Carcieri Expresses Renewed concerns about DOT Contracts

May 11, 2007 Press Release

Governor Warns that VHB Contract May Be "Tip of the Iceberg"
Notes DOT Has Historically Failed to Question Old Practices

Governor Donald L. Carcieri today expressed renewed concerns about contracts entered into by the Rhode Island Department of Transportation (DOT). The Governor instructed newly appointed and confirmed Director Jerome Williams to immediately begin working with Gerald Aubin to uncover any problems that might exist.

Calling the overhead rate paid by the state on a DOT engineering contract with Vanasse Hangen Brustlin Inc "outrageous," Governor Donald L. Carcieri earlier this week asked Mr. Aubin to lead an inquiry into all state contracts that involve the retention of professional services. Today, the Governor asked Mr. Aubin to focus first contracts entered into by the Department of Transportation.

"There is no doubt that the 145 percent overhead rate being paid by the Department of Transportation on an engineering contract with Vanasse Hangen Brustlin is outrageous," Governor Carcieri said. "New DOT Director Jerry Williams has already reduced that rate to 22.5 percent for the nine administrative staff. He is also working to confirm the interpretation of federal law that appears to require the payment of such an outlandish overhead rate for engineering services on federal contracts. If we can convince the federal government to relax their legal interpretation, we will."

"However, regardless of what the federal law says, and despite the fact that the contract is being funded primarily by federal dollars, there is absolutely no reason we should be squandering these federal resources," Carcieri continued. "As I've said several times before, Rhode Island taxpayers also pay federal taxes. State government should be a good steward of all the tax dollars it spends."

"Unfortunately, Jerry Williams has alerted me that this contract may be just the tip of the iceberg," Carcieri said. "There are apparently other contracts with similar overhead rates. There may also be instances where contracts were being awarded to companies composed of former DOT staff, or to companies related to current DOT personnel. We don't have those answers now, but we will soon."

"I want to get to the bottom of these concerns so we can determine if there are any inappropriate relationships and ensure that all tax dollars are being spent effectively," the Governor said. "As part of that process, we will also determine who was responsible for approving these contracts and why they did so. Depending on what we find, responsible parties will be held accountable."

"As I said several days ago, I am concerned that nobody at the Department of Transportation ever thought to question the overhead rate being paid on the VHB contract," Carcieri continued. "Because that's the way things had always been done in the past, nobody thought to question whether they should continue to be done that way. Allowing historical practice to trump commonsense and good management practice is unacceptable.

"The more I learn, the less satisfied I am in how the Department of Transportation has been managed," Carcieri declared. "These questionable engineering contracting practices didn't start with my administration – this has apparently been a problem for years – but they will definitely end with my administration."

"To that end, I recently appointed Jerry Williams as the new Director of the Department of Transportation because he is an outsider with outstanding management skills," Carcieri said. "Because Jerry doesn't come from the department, he brings a fresh perspective on how that institution has been run for the last several decades. He's focused much more on management than on transportation policy and engineering. His job is to run the Department of Transportation effectively. In fact, in the few short months he's been there, he's already erased the operating deficit that was left to him by his predecessor."

"Finally, while the information coming out of the Department of Transportation poses important challenges, it is good news for Rhode Island taxpayers," Carcieri concluded. "Every new revelation is an opportunity to solve a long hidden problem. My hope is that we can uncover all the problems now so we can correct them going forward."

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