Auditor: 'Gross waste' in highway project costs state millions
SEATTLE -- Cost overruns on a project to widen a 3.5-mile stretch of road in Maple Valley cost the state $42.5 million, according to State Auditor Brian Sonntag.
The "gross waste of public funds" resulted from mismanagement on several levels of the state Department of Transportation, Sonntag said.
A whistleblower's claim prompted the auditor's investigation into WSDOT's handling of the project on State Route 18 between Maple Valley and Issaquah-Hobart Road.
The project was awarded to the lowest bidder at $55.9 million in August 2003, but costs ballooned to $98.5 million by completion due to design errors, failure to mitigate the environmental impacts of the project, and failure to properly document and issue payments, the auditor said in his whistleblower report.
Design errors
In designing the project, the department use aerial photography to create a three-dimensional map of the area, then using the map's information to calculate the slope, earth quantities and retaining walls' height and length.
But the aerial survey method cannot be used when working with a large and densely forested area, as was the case in this project, a witness told the auditor. These figures were never verified in the field, and "basing the project design on inaccurate data led to multiple errors and increased project costs," the report said.
Of the 156 change orders issued during the project, 47 - approximately 30 percent - were coded as design error or contract plan error, and totaled $6.3 million, according to the report.
Environmental regulation violations
The design office also did not have an accurate estimate of the storage space needed for trees and woody debris on the site even though staff repeatedly commented on environmental mitigation issues during the planning phase, according to the document.
The report quoted an internal WSDOT investigation, which found, "There were pressures to meet the project advertisement date, so these questions carried over into construction."
As a result, "environmental violations occurred that added millions of dollars to the overall cost," Sonntag said, and "resulted in more than $1 million being added to this project for lease payments, labor and equipment hauling the woody debris to and from the storage facility and construction site."
These errors occurred even though the department had hired an environmental consultant who then hired a contractor to provide guidance to the project's engineers. From February 2005 to April 2007, the subcontractor was paid a total of $1,507,521. The consultant was paid $21,289.
The auditor identified seven change orders that resulted from environmental violations, which added $4.5 million to the cost in addition to fines paid -- $121,000 to the Department of Ecology for filling in a wetland with project debris, and $50,000 to the U.S. Army Corp of Engineers for a violation of the Clean Water Act.
"Almost half of the doubling in cost was due to these add-on contracts and environmental penalties the department had to pay," Sonntag said.
Invoice and payroll issues
During the investigation, the auditor found "two invoices for erosion and water pollution control to the same company, for the same work, under the same invoice number, but on different dates. The prime contractor took a 21 percent markup on each invoice (for unanticipated costs)," the report said.
The auditor also evidence of a possible violation of the federal minimum wage law.
In response to a whistleblower claim, WSDOT reviewed its payroll from 2003 to 2008, and asked a subcontractor to clarify any possible errors.
The subcontractor responded, "…may have under paid a few of the truck drivers below the prevailing minimum wage but we also have paid a lot of them over the prevailing wage and it works both ways where you will have to adjust payment for those who we over paid them."
A WSDOT construction specialist who reviewed payroll paperwork said, "he could not determine what was actually paid and that the payroll issues extended through the life of the contract," according to the report.
Changes made at WSDOT
WSDOT has already put in place policies aimed to prevent future mishaps similar to the ones outlined by the state auditor.
The department has adopted a formal policy requiring designers to field-verify aerial surveys. It has also taken measures to avoid violations of environmental regulations in future projects.
WSDOT said it has rectified its payroll discrepancies and problems with documentation of expenditures.
The "gross waste of public funds" resulted from mismanagement on several levels of the state Department of Transportation, Sonntag said.
A whistleblower's claim prompted the auditor's investigation into WSDOT's handling of the project on State Route 18 between Maple Valley and Issaquah-Hobart Road.
The project was awarded to the lowest bidder at $55.9 million in August 2003, but costs ballooned to $98.5 million by completion due to design errors, failure to mitigate the environmental impacts of the project, and failure to properly document and issue payments, the auditor said in his whistleblower report.
Design errors
In designing the project, the department use aerial photography to create a three-dimensional map of the area, then using the map's information to calculate the slope, earth quantities and retaining walls' height and length.
But the aerial survey method cannot be used when working with a large and densely forested area, as was the case in this project, a witness told the auditor. These figures were never verified in the field, and "basing the project design on inaccurate data led to multiple errors and increased project costs," the report said.
Of the 156 change orders issued during the project, 47 - approximately 30 percent - were coded as design error or contract plan error, and totaled $6.3 million, according to the report.
Environmental regulation violations
The design office also did not have an accurate estimate of the storage space needed for trees and woody debris on the site even though staff repeatedly commented on environmental mitigation issues during the planning phase, according to the document.
The report quoted an internal WSDOT investigation, which found, "There were pressures to meet the project advertisement date, so these questions carried over into construction."
As a result, "environmental violations occurred that added millions of dollars to the overall cost," Sonntag said, and "resulted in more than $1 million being added to this project for lease payments, labor and equipment hauling the woody debris to and from the storage facility and construction site."
These errors occurred even though the department had hired an environmental consultant who then hired a contractor to provide guidance to the project's engineers. From February 2005 to April 2007, the subcontractor was paid a total of $1,507,521. The consultant was paid $21,289.
The auditor identified seven change orders that resulted from environmental violations, which added $4.5 million to the cost in addition to fines paid -- $121,000 to the Department of Ecology for filling in a wetland with project debris, and $50,000 to the U.S. Army Corp of Engineers for a violation of the Clean Water Act.
"Almost half of the doubling in cost was due to these add-on contracts and environmental penalties the department had to pay," Sonntag said.
Invoice and payroll issues
During the investigation, the auditor found "two invoices for erosion and water pollution control to the same company, for the same work, under the same invoice number, but on different dates. The prime contractor took a 21 percent markup on each invoice (for unanticipated costs)," the report said.
The auditor also evidence of a possible violation of the federal minimum wage law.
In response to a whistleblower claim, WSDOT reviewed its payroll from 2003 to 2008, and asked a subcontractor to clarify any possible errors.
The subcontractor responded, "…may have under paid a few of the truck drivers below the prevailing minimum wage but we also have paid a lot of them over the prevailing wage and it works both ways where you will have to adjust payment for those who we over paid them."
A WSDOT construction specialist who reviewed payroll paperwork said, "he could not determine what was actually paid and that the payroll issues extended through the life of the contract," according to the report.
Changes made at WSDOT
WSDOT has already put in place policies aimed to prevent future mishaps similar to the ones outlined by the state auditor.
The department has adopted a formal policy requiring designers to field-verify aerial surveys. It has also taken measures to avoid violations of environmental regulations in future projects.
WSDOT said it has rectified its payroll discrepancies and problems with documentation of expenditures.
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