The House Committee on Transportation met to study the ability of the Texas Department of Transportation (TxDOT) to deliver highway construction projects that reduce congestion and improve mobility, including the Department’s options and limitations related to contracting & make recommendations to improve the Department’s ability to complete complex projects on time and under cost.

This report is intended to give you an overview and highlight of the discussions on the various topics the committee took up. This report is not a verbatim transcript of the hearing; it is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.

James Bass, Executive Director TxDOT

  • Gave an overview of MPPM project, they have separated relationship with the vendor as of March 22
  • Project is looking at 48 different processes within the department
  • As they have looked for off the shelf-commercial product, it turns out there is not one that does what they need to do
  • Working on top 10-12 with their IT provider, that is “in house at TxDOT” and working on a customized solution for that
  • At same time looking at remaining elements of project to see how they might do it
  • Instead of one commercial off the shelf product it will probably look like a Frankenstein – some customized and some off the shelf but it will do everything they need it to do
  • Simmons – so we got rid of people that didn’t do the job? How much money did we pay for them?
    • Bass – paid them just over $5 million for work performed and much was for licenses acquired from vendor
  • Simmons – those are now no value?
    • Bass – correct unless they can use some of those licenses in the 48 process but currently do not think that it will
  • Simmons “One of the challenges that I have with TxDOT doing it internally, uhm, is whether or not were gonna have a system that, gets to what we wan.., that does the evaluation. Sometimes when you…That’s why you have external audits vs internal audits, ok?” How can we be assured you will implementing something rigorous & you putting critical eye on process.
    • Very committed to delivering process and solution  (“we in the administration and (woman coughs over this) are very committed”)
    • Want to clarify that although IT people doing the programming are outsourced vendors, they are doing that and are experts, and we also have IV&V contractor (independent validation and verification) which serves role of ensuring they are getting what they are asking for
    • For the first 10-12 prioritized components looking at early calendar 2019 to go live, still too early to know when phase II or III will be ready
    • What will first 10-12 cover asked Simmons, Design Construction Information System (DCIS), first phase will be replacement for DCIS
  • Simmons – how much will it cost to complete this phase one?
    • Don’t have for first wave but total contract that was canceled was around $32 million and total capital budget project around $64 million
    • Still believes funding available to move forward  and initiate these important processes
    • Simmons – going to have to get it done for now $59 million” not allocating any more money for that
      • Bass – “Correct”
  • Simmons – how does this delay full implementation on legislation implemented previously?
    • It will delay some
  • Pickett – what is in place today? How do we have confidence in project management?
    • Have many IT systems that perform this function but they went live in the 1980’s, so its just more labor intensive and time consuming
  • Pickett – how will this help or hurt individual districts? Does someone still have a thick binder and someone assigned over this?
    • Yes, it looks like a funnel. MPPM is intended to develop better visibility into a project.
  • Pickett and Bass continue to discuss the current process
  • Pickett – bottom line are we keeping to our letting schedule?
    • Yes, just like they have been for the last 30+ years
  • Pickett – when do you hope to have something better than today?
    • First phase in early 2019
  • Pickett – remarks that time frame does not sound right
    • They lost confidence in the developer, decided to end that relationship and start anew
  • Pickett – in regards to project tracker, didn’t have a lot of success, is this related to that?
    • It is not related but it was topic number 3 on discussion today, it is live on the website but it is not final – wants input
  • Pickett – if you show us how to use it, then its already a problem
  • Pickett – discusses his difficulty with using the site
  • Investigation into animal carcass, waiting for TCEQ to complete their investigation and expects their final report in the next few weeks which may impact the TxDOT investigation

Lauren Garduno, Director of Project Planning and Development

  • UTP discussion and overview provided – UTP is 10 year planning document, used to identify project portfolio
  • Goals to balance letting and mixture of projects
  • Funding is formula distributed
  • Simmons – asked if performance-based funding was done, have rules been established
    • Have updated rules to reflect that
  • Simmons – any documentation that shows how commission made decisions on UTP
    • Yes, will get to committee
  • Simmons – asked about distribution
    • Reviews categories and how they are developed in UTP
  • Israel – why split in congestion categories, thinks maybe different terms in regards to regional connectivity, asked about I-35 project
    • In past category 4 was defined as outside urban categories
    • Part of I-35 would be captured in UTP but complete I-35 project is about an $8 billion solution
  • Simmons – discussion on congestion, seems like more should be allocated to congestion, seems like will never get ahead if they don’t
    • If earmarked all incoming new funds towards congestion, it would improve congestion but other categories take a serious hit
    • Simmons – congestion has taken a hit in the metropolitan areas, cost those in his areas to drive miles more than in other areas in the state. This is not sustainable and not even correct.

