After the publication of our initial segment in November, “CDOT IN TOTAL DISARRAY,” the Chronicle has been inundated with additional information from present and former CDOT employees as well as other interested parties. As a result, what was originally envisioned as a two-part series has now been expanded to a three-part series, with the final installment coming in our January 2020 edition.
1950s Road: The Boulder Turnpike was originally constructed in 1952 as a toll road.
Coloradans are increasingly spending hours
stuck in traffic, some of which is unnecessary, insiders tell the Chronicle.
Former and current employees of the Colorado Department of Transportation
(CDOT), as well as in-state contractors, assert that the state agency formed in
1917 to direct the transportation needs of the state “no longer builds roads”
but simply now makes schedules that are seldom accurate. The primary goal at
CDOT has become avoiding blame or liability for the botched schedules and/or
designs resulting in massive additional costs for CDOT projects and long delays
in road projects being completed. The schedules have been weaponized by CDOT to
use against contractors when projects are delayed or run over budget, even where
the primary blame should fall on CDOT.
CDOT once revered for competence and
non-partisanship has become a political football whose overall mission is
increasingly unclear and muddled. Governor Jared Polis, upon coming into
office, replaced highly respected and seemingly well qualified Michael Lewis
(who had been appointed by then Governor Hickenlooper) with 35-year-old history
major Shoshana Lew. She is the daughter of Jack Lew, the former Chief of Staff
of President Obama and later his Secretary of the Treasury. Ms. Lew was
reportedly hired by Governor Polis as a personal favor to former First Lady
Michelle Obama. In interviews with media, including Colorado Public Radio, she
has strikingly avoided discussing roads and instead emphasizing bike lanes, buses,
light rail and multi-modal transportation. Her failure to respond to and, in
some cases, even understand questions from callers on “The Mandy Connell Show”
on 850 KOA Radio, caused her to be banned from the show which has a tradition
of featuring the head of CDOT to discuss transportation issues in Colorado.
CDOT employees indicate that she so dislikes traffic in the Denver area that
she has an employee chauffeur her around town, a luxury few Coloradans can
afford.
Sinkhole: The original toll road lasted over 60 years. The new revision constructed in 2014 lasted only five years without major repairs.
With transportation dollars relatively
scarce in Colorado and the state legislature unlikely to increase any funding
any time in the foreseeable future, making funding as cost efficient as
possible would logically be of paramount importance to CDOT, but the opposite
appears to be the case. In 2013 the legislature did away with the requirement
that all public projects in excess of $50,000 had to be “awarded by competitive
bid.” In its place it provided for the “best value” model in which bids come in
as either (1) Design Build (DB); or (2) Construction Management/General
Contractor (CMGC). Insiders view the “best value” as totally subjective and
little more than a new form of manipulating the system so that two large
out-of-state construction firms could be awarded 81% of all major construction
projects distributed by CDOT in the last seven years.
The two firms are Kraemer North America,
LLC, a subsidiary of the massive Japanese construction firm Obayashi
Corporation and Kiewit Corporation, a Fortune 500 construction company based in
Omaha, Nebraska. In-state contractors indicate that Timothy Maloney of Kraemer
North America was extraordinarily effective in shepherding through CDOT and the
state legislature the change in awarding contracts under the comically false
title “Keep Jobs in Colorado Act.” Prior to its enactment the majority of CDOT
projects went to in-state firms. Set below are the $3.7 billion in major
projects awarded over the last seven years by CDOT:
Mastermind: Tim Maloney, Vice President at Kraemer North America, LLC, successfully ramrodded the change in the bidding procedure through CDOT and the Colorado Legislature.
To apply to be awarded a DB or CMGC costs
firms tens of thousands of dollars. Insiders indicate that CDOT encourages
firms to apply in order to make the process look above board. But the in-state
contractors are then rejected on the basis that they have never done a large DB
or CMGC project. It is becoming increasingly difficult to con in state firms to
submit bids which they cannot win with the massive project almost inevitably
going to Kraemer or Kiewit or other international firms like Flatiron
Construction, a subsidiary of the massive German conglomerate HOCHTIEF.
In turn, Kiewit and Kraemer don’t even want
to have to prepare bids in the semi sham process as they are costly and time
consuming, so they have come up with a new method by using the so-called
“change order” scheme. Ordinarily a “change order” is a change in an existing
project that is different from what was originally contemplated, but words can
be manipulated to mean whatever someone wants.
Embattled: CDOT Executive Director Soshana Lew has incurred increasing demands for her resignation due to her lack of qualifications and performance at the job she currently holds at CDOT.
