Tuesday, May 01, 2007

"With Transparent Spending Policies in Place"

Nagin's office said, "the city doesn't need traditional safeguards on rebuilding and reconstruction projects." Not quite, but it came close:
Nagin's priorities for the session are:

-- Let the city use the design-build contracting process, which requires fewer steps in bidding and is often cheaper than contracting by the usual method, for rebuilding and recovery projects in New Orleans. Senate Bill 121 by Sen. Edwin Murray, D-New Orleans, is carrying the initiative.

After all, design-build has worked so well in the reconstruction of Iraq. Actually, I'm not going to claim that a two hour internet search has made me an expert on design-build contracting. I was tempted to make the assertion that design-build always leads to corruption and cronyism because I tend to get more responses when I make assertions than when I ask for input. In fact, most of the literature seems to indicate that design-build is still increasing in popularity. Of course, most of the literature seems to be put out by an industry group.

If any readers with more knowledge have any input, I'd welcome it. Personally, I wouldn't approve any measure that loosens contract restrictions until the mayor actually delivers on his promise of transparency. For one thing, design-build does away with "lowest bid" in favor of "best value;" in other words, there won't be any change as far as the sanitation department is concerned.

Thelen Reid Brown is a top construction industry law firm, so the following is not from an anti-industry source:
Special laws were needed because design-build and EPC contracting do not lend themselves to the public bidding process and its focus on the low bidder. If the successful bidder will both design the highway and build it, and if the evaluation is purely on the basis of price, then the bidders will have an overwhelming incentive to design the cheapest possible highway. On design-bid-build projects, government agencies prevent this by controlling the design.

With EPC and design-build contracting, evaluation no longer can be purely objective (i.e. lowest price wins) but necessarily must include subjective factors. These may include quality of design, life cycle costs, past track record, perceived commitment to the project, expertise and experience. Involving subjective factors in selection of the contractor poses the risk of re-introducing corruption and cronyism into the government contracting process.

The government experiments in design-build and EPC typically include stringent procedures to keep the selection process fair and honest. Whether the procedures are successful remains to be seen, as the experiments are rather recent.

How many FOIA requests did the Times Picayune need to file just to get information about garbage collection? Any administration that promises transparency and then refuses requests for information can't be presumed to be either fair or honest.

More on design-build here.

Most people believe the reason for the public bid laws is to save money. That is not really true. The purpose is to make sure everyone has the an equal opportunity and there is an objective method of spending the largest share of the money and an objective method of resolving disputes.

Design-build works well in private industry where the ultimate user is calling the shots. There has been some federal design-build which has worked reasonably well because the professional civil servants are in charge and they generally aren't political.

Locally the process is open to all sort of abuse and should not be used until the City has established a track record for integrity and professionalism.
That was basically the impression that I got from my effort to find out more about design-build. Considering the mayor and the city's recent record, I can't see loosening the restrictions on the contracting process. My first thought was that the legislature wouldn't be like the city council and do approve a measure because the mayor recommends it -- I still can't get over the fact that the council voted for the Paragon Economy Fund because the mayor wanted it, even though nobody on the council knew what it was. The legislature wouldn't do something because Nagin wanted it, but individual legislators would love the excuse to change the laws statewide.

Just thinking about MCCI and the major water and sewerage repairs that need to be made.
I can imagine all sorts of mischief in a negotiation including steering work to connected companies.

The first job of the City Government should be creating a culture of public integrity. Over the years I've been told by many people they won't do business in Louisiana or New Orleans because of an experience with corruption or the impression of corruption. The perception of corruption is a major impediment to our economic development.
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