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Audit: Port Authority 'dysfunctional'

by ALFONSO A. CASTILLO AND ZACHARY R. DOWDY
February 7, 2012

Photo credit: Pool, Robert Deutsch | The north memorial pool, with 1 World Trade Center under construction at rear. (Sept. 11, 2011)
An audit of the Port Authority Tuesday called for "a top-to-bottom overhaul" of the agency, charging a history of wasteful and inefficient practices contributed to billions of dollars in cost overruns in rebuilding the World Trade Center.

The report by the Chicago-based consulting firm Navigant portrayed the agency as a "challenged and dysfunctional organization" long beset by inconsistent leadership, bureaucratic fiefdoms that lack "effective collaboration," inadequate cost controls and poor management of capital projects.

In a joint statement, Governors Andrew M. Cuomo of New York and Chris Christie of New Jersey -- who demanded the review last August after the authority sharply hiked bridge and tunnel tolls -- said the bi-state agency's "record of historic failure must be reversed."

"We will demand nothing short of the agency's implementation of comprehensive recommendations and reform," they said.

Port Authority chairman David Samson told reporters in a conference call that the agency has already taken steps to correct its course.

"This report itself is, hopefully, the first step in letting everybody know what the problems are," said Samson, who was named a year ago to head its board of commissioners. "The only way we are going to solve the issues is to diagnose them . . . and disclose them."

The 55-page report detailed how several costs have rapidly grown out of control for the agency. That includes the cost of redeveloping the trade center, which was pegged at $11 billion in 2008 and is now estimated at $14.8 billion -- with the potential for an extra billion in further overruns.

"The Port Authority has been consumed with the additional responsibility for the rebuilding of WTC" -- shifting focus from its primary mission to build and maintain transportation infrastructure, said the report. Overruns were worsened by a mandate to open the Sept. 11 memorial by the 10th anniversary of the attacks last year.

The authority should be seeking to recover $1.6 billion spent for work on behalf of other players in trade center development, including New York City, the Metropolitan Transportation Authority and the National September 11 Memorial Foundation.

An MTA spokesman said he had not seen the audit and could not comment on it. Representatives for the city and the memorial did not respond to requests for comment.

The agency's debt ballooned from $9.1 billion in 2001 to $19.5 billion in 2011, and is expected to reach $20.8 billion by the end of this year, creating "a burden for years to come," the report said.

The report criticized compensation policies as more generous than those for state employees in New York and New Jersey. It noted that overtime and other "add-on" compensation inflated the wages of an average employee by more than $20,000 a year.

In addition, 93 percent of the Port Authority's nearly 7,000 employees contribute nothing toward their health plans. Average overall compensation per employee, including benefits, exceeds $143,000 annually, the report said.

The Port Authority Police Benevolent Association declined to comment. A spokesman, Bobby Egbert, said the union hasn't reviewed the audit.

The audit also took the Port Authority to task for promoting employees based largely on seniority "with little evidence of advancement or compensation being tied to performance."

The report noted the Port Authority has had seven executive directors in the past 10 years -- a turnover rate that makes it "difficult for any significant strategic initiatives, goals and objectives to be realized."

Samson said the agency has taken initial measures such as more transparently reporting employee compensation and overtime as well as revoking free E-ZPass privileges from some employees and retirees.

It plans to do more, including a restructuring of management to create more accountability for capital projects and the designation of a single leader for the trade center project. The agency also will seek to require more employees to pay part of their health insurance.

Another report due later this year will include more findings on the authority's management of capital projects.



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