The incident, and Osnos' wonderful article as a whole, made me think about my home state of California, which is preparing to lay the tracks for its own rail system -- a project I've been covering since January 2009, when rail officials hosted their first scoping meeting on the mammoth project. To be sure. California can't compete with China for the scale of corruption, cost overruns and mismanagement. But when it comes to high-speed rail, that's surely not for the lack of effort. The project received a literate vote of confidence from Californians in November 2008 (the vote approved a $9.95 billion bond for the $33.6 billion-at-the-time project). Its progress since then has been a series of missteps, management errors, conflicts of interest, scathing audits, lawsuits, managerial mishaps and souring public opinion. Gov. Jerry Brown sees the San Francisco-to-Los Angeles high-speed-rail system as his transformational "legacy" project (will future generations call him "Great Leap" Brown?). But in recent months, he's had some troubles convincing even his fellow Democrats to share his vision. Despite his party's dominance of the Senate, the bill authorizing roughly $ billion in funding for high-speed rail and other train improvements passed the state Senate by a single vote in July.
The Democrats who were most familiar with the project through committee assignments -- Joe Simitian, Alan Lowenthal and Mark Desaulnier, all voted against the rail bill. Each argued that high-speed rail is a great concept but that the current plan is badly flawed and should be reconsidered. They cited financial uncertainty and second-guessed the plan's key tenets -- including the decision to launch construction in the Central Valley. Simitian, who is concluding his final Senate term, gave an impassioned speech in explaining his "No" vote and rejected the supporters' assumption that the plan should be approved because it will generate jobs. The vote is not on a "vision" but on a specific plan that will cost the state billions of dollars during a fiscally turbulent time. "This is a question of whether or not we generate good jobs with the right plan or the wrong plan," he said.
Supporters, led by Senate President pro Tem Darrell Steinberg, didn't bother with the details. They virtually ignored the plan in front of them and talked about Abraham Lincoln building the Transcontinental Railroad, California's can-do spirit and construction of Golden Gate Bridge. If any of them had actually read the transformational bill they were about to vote on, they did a great job hiding the fact.
"In this era of term limits, how many chances do we have to vote for something this important and long-lasting?" Steinberg asked in a question that could just as easily refer to the world's biggest coal factory or a space station pegged for Saturn.
China's rail system is one of many invoked by California's rail officials to promote the state's own push. We are behind and we need to catch up, the argument goes. The California High-Speer Rail Authority's former CEO Roelof van Ark often stressed the agency's desire to learn from foreign partners and had traveled to China to solicit investments for the Golden State's fledgling efforts. So the Senate vote in July, and California's project as a whole, rarely strayed from my mind while I was reading Osnos' description of Great Leap Liu's "important and long-lasting" legacy project:
"China's most famous public-works project was an ecosystem almost perfectly hospitable to corruption -- opaque, unsupervised, and overflowing with cash, especially after the government announced a stimulus to mitigate the effects of the 2008 global financial crisis. It boosted funding for railway projects to more than a hundred billion dollars in 2010. In some cases, the bidding period was truncated from five days to 13 hours. In others, the bids were mere theatre, because construction had already begun. Cash was known to vanish, in one instance, seventy-eight million dollars that had been set aside to compensate people whose homes had been demolished to make way for railroad tracks disappeared. Middlemen expected cuts of between one and six per cent."
The problems with California's rail project are different from those in China, but the difference is mostly in degree. The parallels, meanwhile are jarring. The oversight in California is virtually nonexistent with a few dozen state staffers managing a team of more than a thousand consultants, who manage teams of subcontractors, who manage their own subcontractors. This problem has been flagged repeatedly by State Auditor Elaine Howle, who has repeatedly raised red flags about the project's weak oversight, including a slew improprieties carried out by the main project manager, the firm Parsons Brinckerhoff.
Howle flagged several suspicious rail expenditures, including $46,000 spent on furniture for a program manager. The payment was "based on an oral agreement, despite the fact that its written contract expressly states that oral agreements not incorporated in the written contract are not binding," her audit stated (the written contract required the manager "provide its own furniture, equipment and systems." The audit also noted a case in which the rail authority paid a regional contractor more than $194,000 to subcontract for tasks that were not included in the work plan -- one of many such transactions. Hardly the stuff that inspires confidence.
Howle is far from the only impartial official to blast the project. The Legislative Analyst's Office called the rail authority's decision to launch the line in Central Valley a "big gamble" based on "faulty assumptions" and concluded that the governance structure for the project "is too weak to ensure that this mega-project is coordinated and managed effectively." The office recommended not approving the bond money until these problems are corrected. The majority in the Legislature ignored this recommendation because, as the hard-to-refute argument goes, Lincoln built the Transcontinental Railroad.
Eric Thronson, who wrote the LAO report, also noted that the rail authority has "considerable autonomy" and that this "does
not ensure that the board keeps the overall best interests of the state
in mind as it makes critical decisions about the project."
"This relative lack of accountability to either the executive or legislative branches creates a risk that the board will pursue its primary mission — construction of the statewide high-speed rail system — without sufficient regard to other state considerations, such as state fiscal concerns," he wrote.
Howle voiced a similar sentiment when she wrote in her audit:
"The Authority's current organizational structure places the largest portion of the program's planning, construction, and most importantly, oversight in the hands of contractors who may not have the best interests of the State as their primary motivation," the report states. "As a result, the Authority lacks assurance that the program is implemented in a way that best serves the public."
The rail authority responded in May with a face-palm of a hiring decision, when it hired one of its main contractor to manage the entire project as the agency's CEO. The decision to name name Jeff Morales, a vice president at PB, as its new CEO earlier this year did little to comfort the project's growing swell of critics. For a project in which contractors have been in charge since Day One, the state's decision to give its main contractor the power to officially call all the shots can either be seen as a step toward greater transparency or toward giving California's most glaring conflict on interest the state's official seal of approval.
It's possible that things will turn around and that the badly botched $60 billion project (up from the original estimate of $33 billion in 2008) will become the envy of the rest of America. It's also possible that Central Valley will have a shiny new set of tracks for its moderate-speed trains, footed by the rest of the state at a time when teachers are getting canned and state parks are shuttering. It's possible that the $50 billion dollars that the state still needs for the project will magically materialize. And it's also possible that it won't, that the largest infrastructure project in California's history will die a low-speed death and that Legislators will start quoting Abraham Lincoln as they advocate for Brown's next legacy project. Water tunnels anyone?
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