Audit Reveals Abuse in Highway Contracting

February 19, 2009

Some contractors who design and build the nation’s highways wrongly charged taxpayers $73 million for ballooning executive compensation, lavish perks and other unallowable expenses, according to an article by Robert O’Harrow Jr. in last Saturday’s Washington Post.

One firm alone charged $950,000 in unallowable costs, included a political contribution, spa resort bills and alcohol. The auditors estimate that in 2003, executives at design and engineering firms with highway contracts overpaid themselves by as much as $73 million.

Contractors also charged federal and state governments for sporting events, luxury cars, and golf shirts, according to a report by the inspector general of the Department of Transportation. The Post reports that contracting out failed on numerous levels, with design and engineering contractors being “generally hired without competitive bids” and those contractors sometimes hiring “accountants that were not qualified to perform the reviews required by state and federal regulations. In many cases, they 'hired firms with whom they had existing relationships.'” With the nation’s economy in tatters, we cannot afford the fraud and abuse that this report indicates is rampant in contracting out essential government services. After decades of government experiments with contracting out, we now know that the private delivery of our vital public services does not work. Contracting out often results in higher costs, poorer service, increased opportunities for corruption and diminished government flexibility, control and accountability. Contractors who design and build our nation’s highways have illustrated why our vital public services shouldn’t be privatized.

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