- NEWS
- SPORTS
- BUSINESS
- ENTERTAINMENT
- LIFE
- TRAVEL
- OPINION
How did consultant’s $15 million job morph into $126 million job?
May 7th, 2009, 3:00 am · 23 Comments · posted by Teri Sforza, Register staff writer
It started out as a 5-year deal, not to exceed $15 million. But it grew, and grew, and grew - into a 10-year deal that will cost nearly nine times more.
To date, the Orange County Sanitation District - one of the wealthiest special districts in California - has paid Integrated Program Management Consultants $84 million for its expertise in managing big engineering projects.
And in the coming weeks, the Sanitation District will vote on the next amendment to the “professional design services agreement” with Integrated - pushing the total to about $108 million.
By the time Integrated’s contract expires in 2012, the Sanitation District will have paid the consultant some $126 million for its services, including about $190,000 a year - or some $16,000 a month - for the consultants’ travel, hotel bills, rental cars and cell phones.
The Sanitation District’s former lead engineer - who favored hiring consultant Integrated rather than more staffers, and who helped put the deal together - now works for one of Integrated’s parent companies.
CONSULTANTS ARE MORE EFFICIENT?
It was clear from the beginning that the $15 million figure was going to grow; David A. Ludwin (the lead engineer who went to work for Integrated’s parent), told everyone as much when he asked the Sanitation District to sign off on the consultant contract in 2002.
Why was an increase inevitable? Because the Sanitation District had 20 years’ worth of capital improvement projects on the drawing board, worth some $1.8 billion, Ludwin said in a report to the district’s board of directors. And the district was on the verge of deciding to scrub its sewage even cleaner before pumping it into the ocean - yet another big, expensive project, which would boost capital spending by yet another $583 million.
With some $2.4 billion worth of construction ahead, the district needed experienced project managers to hit the ground running and make it all happen. It could have hired them on as employees - but Ludwin and others recommended the consultant route instead.
The district’s needs were “highly specialized and temporary,” according to the 2002 report. Hiring a consultant, as opposed to hiring individuals, “offers a single point of responsibility, vast and relatively immediate resources, consistency, standardization, flexibility, specialized talent, an integrated team approach, and skills transferred to District staff.”
Four big engineering companies bid on the contract: Black & Veatch , Montgomery Watson Harza, Jacobs Inc., and Integrated Program Management Consultants - a partnership of engineering giants CH2M Hill and Parsons.
EXPERIENCE SPEAKS
Ludwin and the staff recommended Integrated because of its “extensive experience and knowledge in the area of program management.” It had handled a $775 million capital improvement program for San Diego, and a $2 billion water supply program for the Southern Nevada Water Authority. “The Parsons CH2MHill team is also providing integrated program management services similar to those required by the District for the $2.6 Billion Seattle Tacoma Airport Expansion Project,” said Ludwin’s report to the board.
The district’s board of directors - from city councils and water districts that send wastewater there for treatment -embraced his proposal, and every increase that came after it.
Ludwin left the district and joined Integrated’s parent, CH2M Hill, in November 2006. Integrated’s contract was extended through 2012 - not to exceed $76.1 million - in May 2007.
Nothing so unusal there; that sort of cross-pollination happens all the time, officials said. But some former district employees don’t feel the situation is fair, and do a slow burn when they see some contract workers earning nearly $80 per hour - before overhead and profit is figured in - while they made half as much.
BACK TO BID?
So, was this the most cost-efficient way to go? Should the Sanitation District have hired staff engineers to handle the projects? Should the contract have gone back out to bid when it morphed from a $15 million-project into a $100-something million project?
The district answered in writing:
“Finding, hiring, and training the right mix of civil, mechanical and electrical engineers, project managers, inspectors, schedulers, cost estimators, project controls experts, resident engineers, commissioning specialists, etc; training them, and then terminating them when our needs change from year to year wouldn’t have been feasible given the magnitude of our program.
“It would have also been disruptive and inefficient for the District to completely change consultants midstream when dealing with highly complex engineering and construction projects. It would also be costly to rehire and retrain new consultants to continue with the implementation of the CIP (capital improvement) projects and still meet the established schedules, budgets and Full Secondary Treatment Consent Decree Dates as stipulated by EPA.
