Former governor George Allen's buyout plan saved money initially, but ended up increasing the cost of several road projects. (By Bill O'Leary – The Post)

First in a series

By Stephen C. Fehr and Michael D. Shear
Washington Post Staff Writers
Tuesday, October 13, 1998; Page A1

Virginia's Department of Transportation is plagued by lengthy project delays, multimillion-dollar budget overruns, a lack of oversight and a severe personnel shortage, leading local officials to question how the agency will complete a decade of planned road-building in Washington's Virginia suburbs and elsewhere.

In Northern Virginia, where a quarter of the state's road construction takes place, the widening of the Dulles Toll Road and completion of the Fairfax County Parkway are a combined $35 million over budget and months behind schedule. The state also will have to shell out at least $22 million to cover overruns in two high-technology projects aimed at moving traffic faster through Northern Virginia by synchronizing traffic signals.

VDOT, or VEE-dot, as many Virginians call the agency, has had trouble rebounding from the loss of about 1,300 employees in the last four years, most from former governor George Allen's $40 million buyout program that trimmed what Allen said was a bloated state bureaucracy. It led VDOT to turn over much of its road design and maintenance work – worth hundreds of millions of dollars – to private firms.

The abrupt exodus of about 11 percent of VDOT's work force – including many of its most experienced engineers – also accelerated long-simmering problems at the agency, which controls virtually everything having to do with building and maintaining roads and bridges in the Old Dominion.

Allen's buyout program initially saved the state $53 million. But a state report to be released today is inconclusive as to whether Allen's program actually has saved millions of dollars each year as advertised, legislative sources say.

The report does say that the program led to increased costs in some projects, because the private consultants who were hired wound up costing more than VDOT would have spent had it done the work itself.

The buyout program has left VDOT short of experienced senior managers at a time when Congress is showering the state with unprecedented federal money – $671 million a year over the next six years – for a building program that includes a $320 million highway interchange at Springfield and the state's share of the $1.6 billion project to replace the Woodrow Wilson Bridge.

Questions about the buyout program come as frustrated officials from Fairfax to Tidewater, who for years have not criticized VDOT out of fear they would offend the state agency that controls local road money, now are openly wondering about VDOT's ability to finish those and other projects on time and within budget.

"All kinds of very skilled people with historical memories walked out the door, in droves. It was unanticipated," said Fairfax County Supervisor Gerald E. Connolly (D-Providence). "That's an inefficiency that plagues VDOT."

Said Shiva K. Pant, Fairfax County's transportation chief: "With all this federal money coming, we're at a crossroads. Getting that much money is great, but . . . they're going to have to gear up to get the projects ready."

State officials defend the buyout program, saying that in the long run it will save the state millions of dollars each year. And they vow that VDOT will be able to handle the expanded federal road-building program; Gov. James S. Gilmore III (R) is allowing the agency to hire enough permanent and temporary employees to meet its demands. The program requires states to return unspent federal highway money at the end of a fiscal year.

"We're going to keep things on time," said VDOT Commissioner David R. Gehr, the agency's top manager. "We won't lose federal dollars. We never have."

Still, local officials worry that VDOT's loss of experienced personnel – combined with what they view as the agency's lack of diligence in completing work on time and within budget – has created the potential for enormous problems.

"VDOT's process is broken," said James K. Spore, city manager of Virginia Beach, where delays in six of eight major road projects have annoyed tourists, residents and businesses. "A few months you can understand. But some cases are more than double the estimated completion time. There's just no sense of urgency there."

Part of the problem, state auditors say, is that the engineers who remained at VDOT after the buyout program have been overwhelmed with work.

Many of VDOT's remaining employees have told auditors they can't finish their duties on time, which the employees said leads to more delays and mistakes in the design of road and bridge projects.

Managers in the critical division that designs road projects, which has lost 50 of its 250 employees since 1991, have told auditors that they don't have the time or people to properly oversee all their work. Engineers manage an average of 23 projects at a time – three times the average in the private sector – and some juggle as many as 60 projects. Overtime expenses are up 19 percent since 1995, or about $3 million a year.

Meanwhile, local officials point to several recent cases in which they say VDOT's oversight was lacking: A senior engineer was sent to jail after stealing $366,000 from the Dulles Toll Road automated toll-collection project, and another manager was suspended after building up a $550,000 overrun in the popular program in which roving VDOT trucks assist stranded motorists.

