In Colorado there has been little notice that the storied multi-billion dollar department in charge of the state’s transportation needs, CDOT, has evolved into little more than a massive piggy bank for former employees who have set up consulting firms to perform the jobs that CDOT used to perform itself.
When the State Auditor did a Performance
Audit on CDOT it found that 80 of the 84 consultant contracts it looked at had
serious flaws including “unapproved consultants labor rates, contracts without
proper approvals and contract terms that did not comply with state
requirements.” Yet in 2019 another quarter billion dollars will have been
squandered on consultants by CDOT. A total revamping of how CDOT performs, or
fails to perform, its basic functions needs to be undertaken.
Even more scandalous is the
anti-competitive practices undertaken by CDOT pursuant to a 2013 change in the
law whereby instead of requiring low bid for projects over $50,000 they are awarded
on the so-called “best value” method of Design Build (DB) or Construction
Manager/ General Contractor (CMGC). Since there is no clear public criteria for
determining who wins a contract under this system it has become a cesspool of
potential corruption. Not surprisingly it has led to only two firms controlling
over 80 percent of the market — Kraemer North America (a subsidiary of the
Japanese mega firm Obayashi Corporation) and Kiewit Corporation out of Omaha,
Nebraska. Experts estimate that the CMGC method is costing over 30 percent more
than of what it would cost under low bid competition and in turn costing
Colorado taxpayers billions of dollars every year.
The change in the 2013 law was comically
called the “Keep Jobs In Colorado Act.” Instead the act has resulted in
destroying or badly damaging Colorado firms who previously dominated the
competitive bid process. While the Colorado press has largely ignored the
scandal at CDOT it has not escaped the purview of federal authorities. The
national Engineering News-Record on November 29, 2019, announced that the
United States Department of Justice had “launched a multipronged effort to root
out bid-rigging, price fixing and other forms of collusion in construction and
other sectors on local, state and federal government funded contracts.” There
is now a strike force which is comprised of prosecutors in Washington as well
as 13 U.S. Attorneys offices in addition to FBI investigators and personal from
four inspector general offices.
CDOT Director Shoshana Lew
One of the key U.S. Attorney Offices is
that of Colorado. One of the items that possibly brought Colorado onto the
radar screen was the purported statement by a key member of CDOT. The high
ranked CDOT official allegedly stated that the $20 million contract for repair
of the Highway 36 sinkhole should not be competitively low bid because CDOT
could not guarantee, under such a method, that it be awarded to their friends
at Kraemer.
Federal authorities are apparently aware
that bid rigging has expanded far beyond various contractors illegally getting
together and now may involve state agencies.
In looking at CDOT one of the key areas of
investigation may be “bid suppression” as a form of a collusive bidding scheme.
The “Guide to Combating Corruption & Fraud in Development Projects” notes:
“Corrupt government and procurement
officials can facilitate the bid suppression efforts (e.g. by disqualifying
other legitimate bidders during the bidding process) . . . .”
Many local contracting firms in Colorado
are increasingly upset that they are not allowed to take an actual part in
bidding for CMGC projects. They are falsely urged to apply to make it seem that
the process is legitimate and then excluded by CDOT on criteria that only
applies to massive national or international firms like Kraemer and Kiewit.
According to federal sources one of the red
lights for a corrupt bidding process is lack of transparency. Under the prior
low bid process the exact figures for all parties were available after a
contract was awarded so losing bidders could see where they fell short. When an
in-state contractor asked CDOT for a copy of the winning bid under a recent
CMGC project he was given a document with almost all of the key relevant
information redacted by CDOT as shown at right.
Federal authorities are apparently hoping
to bring a case of bid suppression that would make national news as to ensure
the greatest effect. The indictment of Shoshana Lew or other high CDOT
officials regarding the duopoly that has overtaken state construction projects
would certainly fit the bill. However, there is no present indication of
personal financial benefit by any present CDOT official, which while not
necessary in such cases, is still preferred by some federal authorities.