Bill Hale, Chief Engineer

  • Walked through slides
  • Notes it’s important to be consistent in contract letting
  • Simmons – go back to crosswalk and send him details on how it translated to funding? How money flows? Simmons just trying to get a feel for process
    • Bass – money goes through formulas
  • Wray – relating to a sidewalk, in his area Farm to Market roads being improved but slated to turn into 4 lane roads, how do you resolve? Wants to make sure someone is looking at big picture, not spending safety dollars for what its been allocated to
    • Shoulders typically added for safety reasons, look at adding additional lanes for safety reasons
  • Pickett – wants to ask Bass about design build, limit on number and dollar amount, do you have projects that you recommend?
    • Bass – done so far have been in far and excess of $150 million but some may be less that might make sense
    • Bass – aware can’t do any more than 3 so will not plan since it is a restriction
    • Pickett – doesn’t think they should have either limitation but agency needs to get more details to the committee so they can review
    • Bass – Hale has worked with industry, not reinventing the wheel for each contract and hopefully showing that will give comfort to legislature
  • Pickett – Critical of toll roads, not sure how it impacts relieving congestion
    • Bass – maybe that is your definition of good tolls vs bad tolls, did they bring money with them to build roads
    • Bass – up to legislature to see if we are delivering enough
    • Pickett – with current tools and money can you deliver system?
    • Bass – how do you want the system to operate? No, there is not enough money but may never be if expectation if for free flow of traffic. So, first question is how you want system to operate and then give to TTI to study to come up with cost needed.
    • Pickett – leadership has said pull back on tolling, some projects in state would have never gotten done without tolls but, in his opinion, have gotten a bit overzealous with tolling
    • Pickett – right now feels legislature at opposite ends either for or against tolling with nothing in middle, at event where gas tax discussion came up….
      • Morrison – interrupted noting they had already spent one hour with this panel
    • Pickett – need alternatives on how to use toll process
  • Davis – asked about minority/diversity participation, perhaps something on the form to help point this out

Katharine Teleki, Sunset Advisory Staff

  • Provides a quick overview on Sunset recommendations
  • Focus on low bid contracting for presentation
  • Fiscal year 2018 letting goal is to let about 830 projects about $6 billion which is up from what they reported in the staff report
  • Low bid contracting as a method for TxDOT is part of their “bread and butter” and good at managing high volume of contracts but does not make them immune to challenges
  • General contract management tools were reviewed
  • Noted some delay due to contractor fault
  • Another option in current low bid contracts which allows default
  • TxDOT has lengthy sanctions process – but historically has not used this process but revived it in FY 2015
  • TxDOT has sticks and carrots to incentivize work (like milestone payments)
  • Those tools are great but need to update rules to make sure it can be accessed, have guidance on how to use strategically
  • Use of contracted inspectors also highlighted in report
  • Thompson – asked about repeat awards
    • There are contracts that companies are awarded and can do projects throughout the state
  • Israel – do you have conflict of interest concern regarding contracted inspectors
    • Generally, in industry have one contractor looking at work of another, key question is if oversight is in place
  • Thompson – is process set, process on participation, able to quantify amount spent on projects (states commitment on money spent with various industries), asked for more details on HUB participants
    • TxDOT has a role in setting goals and being proactive in ensuring people participate
    • Made recommendations to streamline application process to know what they qualify for
    • Tamara Schiff – do have amount for 15 regarding historically underutilized businesses (HUB)
    • Schiff – do not have subsets of the HUB categories
    • Thomas – concerned that they are reviewing the agency but these questions were not part of the review, wants staff to go back and review
    • Schiff – believes part of this was addressed in the review
  • Israel – questions around HB 20, reads the report regarding TxDOT attention to contracts
    • Was highlighting issue 3 but they had 2 additional issues which dovetail with HB 20
    • Thinks overall challenge TxDOT faces is scope and size as well as necessary decentralization – believes TxDOT will continue to struggle with communicating on how funding impacts transportation
    • TxDOT has made a lot of good faith efforts, moving to performance-based funding
  • Israel – next step?
    • Compliance review will include looking at statutory provisions and management decision which includes reviewing project tracker, report may come out at beginning of next session
  • Thompson – all for low bid but need to think of economic impact as well, thinks it should be based on performance and get commitments that they will not cause businesses to be put in situations and give them opportunity to provide input
  • Burkett – inquired more about economic considerations and impacts taken into account with various projects
  • Simmons – if bill signed in 2015, is it reasonable for legislature to expect it to be fully implemented
    • Does not think it should take 5 years to implement a bill in general but TxDOT is a large ship to turn

Brian Cassidy, Locke Lord LLP

  • What funding do you have available for effective project delivery is a key question
  • Props 1 & 7 were great but byproduct may be they created a perception is that it is all the money they needed
  • Clearly need to look at alternative funding mechanism, which brings us to CDAs which have brought major infrastructure
  • Another reason to offer CDA is in light of federal legislation, legislation will try to encourage P3s
  • Notes CDA not right for every project but it is for some – shifts risk to private sector
  • Pickett – to be fair, CDA does not need to be a toll project
    • No but they need a revenue source

Bob Lanham, Williams Brother Construction

  • TxDOT continues to work with the community to look for process improvements that can be made
    • Can’t hire back 600 people back yet but have a level of optimism of growth
  • Highlights various process improvements industries TxDOT is working with, meeting with various stakeholders, controls on bidding projects internally, We Build Texas Initiatives etc
  • Simmons – is your company in charge of the company in Temple, Texas
    • No
  • Davis – wants to clarify that quality is key but doesn’t negate that process is constructed to limit participation and inquired further about his role in this process of including a diversity of groups
    • Send them to us