Wednesday, February 03, 2010

NY MTA fails to honestly rate contractors' work, report says

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Outside contractors working on the New York Metropolitan Transportation Authority's biggest projects are routinely given positive evaluations despite mediocre work, in part to preserve business relationships, an investigation by the authority's inspector general has found, the New York Times repots.

A system to evaluate contractors' performance, in place for 12 years, was intended to help the authority keep inadequate contractors from landing future jobs, many of which are worth upward of a million dollars in public funds. But fewer than 5 percent of the 2,579 contractors evaluated between 2006 and 2008 received a grade of marginal, and fewer than 1 percent were graded unsatisfactory, the lowest mark, according to the report, which was released Tuesday. In several instances, evaluators reported feeling pressured by upper management to raise their ratings, apparently to avoid hampering the authority's ability to deal with vendors in the future.

"Managers sometimes allowed what they perceived to be agency ‘business decisions' to override their true assessments of contractor performance," the report found, noting that there is "an institutional reluctance, for a variety of reasons, to rate contractors' work as ‘unsatisfactory,' even when such ratings are the most appropriate."

The authority is constantly under fire for rampant delays and ballooning budgets on its major construction projects, including the Second Avenue subway, which are often handled nearly entirely by private contractors. Jay H. Walder, the authority's chairman, admitted last month that some vendors told him they build an "M.T.A. premium" into their bids, because of the perceived difficulty of working on projects with the authority.

"Too often we have let our contractors slide when they fail to perform, and that is why we have accepted the I.G.'s recommendations and are working to implement them," Walder said in a prepared statement.

The report, issued by Barry L. Kluger, the authority's inspector general, found that the lack of accuracy in the evaluation process led to vendors' receiving contracts worth tens of millions of dollars despite poor past performance.

"Transparency is lost when evaluations are deficient or late, and when vendors are overrated," the report said. Kluger characterized the authority's aversion to assigning low ratings as "a pervasive mindset, amounting to an institutional culture."

In one instance, managers at the Long Island Rail Road waited more than nine months to grade one vendor, DMJM & Harris, as unsatisfactory, after the firm's work on a 2005 environmental consulting contract was deemed deficient. In the interim, that vendor received five more contracts worth nearly $25 million from New York City Transit, Metro-North Railroad, and the authority's bridges and tunnels division; none of those other agencies were aware of any problems with the firm. (More than half of the evaluations at the Long Island Rail Road were filed late between 2006 and 2008.)

In 2006, Siemens, the technology company, contracted with New York City Transit to update subway signals so the signals could communicate with a central control center. An auditor found that the technology installed by the company consistently failed tests or inexplicably went off-line. Under official guidelines, Siemens should have received an unsatisfactory rating. But a top official at New York City Transit instructed managers to instead assign a rating of "marginal," a higher mark, because of business considerations. The official did not want to jeopardize Siemens's ability to work with the agency in the future, the report said, and he apparently was unaware that an unsatisfactory rating does not strictly preclude contractors from bidding on other projects.

A similar rating upgrade occurred with a second Siemens contract in 2007, the report said.

In response to the report's findings, the authority agreed to institute spot checks of the evaluations to ensure accuracy; prohibit the upgrading of unsatisfactory ratings in cases where certain reporting technicalities have not been met; and speed up the submission of the evaluations, among other measures.

But citing legal concerns, the authority declined to introduce a similarly strict evaluation system for subcontractors, who perform about three-quarters of its capital workload. Such a system is already in place at the Port Authority of New York and New Jersey.

"Despite the troubling aspects of what we found, we are encouraged that the MTA accepted all of the major findings in our reports, and has expressed its eagerness to work with us regarding our recommendations," Kluger said. "A number of these meetings have already taken place."

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