In complementary released yesterday, the MTA Inspector General exposed how contractors hired by the MTA are often given better evaluations than their work suggests so that the agency can maintain business ties with these bidders. For its part, agency heads say the MTA will follow the IG’s recommendations in an effort to improve its business practices.
The reports — available as PDF files here and here — find that the All-Agency Contractor Evaluation program, set up to “screen vendors will poor performance histories,” has not fulfilled that role. The fault, says Barry Kluger, is due in part to managers who are looking to curry favor with the MTA’s long-term clients. Wrote the IG:
Our interviews with managers responsible for implementing NYC Transit’s capital program provided an explanation for these deficiencies: an institutional reluctance, for a variety of reasons, to rate contractors’ work as Unsatisfactory, even when such ratings are the most appropriate.
One particularly disturbing reason given by many of these managers is that they felt pressure to upgrade ratings of Unsatisfactory to prevent important agency contractors from being precluded from bidding on future work – even though under the rules such ratings do not automatically preclude such bidding. In these cases, the managers sometimes allowed what they perceived to be agency “business decisions” to override their true assessments of contractor performance. By doing so, though, they effectively usurped the power and duty of MTA’s General Counsel, Executive Director and Board to adequately review and properly accept or reject contract awards in the future.
The examples in the reports are not unexpected. As Michael Grynbaum, who covered these findings for The Times, highlights, “managers at the Long Island Rail Road waited more than nine months to grade one vendor, DMJM & Harris, as unsatisfactory, after the firm’s work on a 2005 environmental consulting contract was deemed deficient. In the interim, that vendor received five more contracts worth nearly $25 million from New York City Transit, Metro-North Railroad, and the authority’s bridges and tunnels division; none of those other agencies were aware of any problems with the firm.”
Another egregious example of questionable ratings involves Siemens, the company originally selected to update subway signaling technology. Writes Grynbaum: “Under official guidelines, Siemens should have received an unsatisfactory rating. But a top official at New York City Transit instructed managers to instead assign a rating of “marginal,” a higher mark, because of business considerations.” We all get the point.
In response, the MTA has agreed to implement a series of measures designed to better evaluate and assess contractor performance and better oversee those issuing the ratings. “Too often we have let our contractors slide when they fail to perform, and that is why we have accepted the I.G.’s recommendations and are working to implement them,” Jay Walder, MTA CEO and Chairman, said.
For Walder, this report is but the tip of the iceberg of the inefficiencies he plans to combat. It’s a rather in-the-box example of how the MTA’s business practices are run with less oversight than they should have, and it’s a prime way Walder can restore both transparency and accountability to the agency’s contracting. I don’t want to be too cynical about Kluger’s findings or Walder’s commitment to improving the way the agency conducts business, but this is indicative of the organizational problems Walder must solve.
12 comments
A big problem with the TA contractors is that most of these companies win the contract and then subcontract out the work. So the lowest bidder won the job and the job gets done for even less money. So the quality of work the TA gets is usually horrible.
One of the problems that I’ve seen in government work is that there aren’t that many firms that will do government projects. So you end up seeing the same consultants and contractors over and over again. I remember at one point when trying to select a consultant firm from the Term Consultants list at one agency and the only one that hadn’t screwed us on several large jobs, were already booked solid. This was a list of like 20 firms.
So in the end, many project managers give these firms higher scores than they deserve because they know they have to work with these guys again and be on pleasant terms with them. Cause who else are they going to get to do the work?
This was especially true in NYC during the housing boom. Any firm worth a damn didn’t want to be bothered with the hassles of government work, cause they had more private sector work than they could handle, so the only firms that wanted government work were the ones that no one in the private sector wanted.
Josh is absolutely right. There aren’t so many firms willing to deal with the public agencies (about a week ago, someone commented about Lockheed Martin’s reputation as getting things done on time and under budget, except on MTA jobs).
The enormity of recent projects also complicates things. Multiple companies collaborate form a joint-venture, perhaps because they don’t have the people or financial resources to do it themselves (and possibly to eliminate competition).
Also, the company name isn’t that meaningful. Once a large project is awarded, you always see the winning bidder conduct a massive hiring spree to get people to do the work. You eventually end up with the same people, regardless of the corporate banner under which they work.
In a larger sense, isn’t this another symptom of the US becoming a third world country. As a general rule, the powerful now go about their business with impunity. Government officials may have violated the Constitution, our laws, and assorted treaties, but we ignore their crimes and “move forward”. Banksters may have turned Wall Street into a bigger casino than Las Vegas and then run the operation with such reckless incompetence that not only did the “house” lose trillions, but millions of people lost their houses, and the citizens will be picking up the tab for years to come. No matter, those criminals are rich and powerful (and white may have something to do with it). Paying penalties for wrongdoing, like paying taxes, has become something that “only little people do.”
There have to be foreign contractors that could do a better job. Spain for one has by far the lowest construction costs in the developed world. Constructing a subway in Madrid costs one third as much as in Paris and Berlin, and one twentieth as much as in New York. There has to be a way to wholly import contractors and workers to work on New York projects, especially now that Spain’s unemployment is nearly 20%.
I see no potential political problems with that idea, however good it may be.
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Alon, you fail to understand how the construction market in NYC works. Regardless of which contractor gets the job, all craft personnel must be NY union members. For instance, on tunnel jobs, all of the tunneling is handled by Sandhogs, a specialized tunnel union. Right now, the ESA tunnels are being bored by a joint venture of Judlau (Flushing-based) and Dragados (a Spanish company). They can have foreign supervision, but craft needs to be union. (Any contractor who tried to do otherwise would never survive an attack by the labor unions.)
In this construction market, you would never be able to bring in foreign workers en masse as you suggest. Indeed, no matter who the contractor on any project is, they will all be pulling workers from the same union pool (and paying them the same rate). Granted, many companies will have their “core” workers who stay with them, but often they need to call guys out from the union hall to meet their manpower demands.
In response to something that was mentioned earlier, regarding the subcontracting of major work this does raise a big issue of accountability. Based on recent MTA Capital Construction documents, MTA CC wants to put a zero percent self-perform requirement on the new Fulton Street Transit Center Oculus (to be bid later this year) so that they can increase competition. You see this a lot now in this economy where agencies are trying to get as many people involved in the bidding to get lower prices. In doing this, you lose control of some elements of the work. A subcontractor rating system would be helpful in this regard. Also, a minimum self-perform percentage would also help.
Are there rules mandating using several times as many workers as necessary, or do the rules just govern wages and union membership?
If a TA employee gives a contractor a better grade than they deserve they should be immediately fired!! I can’t think of any reason for them to give better grades than deserved except if they are getting paid off!
“Better than they deserve” is subjective – and it also depends on who’s giving the “grades”. Again, look at the Lockheed Martin contract. LM couldn’t complete the job because the someone at the TA didn’t provide what they promised. But that “someone” might not be the one issuing the grades.
[…] a February MTA inspector general report, Rushbaum writes: In recent years, a steady stream of troubled companies have done work for the […]