Briefing Report: Peering Behind The Veil

Why Real Peer Review is Essential for Mega-Projects
Wednesday, January 16, 2013

Over the next several decades, California taxpayers will be asked to invest hundreds of billions of dollars in the development of critical infrastructure projects to ensure the continued economic viability of the state and the prosperity of its citizens.  These projects, from the controversial high-speed rail system to the development of a water conveyance system through the Sacramento-San Joaquin Delta, will all involve complex engineering problems, logistical challenges and precise planning.  These projects will take decades in the planning and development, and billions in state, local, and federal funds, and will require a great deal of public support, legislative oversight and most of all, trust.  Unfortunately, mega-projects like these are virtually never completed on time or within projected budgets, so trust is often in short supply.  These problems have come to light in California’s current mega-project, the eastern span of the Bay Bridge, as the result of over a year of reports from the Sacramento Bee and ongoing oversight hearings by the Senate Transportation & Housing Committee. The consensus in these hearings is that California must develop a far more rigorous, public and independent peer review standard before it launches into the commitment of hundreds of billions in public funds.

The Bay Bridge: Those who don’t learn from history are doomed to repeat it

On October 17, 1989, the Loma Prieta Earthquake struck the San Francisco Bay Area.   The damage caused to the Bay Area toll bridges highlighted the seismic vulnerability of the entire region, but particularly of the Bay Bridge.  In the 23 intervening years, Caltrans has struggled through one of the most convoluted design processes in its history, massive resistance from local, state and federal interests as diverse as the City of Oakland, numerous environmental groups, and the U.S. Navy.  In addition, the replacement span went from being a utilitarian project to a signature span replete with expensive artistic design flourishes.  Other add-ons have included a bike lane to nowhere that represents the only capacity expansion on the entire facility.  In response to the complexity of the process and the design amendments, the overall cost of the structure has ballooned from an estimated $1.36 billion to a total price tag of $6.4 billion today.

Another issue, aside from the ballooning budget and the laundry list of design add-ons, has been the pernicious rumors of problems with the safety of the design and engineering, despite the fact that every expert involved in the project has assured the Legislature that the bridge is the safest and most over-designed facility ever constructed in the state.

A November 2011 Sacramento Bee article raised concerns regarding the adequacy of Caltrans’ construction inspections of the foundations of bridges, including the foundation for the new east span of the Bay Bridge.  The article alleged that a Caltrans inspection technician had falsified inspection data, destroyed raw data from inspections, and improperly checked the calibration of instruments used to perform the test. The article further alleges that discovery of these issues was covered up at Caltrans.  These concerns prompted Caltrans to commission the Seismic Safety Peer Review Panel to review all the records regarding the design, quality assurance, and safety.  The evaluation concluded that the structure is safe, a conclusion that was echoed by the Federal Highway Administration (FHWA).

However, after the exhaustive review, concerns remained, as was reported in the Sacramento Bee on March 25, 2012.  Instead of accepting the decades of specific expertise from engineers in the top of their field, the media instead questioned their conclusions because of concerns about the panelists’ independence.  According to the article, several panelists had financial ties with Caltrans or its contractors, and several also helped select the Bay Bridge design.  The article concluded that these conflicts could affect the panel’s judgment.

The problems unwittingly unearthed by the Sacramento Bee have less to do with the safety of the bridge -- every Californian has a right to expect the bridge and the safety measures imposed on it to be impeccable, and virtually every expert in the field has concluded the bridge is not only safe, but the safest bridge ever constructed.  Instead, the articles highlight the fact that Caltrans, and by extension, state government, has lost the confidence of the people it serves.

Mega-Project Sticker Shock

In the next several decades, California is set to embark on several mega-projects whose size and complexity will dwarf the Bay Bridge.  These projects include the California High-Speed Rail system whose first iteration will traverse the state from Anaheim to San Francisco; a water conveyance system that will provide water through tunnels under the Sacramento San Joaquin River Delta from Northern California to Southern California; a highway tunnel under South Pasadena and Pasadena linking the I-710 and I-210 highways; and a truck lane on the Long Beach Freeway.  Each of these projects will involve tens to hundreds of billions in public money to construct. They will entail decades of effort, hundreds of constituencies, interest groups for and against, and a host of accommodations in order to develop the political support necessary to overcome the built-in opposition so prevalent in California to the development of any significant infrastructure project.

