There’s more than $1 trillion in new infrastructure funding, and state and local governments don’t have the staff to spend it themselves.
State departments of transportation, regional transit agencies and local administrations of all sizes have hollowed out their workforce and handed over more power to consultants and contractors — often without adequate oversight.
“We’ve seen fewer and fewer engineers — as a share of civil engineering — employed by state governments. We’ve seen state DOTs decline in their employment over time, even as what they’re doing has expanded,” said Zachary Liscow, who was the chief economist at the Office of Management and Budget and is now a professor at Yale Law School.
To unpack the impact of the Biden administration’s infrastructure law, NOTUS reviewed thousands of pages of contracting, spending and court records and interviewed government officials, contractors and academic experts. We found fewer experienced government employees supervising projects and ballooning labor costs have made infrastructure projects drastically more expensive — especially if outside contractors are put in charge of too much and end up making decisions that benefit themselves, not the public.
“It makes it harder to write good contracts. It makes it harder to manage contracts. Because you need good people in government to do hard things,” said Liscow, who has studied construction costs. “What are contractors’ or consultants’ incentives? That you design a bigger, more complex project — and they will probably get paid more. Those are bad incentives.”
And when these outside contractors are poorly supervised, things can go off the rails.
Sometimes literally.
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Planners in Boston have been dreaming about extending the city’s Green Line for nearly 100 years.
Cobbled together from the remnants of the old Boston trolley system, the Green Line is a four-branch light-rail system that snakes through many of the city’s residential neighborhoods and nearby suburbs. At its prepandemic peak, more than 175,000 people rode the system every week day.
In 1991, as part of an environmental conservation lawsuit over a highway megaproject, Massachusetts agreed to expand mass transit in Boston — vowing to extend the Green Line into nearby Medford and Somerville. The project languished in political limbo until the mid-2000s, when planning began in earnest. The project broke ground in 2012 and got a nearly $1 billion boost from the federal government in 2014.
More than a dozen different private contractors were involved. One firm called Vanasse Hangen Brustlin to do a study; the firms HDR and Gilbane to manage the project, hire the contractors and do a preliminary design; AECOM, HNTB and STV to do more design; Barletta Heavy, J.F. White, Kiewit, Skanska, Fluor, the Middlesex Corporation, Herzog and Balfour Beatty were all engaged at one point or another to actually build the line.
Over the decades, Boston’s transit system had lost many of its most experienced planners, engineers and project managers to retirement or budget cuts, according to a case study of the Green Line project by researchers at the NYU Marron Institute of Urban Management.
At one point, the NYU team found that the Massachusetts Bay Transportation Authority had only four to six people working on the Green Line extension, seriously impairing the agency’s ability to make timely, sound decisions effectively. The MBTA eventually hired 83 in-house staff in order to manage and supervise the project extension at its height adequately.
The extension finally opened in 2022 — eight years after the date the state had set in 2006. It went so over budget at one point that the project was put on ice while more consultants were brought in to bring the project’s total cost down before it could go forward. A few months after the new lines finally opened, the MBTA had to slow many of the trains to 3 miles per hour due to flaws in how the track was laid. About 80% of the trackage of the brand-new E branch needed to be widened.
An ugly lawsuit between some of the contractors and the design firm is winding its way through the state court system over who is responsible for tens of millions in cost overruns. The builders allege that the designer STV made numerous errors in the design, including failure to comply with the Americans With Disabilities Act in designing one of the new stations, plumbing and fire system errors and a number of other technical problems with retaining walls, bridges, lighting poles and bridge abutments. STV said in a statement: “We are confident that these commercial disputes will be resolved in STV’s favor through the judicial process.”
The only saving grace was that the state of Massachusetts structured the Green Line contract so that the contractors were responsible for cost overruns, not the public.
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As billions flow out of Washington as part of the Bipartisan Infrastructure Law and the Inflation Reduction Act, state and local governments are falling into a similar pattern across the country: Governments are deeply reliant on outside consultants and contractors and often struggle to supervise those firms effectively.