Regarding the over $300 million project to
build express lanes on I-25 from State Highway 402 to Fort Collins rather than
having to go through a bidding process, Kraemer got CDOT to simply declare that
it was going to do a “change order” to the $250 million project for express
lanes from State Highway 66 to State Highway 402. Little did it seem to matter
that the so-called “change order” was larger than the entire original project
and a wholly different section of I-25.
Cost Of Consultants
The massive costs of CDOT projects is in
large part due to the so-called “best value” method of bidding rather than
“lowest bidder,” but it is significantly exacerbated by the utter dependence on
outside consultant firms largely staffed with former CDOT employees who have
retired with PERA pensions at relatively young ages. CDOT no longer has the
in-house capacity to perform many of the everyday functions that it once did 20
years ago. Determining which outside consultants to utilize is once again on a
subjective basis and a consultant without a significant number of former CDOT
employees has little chance of being awarded a contract. Moreover, CDOT employees
have no incentive to look after the taxpayers when dealing with former work
colleagues. Furthermore, many of those now in CDOT plan to join a consultant
once they are eligible to retire under PERA and hope for similar lenient
treatment when they are on the outside.
Monumental Headquarters: Road funds have been scarce but CDOT built itself a massive, five-story, $160 million headquarters located at the intersection of West Howard Place and Federal Boulevard.
In May 2019 the Colorado State Auditor did
a Performance Audit of CDOT and found that problems with 80 of the 84 CDOT
agreements with consultants including “unapproved consultant labor rates,
contracts without proper approvals and contract terms that did not comply with
state requirements.”
While it was generally known that outside
consultants significantly added to the cost of CDOT projects the full extent of
the problem was not previously quantifiable. The chart below is based on very
recent internal CDOT calculations and if anything underestimates the problem in
which consultant fees have averaged over the last four years $226,500,000 per
annum adding 32.5% to the cost of CDOT projects.
Specific Projects
Next month the Chronicle will examine three
particular projects which are:
• The
$1.3 billion 10-mile Central 70 Project;
• The
$226 million 12.5-mile C-470 Project;
• The
$500 million I-25 North Expansion Lanes.
The delays, the cost overruns, the crony
bidding and other problems on these projects help identify the major concerns
with today’s dysfunctional Colorado Department of Transportation.
At a time when Coloradans are desperately
pleading for improved and new roadways the agency in charge of the same, the
Colorado Department of Transportation (CDOT), is mired in the greatest crisis
of its long-storied existence according to insiders.
CDOT Executive Director: Shoshana Lew, a history major in college, became the head of CDOT at age 35 with no engineering or construction management experience due to political connections in Washington, D.C.
Formed in 1917 to administer state
government transportation responsibilities it long had the reputation for the
most competent and least politically comprised department in Colorado
government. Unfortunately, according to people who currently work with CDOT,
that is no longer the case.
Perfect Storm
The convergence of two events has turned
CDOT upside down. The first was the Orwellian named “Keep Jobs in Colorado Act
of 2013.” Previously under CRS Sec. 24-92-109 all public projects in excess of
$50,000 had to be “awarded by competitive bid.” The drawbacks to this method
include occasional “bid rigging” by competing contractors. In addition, so-called
“change orders” can drive up costs of a competitively bid project. But overall
this method, which was used for decades by CDOT, was the least subjective and
generally viewed fairest method to have projects completed at the lowest cost.
The 2013 act substituted the “lowest bid”
method with the so-called “best value” model in which bids come in as either
(1) Design Build; or (2) Construction Manager/General Contractor (CMGC). While
these techniques have various theoretical advantages, especially for unique
highly complex projects, including potentially cutting down the time to
complete a project, it is a highly subjective selection process with the
opportunity for corruption massively increased. To prevent cronyism and
exorbitant cost increases, it requires high expertise and absolute diligence on
the part of CDOT. What CDOT got was the exact opposite.
Shoddy Construction: The massive sinkhole on Highway 36 is but the most glaring example of shoddy construction by CDOT a little over five years after the bridge was built.
Washington Insider
In December 2018, Governor Jared Polis
appointed 35-year-old Shoshana Lew as his new Executive Director, a history
major at Harvard University with an M.A. in American History from Northwestern.
She replaced Governor Hickenlooper’s appointment of 56-year-old Michael Lewis,
an engineer with extensive public construction management experience. Lew’s
appointment was a shock to CDOT employees.
