Costly consultants, big budget lead to price tag

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By DEENA WINTER / Lincoln Journal Star

The New York company leading Lincoln’s largest ever public works project isn’t a stranger to high-stakes construction. Or controversy.

Parsons Brinckerhoff was one of two companies that oversaw Boston’s Big Dig — at $22 billion the most expensive highway project in U.S. history and one plagued by massive cost overruns, missed deadlines and faulty construction.

In Lincoln, the company has earned $15 million managing the design and construction of the Antelope Valley Project. Combine that with the $20 million the subconsultants it hired have earned, and it represents 23 percent of the money spent so far on the project.

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That’s nearly a quarter of Antelope Valley’s costs spent on consultants — and for rented cars, office equipment, airfare and hotel rooms.

All this while early project cost estimates ballooned. In 2000, for instance, project backers said the first phase would cost $175 million; that figure was revised recently to $264 million.

Parsons Brinckerhoff also has a type of contract that is often criticized for not encouraging cost savings.

Introducing Parsons Brinckerhoff

Parsons got its start when its founder designed New York’s first subway line from lower Manhattan to Harlem and has grown to one of the world’s leading transportation engineering companies.

The company was hired by the city, the University of Nebraska-Lincoln and the Lower Platte South Natural Resources District in 1995 to lay the groundwork for local and federal approval of Antelope Valley.

Once the project was approved, Parsons won the contract to manage design and construction, the selection based on qualifications, not because it was the lowest bidder.

Parsons has since awarded no-bid contracts to more than a dozen subconsultants.

But the value of those consultants’ work can be difficult to gauge. One economic development consultant has been paid a quarter of a million dollars since the mid-1990s, largely working to develop an assisted-living facility for minorities that still hasn’t found a location.

Another was paid tens of thousands to draft Antelope Valley design standards, which were shelved and redrawn by another consultant.

Lincoln’s decision to hire Parsons to manage both design and construction of a project is itself controversial — and illegal in some states. It speeds up construction, but design errors can more easily be covered up.

Parsons’ project manager in Lincoln, Jane Jordan, acknowledged controversy over such contracts, but said some clients feel it’s important to have the same firm handle on both phases.

The city’s recently retired Antelope Valley project manager, Wayne Teten, said design questions can be addressed more quickly. “It does expedite things,” he said. “I think it’s up to the project owner to keep tabs on things and sort out whether it is or isn’t a design error.”

But Parsons has the kind of contract presidential candidates rail against. The so-called “cost-plus fixed-fee” contract allows Parsons to get reimbursed for every allowable cost — from leasing vehicles and computers to maintaining first aid kits — plus a profit. But people such as Sen. John McCain have called such contracts wasteful because there’s no incentive to cut costs.

Jordan said if the company didn’t get reimbursed for direct expenses, its overhead would have gone up.

And City Engineer Roger Figard said if a lump sum had instead been paid to Parsons, “This project would have been a nightmare.”

Cost-plus contracts generally demand more oversight to ensure the contractor is spending money wisely. But even though Antelope Valley is Lincoln’s largest public works project ever, only one public employee, Teten, has been devoted full time to monitoring spending. Teten said about a half dozen other public employees also periodically check spending.

Before he retired this month, virtually every dollar spent flowed through Teten. He has not been replaced; instead, a handful of city employees have taken over his duties.

$27 an hour on ‘Antelope Andy’

The Journal Star analyzed hundreds of Antelope Valley invoices, expenditures and contracts, and found:

n A consulting engineering company, Olsson Associates, was paid to help organize public bus tours of Antelope Valley, and received between $27 and $40 an hour (plus overtime, in some cases) for employees to do menial tasks such as typing, preparing name tags and making signs. One employee earned $27 an hour to spend five-and-a-half hours erecting and taking down a cardboard “Antelope Andy” mascot for 2006 bus tours.

n Parsons’ contracts have budgeted up to $3,200 per month to lease five vehicles for their employees — that’s $800 per month (counting gas and oil) per vehicle — $340 per month in phone expenses; $1,550 per month to lease three laptop computers and a copy/fax machine; $15,000 to buy office furniture; $18,500 to relocate employees to Lincoln; $12,000 for 20 airplane tickets; $2,500 for 20 hotel room stays per year; and $100 per diem expenses.

n In 1995, as it was studying the project, Parsons budgeted $450 per month for two furnished apartments and $23,600 for airfare for its employees.

Design standards

done twice

A consultant called RTKL Associates of Baltimore was paid $297,000 to draft design standards for Antelope Valley in 2002. But the city never adopted those standards. They were shelved for four years and, recently, another consultant, Crandall Arambula of Portland, was hired to draft design standards, which the City Council approved this summer. Crandall Arambula was paid more than $100,000.

Antelope Valley spokesman Kent Seacrest — who is paid $280 an hour for his consulting work — said RTKL’s standards were considered too voluminous and out of date.

Teten said he didn’t know if RTKL’s product was what people were looking for.

“RTKL was looking at more broad brush zoning,” Teten said.

Little to show for $250K ‘community liaison’

Rick Wallace, an economic development consultant, has been paid $251,500 to be what Teten called a liaison to the neighborhood and minority populations who live near the Antelope Valley project.

Wallace’s billings indicate he’s spent most of his time working on one particular project that has yet to bear fruit. He’s billed Antelope Valley hundreds of hours — at a rate that started out at $35 an hour in 1995 and grew to $175 an hour now — to work with the Vietnamese community to develop an assisted-living facility that caters to minorities.

Wallace said such a facility is needed because “not every ethnic group feels comfortable going to Lancaster Manor or the Legacy in the golden years of their life.”

He’s studied several locations — including the Malone Center — and is now considering a site in the middle of what he calls the “ethnic enclave” on 27th Street between O and Vine — not exactly in Antelope Valley.

He acknowledges the project has “taken awhile to evolve.”

Teten said when you’re about to plow through a neighborhood with a public works project, it’s wise to have a “good liaison who can help things happen” and prevent the community from rising up against the project. Jordan agreed Wallace’s ties to the neighborhood have been valuable.

“Somebody had to be focused on things other than the roadway and storm channel,” Wallace said.

His billings include 14.5 hours attending 2015 Vision meetings with the public in January 2007. Asked why he billed to attend those meetings, he said because the 2015 private business group’s goals affected Antelope Valley and potential spinoff businesses and jobs.

Jordan defended the expenses and consulting costs, saying they fall within federal guidelines. And the city deferred to Parsons.

“It’s not our job to tell our consulting firm how to run their business,” Figard said.

Reach Deena Winter at 473-2642 or dwinter@journalstar.com.