“IPMC was hired through a competitive request for proposals process which is a qualification-based selection. This process is different from a construction “bid” and is typically used any time we hire an engineering consultant.”
When asked how the contract manage to grow so much, the district said, “The total value of the contract with IPMC is driven by the total number and size of our CIP projects. Resources are allocated to projects based on their schedule, size, complexity, etc. The cost for IPMC resources is included in the individual project budgets.”
Overall, the district says, the program is progressing well. The secondary treatment expansion projects are on schedule for completion by the 2012 deadline, and ”our overall CIP costs are within the total budget.”
The consultant has acutally come in $9 million under budget so far, the district said.
More Watchdog:
- Torture memo’s author may face discipline from state bar
- Kills double at OC’s largest “pro-humane” animal shelter
- Former Garden Grove police chief gets house arrest for embezzlement
- As San Onofre struggles with errors, NRC scrutiny picks up
- Oops. State employees wasted millions, auditor says
- Landlord on hook for up to $44,000 - even though discrimination case was dropped
- Government plan won’t save anyone from disaster, anti-nuke pillmaker says
- AIG investigation goes criminal
- State Bar wouldn’t let guilty lawyer resign
- Free (well, $4.5 million) pills for nuclear neighbors!
- Color of money: Is it racist to ask accountants to have more training?
- Judge stops board from replacing ‘argumentative’ director in Laguna Woods
- 18-seconds missing from jail video taken of jaywalker who claims being beaten
- Manager at addiction center sexually harassed patients, says state report that may be withdrawn
- Two of America’s worst charities call OC home, watchdog says
- Three of OC’s top 10 employers are government agencies
- Oink! Lawmakers fry up $20 million in pork for OC, group says
- OC’s pork projects list
- OC pork breakdown, by lawmaker
- Surprise! Most think taxes are too high, but OK wealth redistribution
- Politicians climb aboard “The Money Train”
- Laguna Woods approves OC’s first mandatory spay-neuter law
- Controversial spay-neuter law heads to Laguna Woods council
- Vote! Should Laguna Woods approve mandatory spay-neuter law?
- Salt for your thyroid in a nuclear emergency: $4.5 million
- Stimulation, indeed: Feds to drop $285 million on new cars
- Transportation czars enjoy $300-a-night hotels while traveling
- White tabs just won’t do! Tustin pays $400 for color-coded tabs at councilwoman’s request
- Surfrider appears to benefit from its toll road fight
- KPCC public radio on ‘low-performing charity’ list
- Defying economic gravity: One OC city rakes in sales tax as others bleed
- Smile! More airborne government cameras snap pictures of your yard
- State moves to revoke embattled lender’s real estate license
- With $150 million in the bank, why is fire authority axing firefighters?
- Former top cop in Garden Grove guilty of embezzlement
- U.S. Postal Service seeks $25 billion federal bailout
- State considers ban on big screen TVs
- Backyard breeders (trying to evade taxes) oppose spay/neuter laws, OC activist says
23 Comments
Leave a Reply
-
ADVERTISEMENT
-
Follow this blog:
-
More from OC Watchdog reports-
ADVERTISEMENT
You can follow this blog: on 
Excellent report. Government run amok.
I actually lobbied the Orange County Sanitation District recently on an issue. The problem there is that the appointed board members are not engaged in scrutinizing and questioning the affairs of the district. This is understandable. The board of directors consists primarily of city council members who are appointed to fill the seats. They have many responsibilities and distractions with their own elected offices. Therefore, the OCSD staff and a few obscure minor board members control what happens. The lack of public accountability is a recipe for fiscal irresponsibility - something that seems to be inherent to generally unknown but often wealthy and powerful special districts in California. Good government reform: eliminate special districts! You can find out who now serves on the OCSD board at this web site: http://www.ocsd.com/about/board_of_directors/board_members.asp
Sewer consultant? Isn’t that just a fancy name for the Roto Rooter guy?