Regardless of federal efforts to clean up
uncompetitive bidding in Colorado, it is clear that CMGC method of awarding
projects should be suspended in Colorado until a transparent competitive system
that will save Colorado taxpayers billions of dollars is undertaken. That and
tight restrictions on consulting contracts with CDOT are both long overdue and
badly needed.
The future for the average motorist in
Colorado is going to be bleak according to insiders at the Colorado Department
of Transportation (CDOT) which is the state agency in charge of the
transportation needs of the people of Colorado. In a 99-page study provided in
December by CDOT to the Colorado Legislature, the department claimed to need
$14 million to $84 million annually in increased fees with Executive Director
Shoshana Lew stating in a cover letter that the state’s “transportation funding
is insufficient and outdated.”
Haves And Have Nots: The future for Colorado motorists will separate the haves and the have nots. Those who can afford it, will be able to sail through what is often referred to as the Lexus lanes, above left, and those who cannot, will be stuck in traffic.
The requested fees increase would in fact
be of little help to the embattled state agency which has little desire or
funding to save the failing roads system in Colorado. Although seldom starkly
expressed, Lew’s plan is to make driving in Colorado so painful that many
average Coloradans will abandon their cars in favor of a public transit alternative.
She understands the inconvenience and unpleasantness of Colorado’s public
transportation system and that the state’s most affluent residents will likely
want to retain the convenience of their own automobiles. Under the radar CDOT
is creating a two tier system — revenue or “Lexus” lanes for those who can
afford it and massive traffic congestion for the general public.
Four major projects in and around Denver
demonstrate this new approach:
• $1.3
billion 10 mile Central I-70 Project in Denver;
• $500
million I-25 North Expansion Project north of Denver;
• $350
million 18 mile I-25 GAP Project south of Denver; and
• $226
million 12.5-mile C-470 Project southwest of Denver.
Many motorists are outraged when they learn
that billions of dollars in expenditures and massive construction
inconveniences will not provide a single additional lane of road for the
average motorist. CDOT effectively has slammed shut state firms from the
ability to bid on the projects so almost all projects are done by massive out-of-state
conglomerates at inflated prices. The following four massive projects reveal
what is in store for the people of the state.
C-470 Project
C470: The 12.5 miles between Wadsworth and I-25 in Douglas County is one of the busiest stretches of roads in Colorado with over 100,000 cars traveling it every day. The $226 million spent is solely for Lexus lanes while the general public will be forced to use the same two lanes east and west.
The 12.5 miles between Wadsworth and I-25
in Douglas County is one of the busiest stretches of roads in Colorado with
over 100,000 cars traveling it every day. The $226 million spent is solely for
Lexus lanes while the general public will be forced to use the same two lanes
east and west. CDOT did not have the funds, and did not want to ask the public
for the borrowing as required by the Taxpayers Bill of Rights (TABOR). It
therefore set up an enterprise fund titled The High Performance Transportation
Enterprise (HPTE) which issued $161.7 million in revenue bonds and borrowed
$106.9 million in loans from federal sources. The revenue from the Lexus lanes
will go to pay back the loans, but even after the payoff, decades in the
future, they are not expected to ever open the lanes to nonpaying drivers.
CDOT expects by 2030 the car usage will
jump to 140,000 cars daily making travel ever more highly congested and
allowing CDOT to charge ever increasing premium prices for their Lexus lanes.
The contract to build the 12.5 miles of
road was not low bid (LB) but awarded on a design build (DB) concept to a joint
venture of Flatiron Construction (a subsidiary of the massive German
conglomerate HOCHTIEF) and AECOM, a large engineering firm out of Los Angeles.
It is one of the few large projects in Colorado not awarded to the virtual
duopoly of Kraemer North America LLC (a subsidiary of the Japanese construction
giant Obayashi Corporation), and Kiewit
Corporation, a Fortune 500 construction firm based in Omaha, Nebraska.
The project has been in constant delays and
CDOT sent a letter of default to Flatiron/AECOM who in turn indicated the
failures have been due to CDOT’s gross incompetence and the agency’s ongoing
effort to try to blame everyone else for its internal problems. The latest
delayed opening projection is in June of 2021.
