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November 19, 2017

7/18/2017 7:30:00 AM
Lawmakers launch DOT reform effort
Package would mandate use of project delivery options

Richard Moore
Investigative Reporter

Republican lawmakers unleashed an effort late last week to reform the way the state Department of Transportation does business, circulating a package of bills they say would fundamentally alter the way the DOT delivers, finances, and administers state highway projects.

Sen. Chris Kapenga (R-Delafield), Rep. Joe Sanfelippo (R-New Berlin), Sen. David Craig (R-Big Bend), and Rep. Rob Hutton (R-Brookfield) took the lead, but 20 lawmakers had joined as co-sponsors as of last Thursday, including Rep. Adam Jarchow (R-Balsam Lake) and Sen. Tom Tiffany (R-Hazelhurst).

The lawmakers say their reform package would result in significant savings to taxpayers, which they called a "must-have component of a long-term path" to fund state roads. The starting point for the legislation, they said, was an audit released earlier this year confirming years of DOT mismanagement.

"After demonstrating a poor use of taxpayer dollars, substantial reform is essential at the DOT," Kapenga said. "These reforms have been proven around the country to save significant money and deliver projects in a more efficient and effective manner. It is part of what is needed to help get the agency back on track."

The bill includes a design-build-finance model the lawmakers say is commonly used in other states to realize significant reductions in construction costs and completion times on road projects. It also contains structural reforms to the DOT and related agencies, including the repeal of prevailing wage, a so-called "fed swap," referendum requirements for roundabouts and local wheel taxes, and an outside audit of DOT operations.

"This bill will restore taxpayer confidence in an agency that has strayed from the sound fiscal and good-government principles we expect," Sanfelippo said.

For his part, Hutton said the issue was one of spending, not funding.

"This legislation rightly addresses several critical areas of fiscal and operational reform within the DOT," he said.

The memorandum

The co-sponsorship memorandum circulated by the legislators said internal reform was necessary, no matter what happened on the revenue side of the transportation equation.

Among other things, according to the memorandum, the bill would provide the DOT with multiple options for project delivery.

"New options include Design-Build, Construction Manager-General Contractor, fixed price variable scope, and incorporates the use of 'alternative technical concepts,'" the memo states. "These changes increase competition and transparency and will lead to projects being completed in shorter periods of time and for less money."

The state currently uses a design-bid-build form of project delivery. The new legislation would add four options.

Government agencies would be authorized to use "design-build," in which architectural, surveying, engineering, construction, and related services for a project are provided by a single contractor, according to an analysis by the Legislative Reference Bureau.

The analysis says they could also use "design-build-finance," in which the design and construction services for a project are provided by a single entity and financing is provided in whole or in part by the same entity; "construction manager-general contractor," a two-phase method in which all services unrelated to construction are provided in the first phase by a contractor who, subject to approval by the government agency, also provides construction services in the second phase; or "fixed-price variable-scope," in which a contractor provides the maximum amount of work at a cost not to exceed the price fixed by the governmental unit.

The bill also creates requirements for soliciting and evaluating proposals using those methods and awarding contracts to the most qualified bidders, the LRB analysis stated.

"The bill requires DOT to use these methods to deliver not less than 5 percent of construction costs of improvement projects by June 30, 2019, not less than 10 percent of construction costs of improvement projects by June 30, 2021, and not less than 20 percent of construction costs of improvement projects by June 30, 2023," the analysis stated.

The legislation would extend the use of the added project delivery methods to counties, towns, cities, and technical colleges, at their request, according to the co-sponsorship memo, direct the creation of a Technical Review Committee to review contract proposals, and create a scoring process that places emphasis on transparency and low project cost along with an incentive program to utilize Wisconsin-based contractors.

In addition, the package of bills would create reporting requirements for the department so the Legislature could measure the effectiveness of reforms, limit the amount of engineering work the department can do with in-house staff to 20 percent to help hold down unnecessary positions, and require DOT to devise a new funding formula for regions that is based on need rather than baseline funding, the memo stated.

What's more, the legislative package would direct the Department of Administration to develop a plan for issuing a Request for Proposals to conduct a thorough operational and financial audit of the entire agency.

The package also incorporates a number of reform items already introduced separately in the Legislature, including requiring local approval of roundabouts; creating a DOT inspector general; repealing the prevailing wage; requiring a referendum for a local wheel tax; and a full audit of the agency.

Vos reacts

Assembly speaker Robin Vos (R-Rochester) said much reform had already been accomplished but acknowledged there was more work to do.

"Under Gov. (Scott) Walker's leadership, the Department of Transportation has saved more than $1.5 billion through efficiencies since 2011," Vos said. "But there are still reforms that need to be made, especially those pointed out in the legislative audit of the agency."

And the speaker said he agreed with many of the reforms in the new package.

"I agree with the bill's authors that a full repeal of prevailing wage is an essential component of a DOT reform package," he said. "I look forward to working with my colleagues in both chambers to improve the DOT to bring about a more effective and efficient agency."

But Vos threw out a caution, too, hinting that new revenues would still be needed for transportation, even with the reforms enacted.

"It's important to understand that reforms alone won't resolve the transportation funding issue that must be addressed in order to maintain a reliable and safe highway system," he said.

Hutton, one of the co-authors of the package, said the reforms were sweeping.

"It is necessary for any successful business to periodically review its business model to ensure that it is operating in the most efficient way possible," he said. "That same principle exists in government and should apply to the DOT. While some of these reforms suggested in the DOT audit have been implemented, there needs to be a more deliberate effort to execute on those reforms. Taxpayers will be well served as these important reforms are implemented."

Hutton also observed that the bill includes a full repeal of prevailing wage, which he called an artificial rate set by government that contractors are required to pay their workers, often times at inflated wage rates, and that are then passed along in the form of higher taxes to Wisconsin citizens.

Under prevailing wage, the LRB analysis states, laborers, workers, mechanics, and truck drivers employed on the site of certain projects of public works must be paid the prevailing wage rate, as determined by the U.S. Department of Labor and must be paid time-and-a-half overtime if they work more than 10 hours a day and 40 hours a week.

Americans for Prosperity-Wisconsin hailed the measure's transparency and efforts at modernization.

"This common sense reform bill will get the DOT back on the right track while saving Wisconsin taxpayers millions of dollars," AFP-W director Eric Bott said. "Sunshine is the best disinfectant, and by opening up more of the DOT's management and operations to public scrutiny, Wisconsinites can have more confidence that DOT will be serving the needs of the driving and riding public while being responsible stewards of taxpayer money. From providing DOT with more options for project delivery to fully repealing the prevailing wage, the DOT reform bill contains desperately needed reforms."

Richard Moore is the author of The New Bossism of the American Left and can be reached at www.rmmoore1.com.

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