Lew’s primary qualification, according to
insiders, was her close relationship to Michelle Obama who called the newly
elected governor for a favor — find a job for Shoshana Lew. Lew is the daughter
of President Obama’s Chief of Staff and later Secretary of the Treasury, Jack
Lew. Ms. Lew is considered by some as an example of how the rich and well
connected can use their positions to secure favored treatment in and outside of
government.
While originally intending to get a
doctorate in history and become a history professor, she instead joined the
Washington based liberal Brookings Institute as a policy analyst. Almost
magically, although in her 20s with no experience, she entered the Obama
administration and soon became a senior adviser at the U.S. Department of the
Interior’s Bureau of Ocean Energy Management and policy adviser at the White
House Domestic Policy Council. With no financial background whatsoever, she
next was appointed Chief Financial Officer of U.S. Department of Transportation
(USDOT) as well as garnering other impressive titles.
Pomp And Circumstance: Shoshana Lew, age 29, arrives at the White House for a state function with her father Jack Lew, U.S. Treasury Secretary. She quickly rose up the bureaucratic ladder with the Obama administration. Image Credit: REUTERS/Yuri Gripas – stock.adobe.com
As the Obama administration began winding down, she parlayed her position as CFO of USDOT to become the Chief Operating Officer (COO) of Rhode Island Department of Transportation (RIDOT) in the spring of 2017. After a controversial reign as COO for RIDOT of just over one year she was appointed Executive Director of CDOT in December 2018 by Governor Polis — a job, according to CDOT employees, she was wholly ill prepared for. CDOT employs over 3,300 people and has an annual budget in excess of $4.5 billion.
Are Our Darn Roads Even On Her List?
On October 7, 2019, Lew gave an interview
with Colorado Public Radio to discuss her job as Executive Director. A
horrified listener, Jane Glenn of Sterling, wrote to the South Platte Sentinel:
Basically, she’s bike lanes, big buses,
walking paths, light rail, and electric cars.
Are our darn roads even on her list?
The answer is, of course, no. She is a
history major with no background in engineering or construction management.
But, of course, there are plenty of people in and outside of CDOT who have
years of experience in both of those fields and with the hen house opened up
with a largely clueless Executive Director and the CMGC bidding process easy to
abuse, they rushed to take advantage.
Revolving Door
CDOT has had a massive exit of its top
personnel, all of whom have left once they became eligible for early retirement
with PERA benefits. They joined consulting firms who now have overtaken the
jobs, including design, testing and inspection, that CDOT once performed
internally. If you have a firm for any such functions and are not heavily
filled with former CDOT employees, you are highly unlikely to be contracted
with CDOT.
I-25 Congestion: In interviews Lew has evidenced little interest in improving existing roads or the building of new roads in Colorado, notwithstanding Colorado failing to keep up with the massive influx of new residents over the last decade.
In theory under the CMGC method, the owner
has a different construction manager and general contractor, but not in
Colorado, where the functions are combined with one more check and balance
disappearing. CDOT no longer has enough civil engineers to begin the design
process to start a project and must hire a design firm filled with former CDOT
employees. The design firm often works with CMGC entities on other projects, so
each has every reason not to cut costs or bring up any areas of conflict of
interest to the attention of CDOT.
The CMGC bidding process for a CDOT project
is supposed to be competitive, even if highly subjective. However, local
construction firms have ceased to enter the process since only one of two
national and international firms are chosen for any important project. The two
firms are Kraemer North America who is owned by Obayashi Corporation, one of
Japan’s largest construction firms, and Kiewit Corporation, a Fortune 500
contracting firm based out of Omaha, Nebraska. Over 75% of the $3.2 billion in
recent CDOT contracts have gone to these two firms with the percentage ever
increasing.
The 2013 law which mandated the change in
bidding, the “Keep Jobs in Colorado Act,” has essentially ensured that Colorado
firms and their employees are almost never hired, except for smaller CDOT
projects that Kraemer and Kiewit are not interested in. There is one group of
Colorado residents that has handsomely profited from the new regimen and that
is the scores of former CDOT employees who have joined the dozens of consulting
firms hired by CDOT. Not only are they scoring six figure salaries, but are
also enjoying their PERA benefits, essentially doing the same job they did at
CDOT at a fraction of the remuneration. CDOT itself evolved into little more
than an admin organization and, in part, that too will be outsourced over time,
although the CDOT state budget is not expected to diminish.
Added Cost
It is estimated that the excess profits by
Kraemer and Kiewit, and the tens of millions of dollars paid to consulting
firms filled with ex-CDOT employees, adds as much as 30% to the cost of every
CDOT project and that percentage is expected to grow in coming years. It is
questioned why Colorado taxpayers would want to pay more taxpayer money to a
department as corrupt and inefficient as CDOT which is headed up by an
individual as uninterested in roads as Shoshana Lew.