I-25 Gap Project
I-25 Gap: The Gap Project will cost $350 million with the state providing $250 million, $65 million from the federal government, and $35 million from local governments including El Paso and Douglas counties.
If you are traveling south on I-25 after
completing the 12.5 miles of C-470 you will need to take your wallet out
quickly enough to travel the 18 miles from Monument to Castle Rock in more
Lexus lanes. That stretch of road is two lanes each way and CDOT says it is so
dangerous that two State Patrol officers have recently died in accidents using
the road. Of course, it is not really clear why it would be any less dangerous
to the average motorist who doesn’t get to use the one additional Lexus lane
each way other than some minor road shoulder expansion on existing lanes. The
Gap Project will cost $350 million with the state providing $250 million, $65
million from the federal government, $35 million from local governments
including El Paso and Douglas counties. Westword has been chronicling the
traffic nightmares imposed on the average motorist in articles titled “Traffic
Nightmare Closures Come to I-25.” Few are aware the only beneficiary of the
money and the traffic are to be the affluent who are willing to pay the fees
for the Lexus lanes and political outrage will occur when the public does find
out.
This project was awarded by CDOT to Kraemer
not on a competitive bid process but by Construction Management/General
Contractor method (CMGC) by which over 80 percent of such projects are awarded
to either Kraemer or Kiewit. This project is also haunted by numerous delays
and is now not expected to be finished until 2022. As with all CDOT projects
CDOT blames the contractor and the contractor blames CDOT.
I-25 North Express LanesMead To Fort Collins
I-25 North Express Lanes: The Mead to Fort Collins project was originally set for 13.5 miles for $250 million and awarded to Kraemer. Later when an additional $250 to $300 million of funding was located another 4.5 miles was added.
If you head north instead of south on I-25
after leaving C-470 you cannot escape the Lexus lanes. The Mead to Fort Collins
project was originally for 13.5 miles for $250 million and awarded to Kraemer.
Later when an additional $250 to $300 million of funding was located another
4.5 miles was added. Without even pretending to look for competitive bids CDOT
simply gave it to their friends at Kraemer, based on a so-called “change
order.”
Central I-70 Project
Central I-70: The most controversial and costly of all of the recent CDOT projects is the 10 mile stretch of I-70 from Chambers Road to I-25 which comes in at a whopping $1.3 billion dollars.
The most controversial and costly of all of
the recent CDOT projects is the 10 mile stretch of I-70 from Chambers Road to
I-25 which comes in at a whopping $1.3 billion dollars. For that money, in the
end all you get is a Lexus lane going each way. The road, instead of going over
the neighborhoods of Elyria and Swansea with a viaduct, goes down to the
neighborhoods and then back up with a viaduct above the road with a park on it.
Why this incredibly expensive alternative was chosen is not totally clear but
it is blamed on the Brighton viaduct being obsolete. It certainly was not to
help the residents of those neighborhoods who adamantly opposed it. Because the
project essentially creates a ditch which would be subject to floods, various
parts of parks in central Denver (City Park and Park Hill) were commandeered to
act as flood water detention ponds to the outrage of those residents
surrounding those parks. It is assumed that the friends of Mayor Hancock will
greatly benefit financially from grounding the roadway and the land has been
dubbed the “Mayor’s Corridor of Opportunity.”
As a design build project, it was awarded
to a joint venture Kiewit and the French global investment group Meridiam
Partners. What is somewhat unique about the relationship is that it was set up
as a public/ private partnership or P3 which means the joint venture will pay
the costs of the project while getting the revenue from the Lexus lanes for at
least 30 years. It has been said about P3s that, generally speaking, the public
gets the losses while the private entities get the profits.
As with all CDOT’s major projects the
Central I-70 project is years behind. CDOT blames the contractors while the
contractors blames CDOT. It is not clear why CDOT can never do a major project
on time regardless of who the contractor is.
