203 — for overhead and $90,613 on top of that for profit. (For reasons that went unexplained yesterday, a $76,260 slice of the company’s $900,473 authorized contract went to the DOT’s construction-scheduling consultant, the Plexus Corp.)
One of the lowest rates, 65.94 percent, goes to Cataldo & Associates, the company that made headlines earlier this year for putting 11 retired DOT construction supervisors on its payroll doing the same kind of work they had been doing on state road projects — while drawing pensions. That practice was eventually nixed by the state retirement board.
DOT Director Jerome F. Williams did not respond to two days of inquiries about the newly released rate information. And without review, a spokesman said Governor Carcieri could not immediately say whether the rates are as “outrageous” as he termed that being paid VHB on the traffic-monitoring center contract when it was first brought to light by a Journal article last month.
“We are going through a process to assess what other contracts may have similar rates and what we can do to significantly reduce them,” said spokesman Jeff Neal.
But the newly released list of what the state has been paying for overhead sheds light on the virtual explosion in costs for “purchased-services” by the DOT since fiscal year 2002.
While publicly financed construction has boomed in Rhode Island over the last six years, the state transportation agency sharply reduced what it spent on salaries and benefits for its in-house engineering and design staff during this period, from $35.5 million to $25.2 million.
The consulting fees it paid an armada of private companies more than tripled, during this same period, from $22.35 million in 2002 to a projected $70.4 million this year and a proposed $77 million next year.
The list, as terse as it is, also illustrates the downside of the state’s growing reliance on consultants, a trend that was sharply criticized in a previously undisclosed 2006 audit by the Federal Highway Administration made public by the DOT this week.
Among the key findings: with more than 600 bridges across the state to keep in safe condition for travel, the Rhode Island DOT’s structural-design program “is currently less effective than the structural design programs in most other state highway agencies.”
Despite 780 employees and a $338.8-million state and federally financed budget, the agency does not have one “expert” in hydraulic and geotechnical engineering on staff, “which is essential for the oversight of safe and cost-effective foundation and wall design. … The RIDOT relies on consultants for these services and has no expertise or systematic program in place to measure the adequacy or efficiency” of their recommendations.
A handful of the engineering and specialty consulting companies detail every expense in their monthly invoices, from their 134-mile roundtrip, $64.99 mileage from Medford, Mass., to Nayatt Road in Barrington right down to the $497 spent on lunches, dinners and tolls. But few offered that kind of detail.
In April, for example, the DOT paid Commonwealth Engineers & Consultants $13,495 in direct salary costs for nine project engineers and technicians making between $24 and $50 an hour that were working that billing period on one piece of the state’s “comprehensive bridge improvement program.”
On top of that, the state paid the company a $15,391 markup for “overhead” and a $2,888 “fixed fee” for profit.
Altogether, the DOT paid the company $31,775 — more than double its labor costs, and the equivalent of $84.73 an hour — for every one of the 375 staff hours Commonwealth reported on that one bill for a traffic analysis and computations for “wind-bracing” and “cantilever bracket repairs” to a Pawtucket bridge.
Asked what the overhead covers, a company spokesmen sent a list that includes vacation time, sick time, personal time, health-care benefits and workers’ compensation insurance for employees, along with office rent and utilities and professional licensing fees.
In the case of Commonwealth, the overhead rate listed on recent invoices was actually lower than the 127 percent that the DOT said it should be. DOT spokeswoman Heidi Cote explained: “The firm expects the overhead rate to be reduced in subsequent audits and has elected to keep the lower rate to offset a future adjustment.” But audits appear to be backed up at the DOT, with consultants owing the state money.
The DOT now estimates, for example, that Plexus Corp, with three big-dollar DOT consulting contracts, owes the state “approximately $8,000” as a result of the delays in lowering its overhead rate to a level auditors recommended.
DOT spokesman Charles St. Martin explained: “The rate was adjusted based on calculations of actual expenditures in calendar year 2004…This will be credited in the next billing period, most likely June.”
Plexus has received $8.2 million overall from a decade-old financial-management tracking contract and two newer minority-company recruitment and contract schedule-monitoring contracts. Of the $953,426 in 2004 costs, the audit “disallowed” $240,554.
Disallowed expenses included “loan payments for personal cars” and “alcohol at a Christmas party.”
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