Audit Reveals Abuse in Highway Contracting ($73 million for ballooning executive compensation)

[Omaha Steve]

http://www.afscmeblog.org/2009/02/19/audit-reveals-abuse-in-highway-contracting/?__utma=1.1197432530765331200.1235181204.1235181204.1235181204.1&__utmb=1.1.10.1235181204&__utmc=1&__utmx=-&__utmz=1.1235181204.1.1.utmcsr=(direct)|utmccn=(direct)|utmcmd=(none)&__utmv=-&__utmk=239728515

February 19th, 2009

Some contractors who design and build the nation’s highways wrongly charged taxpayers $73 million for ballooning executive compensation, lavish perks and other unallowable expenses, according to an article by Robert O’Harrow Jr. in last Saturday’s Washington Post.

One firm alone charged $950,000 in unallowable costs, included a political contribution, spa resort bills and alcohol. The auditors estimate that in 2003, executives at design and engineering firms with highway contracts overpaid themselves by as much as $73 million.

Contractors also charged federal and state governments for sporting events, luxury cars, and golf shirts, according to a report by the inspector general of the Department of Transportation.

The Post reports that contracting out failed on numerous levels, with design and engineering contractors being “generally hired without competitive bids” and those contractors sometimes hiring “accountants that were not qualified to perform the reviews required by state and federal regulations. In many cases, they ‘hired firms with whom they had existing relationships.’”

FULL story at link.

[MrModerate]

1. If there are no competitive bids, that's a symptom of amateurishness . . .

On the customer side, whether it's a locality or a state doing the contracting. (To be fair, there is a form of contracting called "public-private partnership" that's not competitively bid but delivers better value to the taxpayer when it works as intended.)

Also, if this was federal contracting, where was the DCAA-compliant audit oversight that such jobs require?

[Kansas Wyatt]

2. I just met a guy, who quit his K.C. job of ten years and moved to Montana.

He's an engineer, who worked for a road construction company. He said that the last merger they went through, a foreign company bought them out, cut all their benefits, worked them more hours, and paid them less. All their management came over from that foreign country, and they were bringing in inexperienced engineers from the same country to work along side this guy, while paying them twice as much. Anyway, this guy finally got fed up with working 60 hours a week and earning less money, so he took another job.

He said that his new boss assembled all of them, when he came over and told them, 'I'm your boss. We took you over, because you Americans know nothing.' He said he was a major prick, and none of the foreign people that came over would ever interact with any of them and that they were going to bankrupt the company, because they didn't know anything about building roads in the U.S. Like specifications and so on and that it is better to own heavy equipment, rather than selling it off and renting it.

This guy also told me that all asphalt and concrete that anyone in the U.S. bought, came from a foreign owned company and basically how everything in the U.S. has been sold off to foreign investors.