Low-Bid to No-Bid

Don't have a clue how DART could bust its budget by a billion bucks? Here's one.

Aha. Finally got my documents from Dallas Area Regional Transit. Think I may be on to something.

Last November DART announced it was suddenly almost a billion dollars short in its budget for new rail line construction. DART gets its money from you. It is committed to building new lines. So you, the taxpayer, will have to come up with the additional billion dollars for those lines.

The question is why.

DART doesn't put its biggest construction contracts out for bid anymore. Could that be why its construction costs have doubled?
Eva Watson
DART doesn't put its biggest construction contracts out for bid anymore. Could that be why its construction costs have doubled?

Ever since revealing the shortfall, DART has been sort of shrugging its shoulders and saying, "Well, everything's been going up." But everything's been going up for a long time. How could a reasonably prudent management fail to notice a dramatic spike in construction costs until the last minute?

Prices didn't go up overnight. And anyway, this is a billion-dollar shortfall in what was supposed to have been a billion-dollar budget. A 100 percent goof. Oops. Until November, DART thought it could build its new lines for $1 billion. All of a sudden it's $2 billion.

Prices doubled? Suddenly? Now I think I have documents that open a window on another possible explanation.

DART is a regional agency. It's not part of the city or the county or the state or anything else. It belongs to itself. It spends $1.1 billion a year. A third of that is spent to run rail and bus lines. The rest pays to build new rail lines.

The documents I now have show a possible explanation for the sudden billion-dollar budget boo-boo within DART's own contracting process, apart and distinct from rising construction costs in the world market.

Basically it's this: For its biggest contracts with general contractors for the construction of new rail lines, DART has virtually abandoned or at least greatly diluted the time-honored process of competitive bidding. Instead, the process of awarding contract work at DART is carried out behind closed doors in a politically charged context.

According to these documents, on April 12, 2005, a small Dallas firm called Carcon Industries, described on its own Web site as an "Hispanic Woman-Owned General Contractor," won a $5.6 million contract for "pre-construction services" and "communications and signals work" on a new DART rail line from Victory Station downtown to just southwest of Love Field.

DART spokesman Morgan Lyons told me that this $5.6 million contract was competitively bid. DART announced it wanted companies to give their best price for such and such an amount of work. Then DART took the lowest bid from a company it believed could do the job right.

Carcon Industries won that job straight-up the honest way, by bidding. Good on them. But here's the amazing part. Fourteen months later on June 13, 2006, DART granted Carcon two "contract modifications," which were not competitively bid, according to Lyons.

One "modification" increased Carcon's contract by $18 million. More than 300 percent. The other one? It increased Carcon's contract by $364 million.


A local firm starts out with a relatively modest contract for $5.6 million. A year later DART increases that contract amount by 690 percent. For all but the first small bite, there was no competitive bidding!

I'm not saying Carcon got money for nothing. Absolutely not. They got money for work. But in order to get $387.6 million worth of work, Carcon only had to bid on $5.6 million worth of work.

The CEO of Carcon, Arcilia Acosta, was named one of the "Most Powerful and Influential Women in Texas" in 2008 by Texas Diversity Magazine. She is a contributor to both Republican and Democratic campaigns and the wife of City of Dallas employee Kevin Acosta.

I'm sure she's very competent. But in a year and two months, she goes not just from zero to 60 but from zero to 600 as a DART contractor.

And that was only the beginning. In 2006 Carcon's contract went up another $5.6 million, then another $36.5 million, then another $1.8 million, all through "contract modifications."

The year 2007 was lean. Acosta only got contract modifications for $600,000 and $10 million. This year she picked up some more. At present, as far as I can tell, her original $5.6 million contract is now worth $429.2 million—a 770 percent increase in three years.

And she only had to bid on the first $5.6 million.

Lyons has an explanation for it. It's all done according to an arrangement at DART called "construction manager/general contractor" or CM/GC, which DART adopted several years ago. The intent was to bring a general contractor in early during the design process, instead of after design had been completed. That way the general contractor was supposed to be more committed to the design and less likely to come up with last-minute price increases based on unforeseen problems.

The problem with this system, it seems to me, is that DART winds up married to a general contractor before the overwhelming lion's share of the work has been bid. In fact, there is no bidding. All the major work, the hundreds of millions of dollars in work, is handled with contract "modifications." Lyons told me these amounts are "negotiated as part of the CM/GC contract, which was competitively bid."

Yeah. The $5.6 million worth of work was competitively bid. But how does that get you competitive bidding or the equivalent on the remaining $423.6 million worth of work? There is no bidding. Instead, that work is all awarded according to closed-door negotiations between DART staff and the general contractor.

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