April 19th, 2011

From the Executive Director: I-15 CORE Audit

Uncategorized, by Catherine Higgins.

The following is guest post written by John Njord, Executive Director of the Utah Department of Transportation.

As many of you are aware, an audit of the I-15 CORE procurement process was released last week. I believe the auditors did an admirable job of analyzing a very complex process and identifying potential improvements.  The difficulty of their job is compounded by their limited expertise in the area of innovative contracting practice.  They admitted to me that the audit was very difficult and challenging.

Auditors are prone to use the terms “might have” “could have” “should have” and “may be.” This was certainly the case in many of their findings in this audit.  Unfortunately, some interpret these terms not as they were intended.  The auditors were quick to point out to me that just because they said something “might have” happened does not mean they think it actually happened.  In their findings, they attempted to merely point out what they considered potential weaknesses.

Before I discuss the actual findings, I want to step back for a moment and recall when we first launched the effort to procure a contractor for the I-15 CORE project. We launched in a direction of innovation and created new processes that extended our ability to stretch precious and limited tax dollars for the benefit of our customers and to deliver as much project as we possibly could. We essentially adopted a new, unique solution to a complex and difficult problem, answering the question of: How do we put a $1.7 billion patch on a $5 billion hole and make it last for 40 plus years?

The approach we used is called Fixed-Price, Best-Design; a process that takes traditional Design-Build to the next level. This approach, and our overall philosophy to quickly adapt and be an innovative agency, exposes our flank to unwarranted criticism and second guessing by those who desire us to be more “traditional.”

Each of you knows how much we push ourselves as an agency to be innovative at every level of a project.  When we decided to be innovative with the I-15 CORE project, we decided to subject ourselves to criticism.  We could have been “traditional” in our approach, but, I am thoroughly convinced the project would not look anything like what we obtained without using innovative techniques.  Lest anyone has forgotten, when we launched this project, we hoped for 14 to 15 miles of new freeway within the budget we had available. Today, 24 miles are being constructed in just 35 months with minimal impact to ongoing traffic.

This mantra of innovation has enabled us to do many incredible things, like moving bridges overnight, or delivering projects in half the time they take in other states.

I doubt the eventual users of this facility will remember or care about the interpretations of the auditors or the subsequent misinterpretations of the audit in the media. I believe this will be a mere footnote in history as our children, grandchildren, and great grandchildren enjoy the benefits of this project for the next 40 years.  The bridges will be designed to last nearly into the next century.  Nobody will remember the discomfort we as an agency have endured to deliver this critically important project; they will however enjoy the economic opportunities and improved quality of life as a result of our work.  In my mind, that makes it all worth it.

Now let us discuss the actual audit. Looking back to last fall, it was during a particularly contentious political campaign that charges of undue influence and score tampering occurred. In response to this, the Governor called for an independent audit of our processes in procuring the I-15 CORE project. The resulting audit documented no evidence of either allegation, a fact that seems conveniently overlooked by many and one that affirms our position from the onset. I can tell you that is because (as we have said for months) neither of those accusations occurred.

What the audit did find was 13 technical areas of suggested improvements. These included ideas like blinding more procurement processes, improving the security of some of the software used as part of the contract procurement, having more rigorous conflict of interest documentation and using manuals that more clearly defined the roles of the people involved in selection. We are in the process of implementing these suggestions.

Another area it pointed to was that we did not have full documentation in hand justifying the settlement amount that was paid to the FSZ team. What we had was their certification, which is the standard practice in the industry. They provided certification that their costs were in excess of the amount paid. Subsequent documentation proves that they actually expended $14.5 million, $1.5 million more than settlement amount.

Going through a months-long audit is never an easy thing for those being audited. We did take from this process some valuable lessons-learned and appreciate the work our team did in providing open access to the auditors. In every project and process we do, we strive to learn as much as we can so that we can do it better next time.

In this situation, while we can make tweaks to our processes that can improve them, I don’t believe the end result to taxpayers would have been better: a 24-mile, 35-month reconstruction project with minimal impacts to the public and delivering 40-year pavement and 75-year bridges.

The project itself stands as a testament to the quality and integrity of our people and our process.

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