Lawmakers request info on NCDOT outsourcing after WBTV investigation

Source: Nick Ochsner, WBTV, March 9, 2017

State lawmakers have requested information from the North Carolina Department of Transportation on the comparative cost to hire private contractors versus using state employees for design and engineering services. The request comes just weeks after a WBTV investigation exposed questions about the increased use of private contractors at NCDOT. Rep. Frank Iler (R-Brunswick) made the request during a meeting of the Joint Committee on Transportation Appropriations in the House of Representatives held Tuesday morning. … In response to the question from Iler, NCDOT Chief Engineer Mike Holder said the department was working on trying to quantify the cost of using state personnel versus outside contractors. … Holder told lawmakers NCDOT has agreed to pay a consulting company to study how much money NCDOT pays in overhead costs for its employees. The focus on overhead comes after WBTV’s investigation published line-item cost estimates from private consulting firms that showed the state was paying between 140% and 200% overhead, in addition to the cost of man-hours and other actual expenses. …

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Senator steers millions in NCDOT contracts while taking campaign cash
Source: Nick Ochsner, WBTV, February 20, 2017

A powerful state lawmaker has pushed to increase the outsourcing of services within the North Carolina Department of Transportation while collecting campaign contributions from private firms that do business with the state agency. NCDOT has increasingly been required to rely on private firms for engineering and design services since 2011. Since then lawmakers have required NCDOT to shed hundreds of workers and pay hundreds-of-millions of dollars to private firms instead. Ten of the largest engineering firms collectively billed taxpayers more than $111 million for services in 2016 alone. That sum does not include dozens of other private companies who were also awarded contracts. Internal documents obtained by WBTV Investigates show the private firms being hired by NCDOT are building in inflated overhead costs and a built-in profit margin into their bottom line. But some lawmakers continue to advocate for the outsourcing of more state highway jobs as a way to save money and build state roads more efficiently.

State Senator Bill Rabon (R-Brunswick) said it was a pretty easy decision to start outsourcing some services at NCDOT when he and other Republicans took the majority in the state legislature in 2011. … But a review of cost estimates for projects completed by private engineering firms suggests taxpayers may be paying a premium for outsourced services. WBTV Investigates obtained detailed cost estimates for several projects submitted to NCDOT by private firms. … It is not clear if projects completed by private firms—with a built-in profit margin and line items for overhead at up to twice the cost of labor—are more efficient than projects completed by state employees who work for NCDOT. … Campaign finance records show Rabon has collected campaign money from employees of private engineering firms and other companies involved in building roads and bridges, their political action committees and industry-related special interest groups. Records show Rabon’s campaign has taken more than $124,000 since 2012, the first year in which NCDOT was required to hit a specific outsourcing target. It is impossible to know for sure, though, exactly how much campaign money Rabon took from individuals connected to private engineering firms because occupation and employer information is incomplete for a large number of donors. … In his interview with WBTV Investigates, Rabon said he did not keep track of who donated to his campaign and insisted his push to privatize NCDOT services was not connected in any way to contributions made to his campaign. … Legislative records show Rabon continued to advocate for aggressive outsourcing at NCDOT during the 2015 and 2016 budget discussions. …