Personal Favor: Governor Polis reportedly appointed Shoshana Lew as the Executive Director of CDOT as a personal favor to Michelle Obama. Jack Lew, the father of Shoshana Lew, was the Chief of Staff to President Obama as well as later his Secretary of the Treasury.
As for Ms. Lew she has not only garnered
the disrespect of the people she oversees, but her ineptitude has reportedly
angered at least some of the 11 commissioners from across the state who oversee
CDOT. Her job is apparently safe, however, unless and until Governor Polis
cares enough to stop the total destruction of, what once was, one of the most
respected government agencies in Colorado.
In Part II of this series on CDOT we will review individual projects that CDOT has undertaken in recent years including the infamous Highway 36 sinkhole and why taxpayers can expect more shoddy workmanship and massive cost overruns.
The original article mistakenly indicated that CDOT has 330 employees. The number is actually 3,300. A zero was inadvertently omitted.
The Denver City Council’s agent of change and de facto
leader Candi CdeBaca is planning to have the City Council pass a bill to change
the City Charter to allow Denver voters to elect the city’s Sheriff as is the
case almost everywhere else in Colorado. Given the disaster the Sheriff’s
Department has become, the voters could not do worse than Hancock’s picks over
the last nine years. Even the union representing the Sheriff deputies believes
that such a reform is long past due.
It is difficult to catalog all of the scandals that have
befallen the office over the last few years, starting with the death of
mentally ill Michael Lee Marshall while in custody. The lawsuits alone have
cost the taxpayers a staggering amount of money, including the most recent $1.55 million
settlement paid to 15 female Sheriff deputies for “severe and unwelcome sexual
harassment by male inmates . . . fostered by the failure of the Sheriff’s Department
to take reasonable steps to prevent it.” The next big hit to the taxpayers will
be from the female inmate forced to give birth to a child alone in a Denver
jail cell.
Patrick Firman
Denver Sheriff Patrick Firman resigned effective October 14
after years of mistrust from deputies and community activists, who said that
was the price of filling the position with a man who was never the right person
for the job. “Nice guy, just wasn’t suited to be Sheriff,” said Lisa Calderón,
chief of staff for Councilwoman Candi CdeBaca.
If he were so ill suited for the job, why in the world was
he appointed by Mayor Hancock in 2015 after a long search process? Because it
was a workie, workie like everything else the Mayor does. If you think anything
is going to change as long as the Mayor gets to appoint the Sheriff, you would
be mistaken. For the interim Sheriff, Hancock has appointed a woman, Fran
Gomez, who is even more unqualified than Firman. She was briefly with the
Sheriff’s Department in the 1980s and then after years doing police work in
Aurora and Commerce City she retired. In August of last year she apparently
unretired and got the “no work” job in the Sheriff’s Department as the
“Director of Professional Standards.”
What caused the sudden hiring and incredible rise through
the ranks to the top in a little over a year? According to the Deputy Sheriff’s
union it is due to the fact she is the wife of one of Hancock’s security
detail. Hancock apparently counted on that fact being obscured by the fact she
is the “first” female Denver Sheriff of any sort and has a Hispanic last name.
Almost everyone expects that under Ms. Gomez things will go from bad to even
worse at the jail. This will be followed by the appointment of another gross
incompetent as the permanent Denver Sheriff.
Denver’s citizens really do not have to put up with this
pathetic hiring carousel for the Sheriff position. We should choose the best
candidate for Sheriff ourselves. Voters are not perfect of course, as evidenced
by the fact we have elected Michael Hancock three times. But candidates for the
office will have to at least try to convince us why they would be well-suited
for the job. We can’t do a whole lot worse than choosing as interim Sheriff a
person whose only qualification is that she is the wife of a man on the Mayor’s
security detail.
Fran Gomez
The positions directly below the Sheriff are also presently
political patronage jobs chosen by the Mayor for all of the wrong reasons. An
elected Sheriff could at least pick individuals he/she believes are best suited
to help do what is a very hard job, rather than simply to people whom a Mayor
owes a favor.
Having an elected Sheriff is only the beginning of the
process to provide some checks and balances in the City Charter over present
and future corrupt and out-of-control Mayors.
Lord Acton famously stated: “Power tends to corrupt, and
absolute power corrupts absolutely.”
It is time in Denver for a little less absolute power and a
lot less public corruption.
