Report calls CRC practices into question
Friday, January 20, 2012
Vancouver forensic accountant Tiffany Couch this week called for an “intervention” on the Columbia River Crossing, citing a “severe lack of accountability, transparency and oversight” in a presentation to Washington lawmakers.
Couch asked for a delay in further spending on the more than $3 billion project until leaders change the way they do business. Among the most pressing needs: providing central accounting and financial decision-making, and altering contracting practices, according to a written report that accompanied her presentation Thursday.
The report questioned the process that’s steered the lion’s share of CRC expenditures so far to Portland-based engineering firm David Evans and Associates.
Couch may not have changed many minds over the controversial project. But even as some lawmakers raised questions of their own, Washington State Department of Transportation officials dismissed the report and defended their progress.
“We just disagree with every one of her accusations,” state Secretary of Transportation Paula Hammond said. “If people take the time to listen to the comments and the responses (from Thursday’s meeting), then they’ll have a different view.”
The presentation renewed Couch’s recent role as a prominent voice in the battle over the CRC. That role began in earnest last year, when Vancouver businessman and CRC critic David Madore hired her to dig into the project’s finances.
The report raises familiar concerns that have followed the project in the past — cost overruns and accounting practices among them. But Couch also highlighted specific details about David Evans and Associates’ billing rate, and a markup on sub-consultant costs totaling $1.4 million, according to the report. More than $130 million has been spent on CRC planning and design to date.
Couch stopped short of accusing project leaders of fraud. She did, however, list 33 “red flags” of public sector irregularity, and said the CRC has committed at least 15 of them.
“As a forensic accountant and former government-agency auditor, I am gravely concerned about the management and oversight of taxpayer dollars being spent by the CRC,” Couch wrote in the report. “I am not alone in identifying such grave concerns.”
Couch devoted much of her report to the agreements that have given lead contractor David Evans and Associates most of the project’s expenditures to date. She noted the firm’s hourly rate for overhead (172 percent of salary costs) and for-profit fees (31 percent).
But other industry players said those numbers fall well within what’s considered a normal range. Scott Sawyer, a senior project manager with Olympia-based engineering firm Shea Carr Jewell, said the state’s contract language makes profit margins look larger than they actually are.
Sawyer explained it this way: For-profit fees are reflected as a percentage of direct salary only, not total costs. So once overhead is factored in, the actual profit paid to the firm is about 10 percent of the total bill — not the 31 percent number that might appear on a contract. Government agreements follow strict guidelines in that regard, he added.
“That’s pretty normal,” Sawyer said. “Thirty-one percent is certainly not out of the range.”
Couch’s report also noted a 4 percent markup fee paid to David Evans’ sub-consultants — payments that totaled more than $1.4 million as of June, according to Couch.
The report characterized those charges as “unauthorized,” not written into the firm’s original agreements with the CRC. But CRC spokeswoman Anne Pressentin said the extra charges were authorized when they began, and have since been discontinued.
Reaction to Couch’s presentation ranged all over the map. State Rep. Ann Rivers, R-La Center, may have landed somewhere in the middle.
As for stopping the project now for an investigation, “I’m not at that point yet,” Rivers said. “I think that in the coming week, I’m going to be looking a lot harder at looking into it.”
Rivers called the report “very enlightening,” and said she’d push harder on getting the results of a Washington state audit of the project. Those results are currently due out by February or March, according to WSDOT.
In a project of such huge scale and complexity, at least some errant billing and bookkeeping is inevitable, said Rep. Jim Moeller, D-Vancouver. But to suggest willful wrongdoing is something else entirely, he said.
“I’m not worried that there has been fraud or malfeasance at any step along the way,” Moeller said, adding he feels the project has operated transparently.
Moeller questioned Couch’s objectivity, noting her work is funded by a vocal CRC opponent in Madore. That’s enough to put her credibility in doubt, he said.
“I think that Tiffany is doing the job she was hired to do,” he said. “And that’s stop the project.”
Couch has said her work speaks for itself and is not influenced by her client.
“While my work is funded by a private citizen,” she wrote in this week’s report, “the results of my findings are not a private matter.”
Rep. Ed Orcutt, R-Kalama, said the report reinforced concerns he’s long held about CRC spending and financial management. The project office has performed “very poorly” in some ways, yet continues to receive funding to move forward, he said. The state needs better accountability of how that money is spent, he said.
“I think she raised some very valid points,” Orcutt said. “And I don’t think we got good answers.”
Couch’s presentation in Olympia came on the same day that project officials unveiled how scaled-back, phased plans might look in Oregon. Full plans would replace the Interstate 5 Bridge between Vancouver and Portland, rebuild several freeway interchanges on both sides of the Columbia River and extend light rail into downtown Vancouver.
The project received federal approval last month — a milestone CRC leaders have pointed to as validation of the process to this point.
Reporter Andrea Damewood contributed to this report.
Eric Florip: 360-735-4541; http://twitter.com/col_enviro; email@example.com.