Caution: Consultants Ahead

The city has been doling out millions in no-bid contracts to outside consultants on public works projects. sometimes the results aren't pretty.

It was back in April of 1993 when the city's Public Works and Engineering Department picked Terra Associates to manage its new "Neighborhood Traffic Projects" program. Despite the rather sweeping title, the program primarily called for the engineering firm to work with neighborhoods on designing and building so-called "911 gates," which close roads to all but emergency vehicles. The idea behind the gates was to eliminate cut-through traffic in residential areas and simultaneously reduce crime risks by keeping out undesirables. The $400,000 contract covered a two-year period.

But it didn't take long before the contract began to bulge. After six months, the public works department went to City Council to request an additional $337,000 for Terra Associates. "The demand from the public for these services has been much greater than anticipated, and we now have over 80 neighborhoods in the process," the department noted in its request. The Council approved the extra payment.

At the time, the public works department's Traffic Management and Maintenance Division was indeed being flooded by requests to have the gates installed across the city. Just a year from the original contract date, program coordinator Susan McMillian wrote to deputy director Jerry Dinkins asking for yet another appropriation for Terra Associates. This time the amount was $975,000.

"We currently have a waiting list of neighborhoods which cannot be served until this additional funding is provided," McMillian said in her memo.

Though Terra Associates' initial duties included updating a city traffic manual, most of the firm's work consisted of meeting with neighborhood associations and helping them with their applications for gate installations. For that, Terra employees were paid as much as $57 an hour.

"If you're paying consultants to talk for you, that's relatively expensive," McMillian admits today.

Before the request for the additional $975,000 could be approved by Council, though, the program stalled. Terra's duties apparently didn't include checking to see if all the residents in the various neighborhoods approved of having their streets sealed off. As it turned out, many did not. "There was an underestimation of what the opposition would be," admits McMillian.

Because residents couldn't even agree about whether to have a gate, let alone about where it might be placed, the majority of the neighborhoods that had initially asked to participate in the program never submitted formal applications to the city. Of the more than 100 proposals Terra was paid to develop, only 13 have been completed. Another eight are still pending. "Many of them died on the vine," says McMillian.

In December 1995, the city rehired Terra to manage the design and construction of the eight remaining projects for $166,000. When its contract is complete, Terra will have billed the city for more than $900,000.

Despite the paucity of completed projects, McMillian says she wouldn't necessarily characterize the money paid to Terra as wasted, although the traffic division now handles the program itself. "We got a lot of research out of the first contract," she says.

That may seem like a lot for research, but it's a mere pittance in the larger scheme of things. Since Mayor Bob Lanier took office in 1992 and installed Jimmie Schindewolf as his public works director, the city has spent more than $4 billion in repaving streets and otherwise rejuvenating its sagging infrastructure. While much of that spending can be measured in tons of asphalt, miles of pipe and acres of refurbished parks, more than $350 million has been pumped into less-concrete components of Lanier's rebuilding program. With little fanfare, the department has dished out huge no-bid contracts to outside consulting firms to oversee the public works construction that has accelerated at a frenzied pace during Lanier's tenure.

At the same time, many of the city employees who used to be responsible for managing public works projects have either been pushed out of their jobs or assigned more menial tasks.

"The city has a lot of engineers who are doing nothing," says one longtime public works employee. "I'm not doing engineering work, really. I'm a Xerox guy."

The shift reflects the department's objectives under Lanier: to ensure that projects are finished on time, and to keep councilmembers and constituents happy.

Those are laudable goals, yet sometimes both quality and cost-effectiveness have been sacrificed in their pursuit. By using program-management consultants for the design and construction of public works projects, the city stays one step removed, making it much easier for poor work to slip by unnoticed until the projects are long closed out. And when problems do surface, the actions of public works management are as likely to be dictated by politics as by sound professional judgment.

Terra Associates' piece of the action is tiny compared to the share of the bigger consulting firms in town. Though some of the money has been funneled to subconsultants, Rust/Lichliter Jameson has received more than $7 million since October 1993 to manage programs in the department's Street and Bridge Division and is in line for $3 million more. In January, Lockwood, Andrews & Newnam (LAN) scored an $8-million contract to run the city's surface-water transmission program, having already been paid almost $15 million in city funds over the past five years. And Montgomery Watson Americas, which oversees the mammoth Greater Houston Wastewater Program, has billed the city more than $280 million for its services.

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