The Future Of Transportation In Colorado And CDOT
It is clear that CDOT under Shoshana Lew is
generally not interested in building roads for the citizens of Colorado and
where CDOT does build roads they are only for the affluent who can afford the
Lexus lanes which will become ever more costly. By using CMGTC and DB methods
and not competitive low bids CDOT set a duopoly for Kraemer and Kiewit which
charges 30 percent more for every project. In addition, CDOT pays a quarter
billion dollars to consultants every year to perform the tasks that CDOT once
performed but is now unwilling to do. Major projects in turn are almost never
performed on time with massive inconvenience to the motoring public.
As highlighted in our Editorial on page 3, the disgraceful state of affairs has not gone unnoticed. CDOT and Lew are increasingly coming under investigation, including by the U.S. Department of Justice, for their practices which may violate various federal statutes. But unless and until the citizens of Colorado become cognizant and angered about what is happening to their transportation system, no long-term solution will be possible.
Putting on our collective thinking caps,
looking into our all-seeing crystal ball, we’re going to give you a list of
predictions and resolutions for one of the most powerful political years in the
country’s history, 2020.
The top of the shop of course is who will
be the next President of the United States. Donald Trump the man who would be
king or….. any number of erstwhile equally bizarre characters on the other
side. Folks, it just doesn’t get any better. This clearly tops when General
Curtis LeMay was George Wallace’s Vice Presidential running mate. George
McGovern and his first running mate Thomas Eagleton who was just a little
before his time, a guy who actually admitted he had emotional problems unlike
the present lineup of stars. So here goes.
By the way do you folks remember the
Amazing Kreskin? Yeah, I know no one else does either. He always made these
predictions on the Mike Douglas show. So, let’s begin.
Who will be the next U.S. Senator from the
State of Colorado? Will it be joyride John or cardboard Cory? Remember the joke
of the guy in the alley when he gets the gun pulled on him and the stickup
artist says, “Your money or your life” and Jack Benny allegedly said, “I’m
thinking, I’m thinking.” Boy, how about these two. A couple of stalwarts. One
of my New Year’s wishes is for Cory Gardner to get his man card back and get an
extra-large jockstrap. Hick is finding out the media does not love him as much
as he thought.
How ’bout those Broncos. As we are writing
this they are on a winning streak. Is it because they brought another Bowlen
family member back into the game?
We predict Denver Mayor Michael Hancock
will successfully close whatever remaining open spaces and parks are left in
the city and take care of snow removal … and any ice still in your driveway?
How long will Candi CdeBaca be able to
bitch slap Michael Hancock around while yelling, “Workers of the world unite,
you have nothing to lose but your chains.” And maybe give us a Potemkin tour of
the homeless living on the Platte.
And I predict after midnight on January 1,
2020, the first three people to be red flagged will be Tom Tancredo, Dudley
Brown and Sheriff Reams from Weld County.
Looming over our shoulder is the return of
Brittany Pettersen. Now that General Bud-Weiser has reopened the insanity of
heroin injection, will Brittany receive more money from her husband’s pipeline
from George Soros’s red phone?
Will our businessman-Governor Jared Polis
manage to tank the Colorado economy a year earlier than he planned? And since
we know from Greta Thunberg there are only 12 New Year’s Eves left.
And will Shoshana Lew destroy whatever
credibility CDOT has left?
But enough of the positive it’s time to
thank the good guys for a hell of a 2019.
Mike Roberts and Patti Calhoun from
Westword.
Patrick Neville and his band of merry men
and women.
Frank McNulty for going after John
Hickenlooper even though the Ethics Committee can’t find an empty room to hold
their inquiry and the Dems think its ok Hick uses federal 9-11 funds to pay for
his lawyer. Is this a great country or what?
The King of Glendale Mike Dunafon.
Comrade CdeBaca for busting Hancock’s chops
every chance she gets.
The fine folks that woke up in Colorado and
voted to keep Tabor while the progressive con men tried to rip off your last
hope of keeping them in check.
Ted Trimpa and Arash Moselah a tip of the
hat for Halloween and a great Thanksgiving.
Greg Hollenback, the Modern Eater. Sheik I
never stopped to thank you.
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.
