Audit Report on the Department of Transportation’s Management and Procurement of the Brooklyn Bridge Rehabilitation Contract No. 6

Executive Summary

This audit was performed to assess the New York City Department of Transportation’s (DOT’s) procurement of the Brooklyn Bridge Rehabilitation of Approach Spans and Ramps and Painting of the Entire Bridge contract (Contract No. 20100016889 or Contract No. 6) including analyses of approval processes for change orders and Time and Material (T&M) payments for change orders.

To maintain the transportation infrastructure critical to the economic vitality and quality of life of New York City (City) residents, between 1980 and 2017, DOT has spent approximately $942 million on major re-construction projects of the Brooklyn Bridge. Over $600 million of this was for work performed under Contract No. 6 (the Contract), which is the focus of this audit. The scope of work covered by the Contract included rehabilitation, repair, and re-striping of the ramps and approaches to the Brooklyn Bridge, seismic upgrades, and repainting of the entire bridge.

Within DOT, the Division of Bridges, Capital Design & Construction Bureau’s East River Bridges Section is responsible for all rehabilitation/reconstruction work on the East River bridges. DOT contracted with design consultant URS Corporation (URS) to prepare the project design, the engineer’s estimate (or contract estimate), and the bid analysis. For construction administration, DOT contracted with a Resident Engineering and Inspection (REI) services consultant (Greenman-Pedersen, Inc.) who worked as a project manager at the site, representing DOT. A DOT Engineer-in-Charge (EIC) oversaw and approved the REI consultant’s work. For processing of payments and change order (CO) requests, additional layers of reviews and approvals were in place, including by DOT’s Engineering Audit Bureau (EAB) and Agency Chief Contracting Officer (ACCO). DOT’s Fiscal Affairs division was responsible for administering and processing project payment requests.

DOT awarded the contract to sole bidder Skanska Koch (Skanska) at the proposed cost of $508 million which was 19.5% higher than DOT’s engineer’s estimate of $425 million. The initial term of the contract was from January 2010 to April 2014, but due to additional work and delays, it was extended until January 2017. The original contract amount of $508 million was revised to $657 million, of which $322 million was funded by the City and $335 million was federally funded.

Audit Findings and Conclusion

DOT generally complied with federal, State, City and its internal requirements when procuring and managing Contract No. 6. However, certain weaknesses were found in DOT’s internal controls that resulted in inefficient use of funds and reflected a lack of transparency and accountability in some of the agency’s public procurement and contract administration processes. The auditors found that DOT accepted an inadequate bid analysis and did not require a revision of the engineer’s estimate as necessitated by New York State Department of Transportation (SDOT) Procedure Code 7.1-5 (2007), which stipulates various procedures and specific analyses for cases when only a single bid is received and/or for contract estimates that exceed $5 million. DOT generally attributed its decision not to have URS revise the engineer’s estimate to an urgent need to award the contract, based on the conditions of the bridge at that time.

The audit also found weaknesses in DOT’s change order and payment processes. Specifically, two schedule acceleration change orders totaling $4 million were inadequately supported, and 5 additional change orders totaling $1,853,979 were inappropriately approved, including $15,508 in disallowable charges.

Further, DOT’s REI, EIC and EAB did not consistently follow DOT’s Standard Procedure for Time and Material Processing and did not exercise adequate due diligence during review and processing of payment requests and supporting documentation. As a result, DOT approved payment requests that included erroneous Federal and State Unemployment Tax Act (FUTA/SUTA) charges, unsupported Workers’ Compensation charges, and labor rates inconsistent with relevant certified payrolls and without explanation. Weaknesses in the payment approval process resulted in overpayments to contractors, totaling $52,228 in disallowable charges.

Audit Recommendations

This report makes 17 recommendations to DOT that will help the agency improve its internal controls over its public procurement and contract administration processes and ensure transparency and accountability. These appear in the body of this report.

Agency Response

In its written response, DOT agreed with eight of the 17 recommendations, partially agreed with five, and disagreed with four.