Monday, May 27, 2013

Ron Tutor: "My track record on change orders is no different than any other large contractor”

Ron Tutor Photo: Hollywood Reporter
 
The MTA board of directors can't find enough money to fix our Muni system, but it votes unanimously to award an $840 million Central Subway contract to Tutor Perini, radically reducing the project's contingency budget and its scheduling buffer.
 
As the Examiner reported last week ("With little wiggle room, Muni trusting controversial contractor for Central Subway work"), Tutor Perini was even successfully sued in 2002 by the City Attorney for defrauding city taxpayers on an airport project:
 
Tutor has been demonized by his critics for initially bidding low for projects and then adjusting the cost upward, a practice called change-order contracting. In 1992, then-Los Angeles Mayor Tom Bradley said Tutor was “the greatest change-order artist I’ve ever seen.” A report last year by The Bay Citizen found that 11 projects overseen by Tutor in the Bay Area exceeded their costs by a collective $765 million...Tutor’s bid for the Central Subway contract---which includes the construction of three train stations---was $27 million lower than the next-closest firm. By law, the transit agency is obligated to accept the “lowest and most responsible bidder.”

Based on its history of deceptive bidding, the MTA board could have rejected Tutor Perini's bid as not by a "responsible bidder." But the Examiner tells us why they didn't do that:
 
Director Tom Nolan, president of the transit agency’s board, said he was aware of Tutor’s reputation for change orders but did not know about Herrera’s lawsuit. “This is far from perfect,” Nolan said. “But putting this out to bid again would have put us way behind schedule.”

Hey, no one's perfect! Allowing Perini Tutor to rip off city taxpayers---like it has in the past---is the price the city pays to keep this project "on schedule."
 
Recall that the Central Subway was part of Proposition K on the 2003 ballot---the sales tax measure that brings in more than $80 million a year, adminstered by the SFCTA, supposedly to pay for city transportation and  "improvements" to city streets (the SFCTA pays for Bike to Work Day, for example). 
 
Voters were told in 2003 that the Central Subway would cost $647 million; the price tag is now officially at $1.6 billion and counting.
 
The Examiner reporter, Will Reisman, did some digging:
 
Tutor was unable to respond to requests for comment Thursday. But in August 2012, when asked similar questions about his involvement with San Francisco and his history of change orders, Tutor said, “I have a great working relationship with Muni and my track record on change orders is no different than any other large contractor.”
 
Tutor is right about that. As the authors of "Megaprojects and Risk: An Anatomy of Ambition"---which I highly recommend---tell us, large projects are typically launched based not on honest bidding mistakes but on lies by contractors:
 
"Cost underestimation and overrun cannot be explained by error and seem to be best explained by strategic misrepresentation, namely lying, with a view to getting projects started." (page 16) 

The authors of Megaprojects and Risk examined hundreds of big projects in 20 countries, including the Chunnel: "Promoters of multi-billion dollar land-use development megaprojects systematically misinform parliaments, the public and the media in order to get them approved and built." They don't discuss California's high-speed rail project in the book, but it fits their analysis perfectly, since it's always been based on misinformation.
 
Once big projects get started, they're impossible to stop.
 
Prop. K was supported by the usual "good government" suspects: the San Francisco Chamber of Commerce, the San Francisco League of Conservation Voters, San Francisco Firefighters, Transportation for a Liveable City, Rescue Muni, SF Bicycle Coalition, Walk SF, San Francisco Tomorrow, Jane Morrison, Nancy Pelosi, John Burton, SEIU Local 250, SPUR, Dave Snyder, Tom Radulovich, the San Francisco Police Officers Association, Assemblyman Leland Yee, the SF Labor Council, Lynette Sweet (BART Director), James Fang (BART Director), and the  Noe Valley Democratic Club.

For a detailed analysis of Tutor's successful bid on a high-speed rail contract, see Californians Advocating Responsible Rail Design.  
 

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1 Comments:

At 2:47 PM, Blogger Mark Kaepplein said...

Boston's Big Dig project was to cost $2.8 Billion. It is projected to ultimately cost $22 Billion. It had the usual delays, overruns, fraud, and corruption. Big projects and burying things are expensive.

 

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