"Where's the accounting and the accountability?" asked Katherine K. Hanley (D), chairman of the Fairfax County Board of Supervisors. "They lay out the estimates" for projects, "but then there doesn't seem to be a budget. There doesn't seem to be a limit. It's just perennial estimation."

State transportation officials say the delays and cost overruns are not signs of mismanagement, a defense that local officials say reflects an agency culture in which overspending is anticipated in many projects because money is usually available to cover overruns – a word transportation officials rarely use.

"I do get concerned about referring to changes in the scope of projects as 'overruns,'" said Virginia Transportation Secretary Shirley Ybarra. "These happen frequently because we have to meet the requirements of a project. There's nothing good or bad about them."

Unexpected complications, such as poor soil or asbestos removal, drive up costs, VDOT officials say. So do demands from residents, who sometimes ask for changes to a project once it is underway to ease the impact on them. A contingency of up to 20 percent is added to most programs, but VDOT often uses it up, knowing there will be more money available to complete a project because, as Gehr said, "we aren't going to leave a roadway or a bridge undone once we get started."

Added Thomas F. Farley, VDOT's chief engineer in Northern Virginia: "When we first estimate the costs of a project, it's not just seat-of-the-pants, but the best we have. [But] it's not uncommon or unexpected to have design errors or add-ons that increase the contract price. . . . I don't want people to think there's a linkage or pattern or trend" of management problems at VDOT.

All Roads Lead to VDOT

One of Virginia's three largest agencies, VDOT accounts for about 13 percent of the state budget.

In most states, including Maryland, local governments build, operate and maintain their own streets while the state government takes care of state highways and arterial streets. But Virginia is one of a few places where state government is responsible for nearly all roads, including those in the counties.

Historically, VDOT has relied on private contractors to build its roads and bridges, but the state took care of most of the maintenance of state roads. Now, most maintenance is done by private companies. Nearly all of Virginia's 41 rest areas and 13 drawbridges are maintained and operated by private firms. And most of the engineering work that precedes construction is done by private companies, a reversal from only three years ago, when state engineers did most of that work.

Though the VDOT job cuts started under then-Gov. L. Douglas Wilder (D) in 1991, most of the cutbacks came under Allen's work force reduction program, which gave workers as much as a year's salary as an incentive to leave the agency.

Allen's transportation secretary, Robert E. Martinez, said he allowed all VDOT employees who applied for the program to leave, a calculated risk because he said he knew "a few people would leave who you wish didn't."

The result was an exodus of about 1,000 people, which could cause VDOT headaches as the agency plans for a federal building program that will increase the U.S. government's contribution to the state's road fund by 62 percent. Finding qualified help could be a challenge; VDOT is having trouble filling dozens of existing vacancies.

"The cuts were not made as part of a strategic plan but as a result of a blunt, across-the-board decision to simply cut," said former governor Gerald L. Baliles (D). "VDOT has lost people with institutional memory and invaluable experience. That has a downstream effect, as projects back up and congestion increases."

VDOT has become the leaner agency that some state officials – particularly Republicans – have envisioned for years. Allen, as well as Gilmore, believes that relying on private consultants and contractors can save the state millions of dollars a year. Martinez said the state has saved $24 million by having a private firm maintain parts of three interstate highways.

But using private firms also can drive up project costs, analysts say. The custom is that a private firm hires an experienced state engineer at a higher salary. Then, the private firm wins a contract on a project that its newly hired engineer had been working on.

"So the state hires the same skills back at a much higher price," said Francis B. Francois, executive director of the American Association of State Highway and Transportation Officials.

Richard C. Lockwood, a 32-year VDOT employee who rose to become the agency's chief planner, took Allen's early-retirement plan. He was making $67,000 at VDOT and accepted a higher-paying job at a Richmond transportation engineering firm that works on VDOT projects. He declined to disclose his new salary.

Supporters of VDOT's buyout program maintain that hiring new employees for the federal building program is not an admission that the buyout effort was a failure.

Gilmore, meanwhile, has said he will continue Allen's pursuit of a leaner state government but says he will ask the legislature for a yet-to-be-determined increase in VDOT employees in part because "we don't want to reduce the working people of this state [government] to such a level that they cannot efficiently get the job done."