Aw sheet. Clearly I’m in the wrong line of work.
It’s because or CRAP like this we can’t afford to keep schools open.
I wonder where they go for their sponsored meals and what kind of hotels they stay at. I suppose I’ll someday tell my children that this is a great career path to making millions.
Something smells….I thought it was the dirty water. Whoops, apparently it the crap being shoveled by the people in charge of this fiasco.
Integrated Program Management is clearly number 1 in handling all the problems with number 2! Or at least their PR and Accounting Departments are!
Definition of a Consultant -
If you can’t fix the problem, prolong long it for as long as you can and get paid for it!
Definition of a Publically Funded Entity -
Put all the Politicians on top - Because they speak out of both sides of their mouths and can do it with a mouth full of food.
Hire only persons not able to make it in the private sector.
Hire ‘Outside’ Consultants to tell you what your people need to do, which they are not qualified or capable of doing.
After spending outrages amounts of public funds figuring out that your people can’t get the job done- Put the whole thing out for Public Bid. Award the project to the lowest bidder who is not capable of completing the project and in the end pay them 20 times what the project was awarded for….and still have an infrastructure that was built and will be managed poorly.
Welcome to Public Works!
That $80/hour figure is misleading. Generally it costs 2 to 2.5 times an employee’s pay rate to break even. One third is the pay, one third or more is the overhead, and remaining third to less than a third is company profit probably between 10 to 20% for a company like that.
Same is true of your mechanic or anyone who does something that has overhead.
The pay for a position at a billable rate of $80/hr is approximately, 55 - 56 k per year… Which is likely near the rates that the employees that grumble there are getting paid.
Though it sure as heck ought to be rebid periodically to try to filter out all the extra unnessessary costs.
Ed Norton sure has come a long way
Are you kidding me, they bill at between 3 and 500kper year and are horrible workers. They give OCSD the bottom of the barrel because they know management doesn’t care and the Board approves $16million a year for these clowns. Where is the guy in charge of engineering other than filling his Board full of crap and cooked books. I am sure it won’t be long before he works for one of these firms as a pay back. The 200k is just the raw pay for IPMC. How many people at OCSD make that much, work a 4/10 schedule and haven’t seen a wekend or late night ever? Only management! The odacity is staggering.
So here we go with another example of wasted money! And people wonder why Califonia, is so deep in the hole, literally!
TITLE - I WILL TAKE A LIE DETECTOR TEST TO SUPPORT MY COMMENTS:
I worked for OCSD and it’s my opinion, and the opinion of others, that I was laid off from OCSD because I became frustrated, and then complained, about some (not all) of the IPMC work performance. Another OCSD employee would have been laid because of his/her frustration, and complaints, but could not be laid off because they were a permanent employee. Instead of being laid off, this employee was shifted to another OCSD location to avoid conflict with IPMC. It’s my opinion, and the opinion of other past and present OCSD employees, that OCSD supervision/management is afraid to take a stance against IPMC and would rather defend IPMC (out of fear) than to support its’ employees and the tax payer.
I worked approximately 15 hours a week of unpaid overtime because I was a salaried OCSD employee, whereas salaried IPMC employees were paid overtime, and I was laid off from OCSD because I complained about a certain aspect of IPMC work performance (I could have complained about other aspects but didn’t). Like many government agencies it was obvious to me, and others, that OCSD management is not concerned about the tax dollar - but about keeping their lives as simple and trouble free as possible. I still have not ruled out direct or indirect corruption. An example of indirect corruption would be current OCSD managers protecting IPMC for future benefits (like a future job with one of the IPMC A-E’s after the manager retires from OCSD).
Shortly after other OCSD employees found out that I was laid off they encouraged me to petition the general manager for input. I petitioned the GM and got no response from him. I wrote the general manager a detailed 6 page letter explaining what I, and some others, had gone through w/out a word back from the then, and present, OCSD General Manager. The GM apparently just forwarded my letter to the HR manager. The HR manager gave me a falsified explanation as to why I was laid-off. His explanation was a LIE because it was indirect conflict w/what the manager of my department told me was the reason for my lay off. Like many other public and private agencies the OCSD HR department appeared to have a primary goal of protecting the managers – with apparently no interest in protecting the lower than management level employee.
