Point of Beginning

Capitol Gains: Build Highways, Not Bureaucracies.

March 1, 2009
What’s more important, constructing roads or expanding government?



This issue is of major concern for the private geospatial community and will become more prominent later this year as policymakers in our nation’s capital consider reauthorization of the highway and transit bill.

On Sept. 30, 2009, the current federal law authorizing the interstate highway program--formally called the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU)--will expire. Before this date, Congress and the Obama administration must enact an extension of current law or develop a new approach to transportation.

Ever since the original Federal-Aid Highway Act was enacted in 1956, federal law has required the secretary of transportation to “wherever practicable, authorize the use of photogrammetric methods in mapping, and the utilization of commercial enterprise for such services.” The 1956 highway act was amended in the 1995 National Highway System Designation Act to require the secretary to “issue guidance to encourage States to utilize, to the maximum extent practicable, private sector sources for surveying and mapping services for projects” (23 U.S. Code 306).

However, the Federal Highway Administration (FHWA), which manages the national highway program and oversees the state transportation agencies it funds, does not monitor state compliance with current federal law and does not conduct audits or perform any oversight of state transportation agencies to determine whether these programs are being operated in the most efficient and cost-effective manner. Other than a guidance document issued in 1998, FHWA has no other process in place for implementing 23 USC 306.[1] As a result, despite more than 50 years of law, the opposite of the intent of Congress has been realized--many states still operate in-house mapping-related functions.

Duplicated Efforts

State departments of transportation (DOTs) have used federal highway money as well as their own transportation funds to build in-house capabilities in surveying, mapping, engineering and planning. Numerous states have their own crews, equipment and capabilities that duplicate services available from private firms. Some state DOTs, such as those in Florida and Washington state, even market these services outside their own agency and perform work for other state agencies, city and county government offices, and even private organizations in direct competition with the private sector. Washington’s DOT advertises its services on the Internet complete with a price list.

The advances in technology in recent years--particularly digital aerial sensors and LiDAR systems--have brought on an era of significant recapitalization in many states. An informal 2008 survey of private geospatial firms conducted by MAPPS, the association of private geospatial companies, shows that a majority of states have significant in-house photogrammetric compilation operations, about half operate aircraft with cameras, and many have recently bought or are planning to buy new digital aerial sensors (at a cost of $1.5 million each). FHWA is reportedly conducting its own survey through its regional offices.

Given the unitization rates of state DOT equipment, particularly aircraft and aerial cameras/sensors, there is no conceivable way that government ownership and operation of this equipment is economically justified.

The Benefits of Contracting

Congress intended for states to increase the utilization of the private sector not only because a tremendous expertise and capability exists in private firms but also because contracting saves money, more efficiently applies limited transportation resources, creates private-sector jobs and expands each state’s tax base.

When George W. Bush was governor of Texas, a Texas DOT study determined that the department’s in-house staff was utilized to just 36 percent of its total capacity while having a backlog of work in excess of two years. The DOT privatized its photogrammetry and GPS functions by contracting with minority, woman-owned, and large and small businesses and, as a result, was able to reduce costs and focus in-house resources on inherently governmental responsibilities.

A report titled “State DOT Project Delivery Practices: A Comparative Analysis” by Thomas R. Warne, a former head of Utah’s DOT, documented the high costs and inefficiencies of one of the nation’s largest state transportation agencies, the California Department of Transportation (Caltrans), compared to five other large state DOTs.[2] The report pointed out that Caltrans had higher overhead and less efficiency in project management compared to five other states with large transportation budgets: Florida, Georgia, New York, Pennsylvania and Texas. The report noted California’s very low use of outside engineering support: Only 5 percent of state dollars are spent on private-sector engineering compared to an average of 64 percent in all other states.

In 2000, the Reason Foundation found that outsourcing infrastructure-related services, such as engineering, had several benefits: improved delivery of services, innovation in infrastructure projects, the ability to attract specialized outside expertise, more-efficient handling of peak demand compared to traditional public-sector efforts, and cost effectiveness.[3]

Despite such evidence, some state DOTs perform their own engineering, surveying and mapping to meet state highway requirements, thus denying contracting opportunities by private firms. The federal Office of Management and Budget’s Circular A-76 notes that while government agencies must use “competitive sourcing” to determine whether in-house or private providers render the best value to the taxpayers, these requirements do not apply to grant-in-aid programs.[4] Few states have comprehensive competitive sourcing programs of their own so the efficiency of these DOT activities is unknown and untested.

A New Model

In 2004, the Transportation Research Board (TRB) released a report titled “Geospatial Information Infrastructure for Transportation Organizations: Toward a Foundation for Improved Decision Making,”[5] which stated:

The roles and responsibilities of decision-makers must evolve if we are to leverage geospatial information and tools to our best advantage. This entails building and maintaining different relationships and enabling new and creative ways to do business. To accomplish this:

- The role of government should shift from implementer to facilitator/enabler and role model, allowing agencies to become more flexible and responsive; [and]

- Different relationships should be established, both horizontally across functions and vertically across levels of government and the private sector, to ensure that resources are used most effectively.

The committee concluded that to respond to a world in which data and technology are evolving more rapidly than the institutions that use them, a new model for developing and using geospatial information by the transportation system is needed−one based on focused alliances and collaborations among public, private and academic communities.

Dr. Adrian Moore of the Reason Foundation summarized the need for increased utilization of the private sector in transportation when he told Congress: “In many cases government agencies compete with private service providers or have forced private providers out of the market in order to maximize revenue for government services. In such instances the market would provide transportation services if government competition or regulation were removed.” He concluded: “Private sector participation in transportation services will either take the form of market provision or of provision under contract with a government agency in a public-private partnership. Government transportation services should not be allowed to compete with private services, nor should state or local governments ban or restrict private services to reduce competition with government services.”[6]

The nation’s leaders have a choice: Build bureaucracies or build highways. Encouraging private competition rather than feeding government will go a long way toward boosting our economy.


References

1. www.fhwa.dot.gov/programadmin/24mar98.cfm.

2. Infrastructure Delivery Council, “State DOT Project Delivery Practices: A Comparative Analysis,” by Thomas R. Warne, PE, and Thomas G. Schmitt, PE (March 31, 2004), pp. 7-16 (consultant’s report).

3. Reason Foundation, “Infrastructure Outsourcing: Leveraging Concrete, Steel, and Asphalt with Public-private Partnerships,” www.reason.org/ps272.pdf.

4. www.whitehouse.gov/omb/circulars/a076/a76_rev2003.pdf.

5. trb.org/publications/conf/CP31spatialinfo.pdf.

6. Hearing on “How Can We Maximize Private Sector Participation in Transportation?” House Government Reform Subcommittee on Energy Policy, Natural Resources and Regulatory Affairs, U.S. House of Representatives, May 18, 2004.