But many local officials say that's exactly what has happened in recent years.

"When the Allen administration took over [in 1994], there was a huge impact on the VDOT bureaucracy. They really haven't recovered," said Kathleen K. Seefeldt (D), chairman of the Prince William Board of County Supervisors. Added Fairfax Supervisor T. Dana Kauffman (D-Lee): "Incredible hemorrhaging is taking place."

Oversight Questions

Many state transportation engineers not only lack experience overseeing others but also are being assigned too many private-sector projects to manage, the audit said. This leads to delays and errors, the audit added, although engineers did not cite specific examples when they talked to auditors.

"I do not have the time to thoroughly . . . review projects, which makes me dependent on the consultants' evaluation of project conditions," an unidentified VDOT project manager told the audit commission.

Another senior VDOT administrator said that veteran private consultants – some of them former managers at VDOT – won't take direction from engineers with substantially less experience who still work for the agency. As a result, the "consultants tend to assume control of the projects," the commission said. A spokesman for the state's consulting engineers association, Tim Stowe, denied that this happens.

State auditor Walter J. Kucharski said he has warned VDOT officials of the potential for abuse by private contractors and consultants, given their increased role. "VDOT is doing a ton of this stuff and needs to have better control over it," he said.

Kucharski, in a routine audit of VDOT, chastised the department for "inadequate monitoring" of the Dulles Toll Road automated toll-collection project. The engineer overseeing installation of the system, Charles L. Williams Jr., was caught embezzling $366,000 in state money. He was sentenced to two years in a work-release program and was ordered to pay the money back; court records indicate he has not reimbursed the state.

Gehr emphasized that the department's own employees detected the embezzlement and that Williams was punished. "We have adequate controls. We caught it," Gehr said.

But Kucharski said the installation of the toll-collection equipment had not been monitored properly by Williams's supervisors, allowing Williams to initiate and fraudulently approve 49 orders changing the project, running up costs.

"Management failed to detect the unauthorized change orders until the project was almost complete, because no one had responsibility for administering the contract and no one monitored the contract costs," Kucharski said.

He added that no one was watching managers of the safety service patrol, which assists stranded motorists along Northern Virginia's highways, when the managers exceeded their $2.2 million budget by $550,000 earlier this year. After a state police investigation, the patrol's manager was suspended for two weeks, but the incident cast more doubt on VDOT's oversight at the agency's top levels.

At the time of these incidents, several elected officials in Northern Virginia had begun hammering VDOT for overspending its budget on the widening of the toll road, the completion of the Fairfax County Parkway and two projects with traffic-watching TV cameras and computers that are supposed to speed traffic along interstate highways and at traffic signals.

The toll road project exceeded its budget by 40 percent, from about $50 million to $71 million, because of changes made after the project started two years ago. Last spring, VDOT officials discovered a $15 million overrun in the construction of the cross-county parkway because additional engineering work was needed. The traffic signal contract is about $12 million over budget, in part because of errors in estimating supplies.

"They need more oversight," said James E. Rich, a member of the state's transportation board during Allen's administration. "We have to institute a new system for overruns so they explain them better, and the board has to approve" them.

Local officials say that whatever money VDOT spends to cover overruns means there is less in the state's budget for other road and bridge projects. "Every dollar of a cost overrun is a lost dollar to us" for other projects, Fairfax's Connolly said.

VDOT collects money from contractors if they don't finish on time or have other problems completing a contract not caused by the agency. In the last year, the state has sought financial penalties from 12 contractors and banned an additional six firms from state work.

Virginia lawmakers, meanwhile, disagree over how seriously to treat VDOT's overruns.

"Is it a big thing? No. It hasn't gripped the public's mind," said state Senate Minority Leader Richard L. Saslaw (D-Fairfax). "This is not a $700 Pentagon toilet."

But Del. Jay W. DeBoer (D-Petersburg), a critic of Allen's buyout program, said the overruns fly in the face of Virginia's penchant for frugality. "It wasn't that long ago that cost overruns were cause for dismissal," he said. "Now, they're business as usual."

TOMORROW: How one VDOT contract turned sour.

Staff writer R.H. Melton contributed to this report.