http://almanacnews.com/print/story/print/2012/06/06/new-high-speed-rail-ceo-criticized-for-insider-status


Almanac

News - June 6, 2012

New high-speed rail CEO criticized for 'insider' status

by Gennady Sheyner

Jeff Morales, the newly hired CEO of the California High-Speed Rail Authority, is in many ways the polar opposite of his predecessor, Roelof van Ark.

While Mr. van Ark, a former president of international transportation giants Alstom Transportation and Siemens Transportation System, brought international experience and an engineer's perspective to the table, Mr. Morales is a policy insider who knows his way around Sacramento and Washington, D.C.

Mr. Morales, whose hiring the rail authority announced on May 29, has headed the California Department of Transportation and the Chicago Transit Authority. He was part of President Barack Obama's presidential transition team, and served on the staff at the U.S. Department of Transportation and the U.S. Senate.

But what worries some critics of the project is Mr. Morales' latest job as senior vice president and director of strategic initiatives and government relations at Parsons Brinckerhoff, the firm that has been spearheading the beleaguered project. While the rail authority has been getting by with a core staff of about 20 people, Parsons Brinckerhoff had devoted 100 employees to day-to-day management of the colossal project, and had been instrumental in putting together the environmental studies and business plans for the San Francisco-to-Los Angeles rail system.

So while Dan Richards, chair of the rail authority's board of directors, praised Mr. Morales as "exactly the right person to take the helm at this pivotal time," others expressed disappointment that, after an "extensive international search," the rail authority decided to go with the ultimate insider for the top staff position.

State Sen. Doug LaMalfa is among the latter. As soon as Mr. Morales' hiring was announced, the Republican senator released a statement noting the rail authority's $200 million contract with Parsons Brinckerhoff and criticizing the rail authority's choice for the top post.

"The Rail Authority claims it conducted a nation-wide search just to end up with an executive from its biggest contractor?" Sen. LaMalfa asked in a statement. "How can we expect this insider to provide an independent review of the project, when he helped write the plan that's already doubled the cost to taxpayers?

"Moving forward, how are we to know where the Authority stops and Parsons Brinckerhoff begins?" he added.

Elizabeth Alexis, co-founder of the Palo Alto-based rail-watchdog group Californians Advocating Responsible Rail Design, voiced a similar concern. Her group was among the first to criticize the rail authority's ridership projections and cost estimates (the price tag for the system increased from about $43 billion two years ago to $98.1 billion earlier this year before coming down to the current level of $68 billion).

Parsons Brinckerhoff, Ms. Alexis said, was the primary agency responsible for the initial low-balling of the cost estimate. The fact that Mr. Morales served as a high-level executive for the rail authority's highest-paid contractor should disqualify him from the position, she said.

"It's always been a major concern with this relationship. Who is running the show? Is it PB or is it the state of California?" she said. "Now, that's an even more difficult question to answer."

Parsons Brinckerhoff's management of the rail project also faced scrutiny from State Auditor Elaine Howle, who released an audit in April 2010 criticizing the high-speed-rail project for "lax contract management" and "weak oversight."

The report doesn't name Parsons Brinckerhoff, but refers to the firm as "program manager." It notes that the rail authority "is significantly understaffed" and "has delegated significant control to its contractors — especially the entity that manages the program."

The audit uncovered many instances in which the program manager provided inaccurate information to state officials.

In her January follow-up to the 2010 report, Ms. Howle noted that the authority "relies on the Program Manager to provide accurate, consistent, and useful information in its monthly progress report."

"However, we found that these reports were often inaccurate and that at times the Program Manager appeared to misinform the Authority about the speed with which contractors for each region performed tasks."

Ms. Howle's office first flagged these problems in 2010. In its follow-up this year, it learned that these problems still persist. Her audit uncovered more than "50 errors and inconsistencies of various types in three of the Program Manager's monthly reports," which were submitted in December 2010, June 2011 and July 2011.

In some cases, Ms. Howle wrote, the program manager "altered dates to make it appear that the regional contractors would perform work either more or less quickly than they estimated they could in their progress reports."

The program manager also changed the regional contractors' estimated milestones and "percentage-of-progress" data. Of the 12 percentage-of-progress changes, Ms. Howle wrote, "three made it appear that the regional contractor had completed more than it reported and nine made it appear that the regional contractor completed less than it reported in its progress report."

Ms. Howle wrote in the January report that while there are some valid reasons for the discrepancies, "the number and frequency of the changes we noted suggest that the Program Manager misinformed the Authority about the actual status and progress of the construction section."

Her follow-up report states that because the authority has delegated so much control of the project to its contractors, "it may not have the information necessary to make critical decisions about the program's future."

The rail authority's vacancy problem persists to this day. Of the 11 positions listed on the rail authority website's "Executive Staff" directory, seven are vacant (the list does not include the CEO position).

In announcing Mr. Morales' hiring, Mr. Richard called the move "a giant step forward" for the rail project, for which voters approved a $9.95 billion bond in 2008.

"This Board was deeply impressed by his extensive experience in large and complex transportation issues and projects on the local, state, federal and international levels," Mr. Richard said in a statement. "He has a solid track record of creativity and innovation in the delivery of on-time, on-budget infrastructure projects."

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