The development of mega-projects historically has been plagued with problems.  In fact, the problems have been so consistent, that it has become its own area of study.  The conclusions drawn by these studies are that good data is virtually impossible to come by when debating mega-projects.  Advocates and opponents typically produce systematically, and significantly deceptive data.  Cost-benefit analysis is often skewed in order to provide support for the project.  In fact, academics charged with the study of these projects conclude that the incentives to exaggerate the benefits of projects is so strong and the disincentives so weak, that the people left to determine the wisdom of investing public funds simply do not have a clear picture of what they are being asked to support.

The conventional approach to mega-projects puts all the major risks—of cost overruns and of inadequate traffic—onto the shoulders of the taxpayers. If somebody else is picking up the tab, neither government officials nor private contractors have any real incentives to anticipate the kinds of things that will lead to problems. Not only is this inherently undesirable, but a system set up in this way is likely to increase the risk and total cost of projects.  These results were borne out in the Big Dig in Boston, the Bay Bridge, and virtually every other mega-project on record.

Earning the public trust through independent peer review

Before California embarks on these monumental infrastructure investments, we have to do something about the credibility problem that the recent Bay Bridge coverage has highlighted.  Anyone who sat through the countless debates and hearings on high-speed rail over the years knows that there is a great deal of distrust among the voters and among decision-makers about the credibility of the people tasked with giving objective data on the project.  Until we address these concerns, we will never be able to develop the support necessary to move forward.

For legislators and the governor to have the tools to make good decisions and to convince the voters to spend their tax dollars, a system must be put into place to ensure that public projects and planning are based on solid documentation and data.

The Senate Transportation & Housing Committee has been working on this very issue over the interim, and one positive result has been a commitment to developing a bipartisan solution.

Conclusion:  Peer Review, a good first step

The first step toward regaining the public’s trust is to take project development and planning out of the shadows of monolithic state bureaucracies and bring it out into the light of public review and independent analysis.  The first step in achieving that is the development of a system of peer review.

  1. Independence: In order for public agencies to develop trust among the voters and with the Legislature, there must be an independent body whose one job is to oversee the data used in advocating projects to ensure that the information presented has stood rigorous analysis and represents the best available information.

    The peer review panels cannot be a part of the project team, and they cannot be hand-picked by the proponents of the project.

    In addition, given the intense political pressure and money involved in the development of these projects, the peer review panel should not have a significant compensation for its work, and should be shielded from retribution if the result of the analysis is not in keeping with prevailing attitudes about a particular project.

  1. Access to information: The peer review panel, and to a lesser extent the public at large, should have access to any and all data it needs in order to undertake an exhaustive analysis.  Using the history of projects like the Bay Bridge, or the high-speed rail, the reticence of project sponsors to share data with a review panel is an issue to consider.  It may be necessary to give an independent peer review entity some sort of authority to demand documents if they are not forthcoming, but precisely what power, or how to ensure the free flow of information is something that should be at the top of the Legislature’s mind as it considers the development of a more cohesive peer review requirement.

  1. Conflict of Interest: Given the nature of mega-projects and the limited number of experts with experience in these types of projects, a special conflict of interest disclosure form, like the statement of economic interest Form 700 that is filed by other public officials, should be developed that documents any and all potential conflicts that the peer review team might have, including former connections with the consultants on the project or with Caltrans.  These documents should be filed under penalty of perjury to ensure their accuracy.

  1. Transparency: Although the complexity of infrastructure projects precludes allowing direct public access to all meetings between contractors and the peer review panel, particularly when discussing proprietary information, to the extent possible, the process should be open and transparent to ensure that the public and any group with a vital interest in the process has a forum to discuss potential concerns with the data, the project or the process.  At minimum, this should mean that meetings have an agenda and minutes are available for public review.

Implementing these first steps is hardly a solution, but it will begin to provide a scientific approach to the development of planning documents that will give lawmakers the ability to assess the wisdom of moving forward and will give taxpayers the ability to see for themselves if projects are worth the money. 

 

 

For more information on this report or other Transportation issues, contact Ted Morley, Senate Republican Office of Policy at 916/651-1501.