In my 6 page letter, I GAVE EXPLICIT AND ACCURATE EVIDENCE TO THE GM OF IPMC WASTE with no follow-up response. I even told the GM I WOULD TAKE A LIE DETECTOR TEST to support my facts – and no response.
I was working extremely hard, routinely working free OT, and (again) it’s my opinion and the opinion of past, and present, OCSD employees that I was laid off for complaining about certain aspects of IPMC performance. It is my contention that OCSD management, and the GM, is more interested in living simple care free lives then to challenge IPMC and aspects of their work performance.
All I have to say is … KARMA IS A B***H … my boyfriend used to work for OCSD and with these idiots (the consultant)…he reported them for wasting time and cursing worst than a sailor (all their BS) to OCSD. He was then fired for complaining to OCSD about the consultant. After he was fired he met with the General Manager at OCSD and wanted the consultant to be investigated. After the investigation the only reply from the General Manager to my bf was that OCSD did not find anything wrong with consultant. Again I say to OCSD…KARMA IS A B***H!!!!!!!
CORRECTION on previous submitted - response my bf received an EMAIL replying to his complain with the consultant the General Manager did not meet with him nor did the HR rep…I am a witness to what he went through and how this affected our day-to-day life.
you can take your claim to a lawyer. I work for a huge corp. and we have had fired employees come back with lawyers that demand an explination of why the person was fired.
OMG, the lawsuits HR and management have created? The $126million is just the begining. IPMC are just consultants like all the rest but HR made them so much more. The lawyers are drooling over this fiasco.
Yeah right…these consultants are worth every penny….the folks at OCSD are not as skilled or hard-working because they don’t have to be. The consultants on the other hand have to compete out in the private sector. Taxpayers should really open their minds and take the time to learn about all the hard work that goes into keeping what get flushed out of sight and out of mind. Great reporting as usual Register. So provincial.
Pathetic, blame it on a guy whos been gone 3 years. Things have fallen apart because of Jim Heberg, not Dave Ludwin..anyone whos honest will tell you that. Ol duck and weave Heberg, TCB as usual.
We got hosed.
Herberg is useless and always has been. Shake hands and look at himself in the mirror. Sell his mother for a promotion. Too scared to work. Movie set all the way!
So the Sanitation District had twenty years of backlogged projects.Then what the hell have they been doing to earn their money for two decades?Jack squat thats what .And Arnold wants to raise your taxes.I call B.S. on this District and all of Sacramento.
IPMC are taking advantage the San District and their surrounding cities by putting on the airs that they are the experts-with-the-experience. IPMC sits there just like a San District employee and calls on other engineering consults to do their work and make decisions for them so they are clean and cannot be held accountable for any mistakes or wrong decisions. This is funny when you read, that IMPC are the experts in project management and technical knowhow (yeah right). And if you try to give them additional work to do (funny that is why IPMC was hired to work on the backlog of work.) IPMC will either ask for more money or bring more of their crony friends aboard to do this “extra work”. And whenever IPMC gets the gumption to work on something, they usually start by dreaming up new future projects for IPMC staff to “work on” (by first calling out one of the San District’s engineering consultants to work on it for them). Keep that gravy-train-moving. I bet if IPMC had to pay for these IPMC guys and gals to sit at their corporate headquarters and do nothing but complain all day long about the workload they are under and wasting time and if the management of IPMC had to pay these salaries out of their corporate profits and not though the San District revenue of money. They would lay them off just like the thousands of Californians that are out of work and have lost their 401s. And why is IPMC dictating to the San District which new projects are required when it is in their own best interest to keep the work going until 2012 and beyond. What a fair and governmental system of public bid contracts and fair play to all the other private companies that may want to bid on these public works projects. Just let IPMC tell the San District which projects are required and should be done $$$$$$$$$ by IPMC. There has to be a separation of public work projects from private industry - IPMC is getting the work delivered to them on a silver platter by having the inside track on the inner details of San District future work that should do out to public bid first.