The problem has been exacerbated by what civil engineers say is decades of underinvestment in infrastructure at all levels of government.
“We’ve got DOTs that are not staffed up because they didn’t have the resources, and they didn’t have the need,” Marsia Geldert-Murphey, the president of the American Society of Civil Engineers. “We’re training and getting up to speed a whole system that’s been sitting idle.”
But ramping up capacity in state and local governments is a long-term project — and infrastructure dollars are flowing out of Washington now. In addition, many federal transportation grants make it fairly easy to pay consultants with the grant money but harder to pay in-house staff. The result is that consultants are often who the government first turns to to help them get projects built.
The California High-Speed Rail project, which has been in the works since 1996 and received another $3.1 billion in funding from the Biden-era infrastructure law, has seen a who’s who of designers, consultants and construction firms cycle through the project. The lead consulting firm, WSP, vowed they could finish the project in 12 years for a price tag of $33 billion for the whole line. Eighteen years after WSP was hired, there is still no California bullet train in sight — and the project is massively over budget.
In 2018, an audit by a state watchdog documented numerous “inappropriate use of contractors to perform state functions” — for example, the high-speed rail authority had outsourced even overseeing contractors to consultants. Contractors “may not always have the State’s best interests as their primary motivation,” the auditor warned, documenting failures to properly oversee more than $1.3 billion in contracts that she reviewed.
The next year, a Los Angeles Times investigation raised questions about the value those same contractors were offering — finding that California was paying $427,000 per contract engineer, when it pays just $131,000 for an in-house engineer.
“Lots of projects where they start off with an idea, they bring in the consultant and it’s a pretty different idea,” said Eric Goldwyn, program director at the Marron Institute of Urban Management at NYU and who studies transit costs. “If you had sort of a public sector that people were confident in and thought they were competent, I think you’d avoid some of that scope creep. You’d be able to have better project definition and better project management of your consultants.”
For example, New Hampshire estimated that tearing down an old bridge called the General Sullivan Bridge and replacing it with a modern pedestrian bridge would cost $35.5 million in a grant application submitted to Washington for infrastructure law funding. The project was awarded $20 million by the U.S. Department of Transportation — with state and local governments expected to pick up the rest of the construction costs.
However, when it sent the bid out to contractors, only one firm even bid at all, wanting to charge $82.2 million to do the project — more than double what the state had initially budgeted for. The project is now on hold as the state evaluates its options.
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The infrastructure law was touted as an economic stimulus that would create hundreds of thousands of good-paying construction and manufacturing jobs. But there is an acute shortage of skilled labor for many projects that is driving up costs, delaying projects and wreaking havoc on implementation.
Contractors and consulting firms can pay higher salaries than local governments and tend to be more attractive jobs — leaving state and local governments even more reliant on outside contracts.
“We have workforce challenges across our industry, and that has led to some challenges with implementation. Less bids means less competition. You may end up getting less for your dollar than you might have in another time and place and in our kind of economic landscape,” said Susan Howard, director of policy and government relations at the American Association of State Highway and Transportation Officials, which represents state transportation officials.
If costs soar, contractors don’t want to be left holding the bag. As a result, construction, engineering and design firms are getting choosier. And this lack of competition for projects hurts the taxpayers.
The average state transportation project in Washington is attracting fewer bids now than it did even a couple of years ago, The Seattle Times reported. State officials concluded that contractors could be choosy because there was so much work available — and many saw government work as risky, wary of contracting arrangements like the one in Boston that put the risk of increases in costs on the contractors rather than the state.
The latest infrastructure law has only laid bare many of these issues.
“I love Joe Biden much more than the average person. I worked in the Senate for 22 years,” said Peter Rogoff, former under secretary of transportation for policy at the U.S. Department of Transportation who went on to serve as the CEO of Seattle’s transit system and is now a consultant. But “when he would be touting the infrastructure bill for all the jobs it was going to create, I found myself yelling at the television saying, ‘We can’t fill the jobs we have now.’”
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Byron Tau is a reporter at NOTUS.