Cost plus contracts shouldn’t be used within cities

We have a “tax and spend and tax again” (TASATA) city government that doesn’t have the word NO in its public vocabulary and needs remedial fiduciary responsibility training. Wooden soldiers of the status quo who our city’s elected appear to be with respect to TASATA and there is zero signs they are inclined to understand there is a disconnect between city policies and Tukwila voters. Next election will tell us how wide that apparent disconnect is, in actuality.

Our city government is mired in its social policies at the apparent expense of scrutiny in city contracting as witness the public safety building renaissance that is forecast to cost about $154 million double what was promised to taxpayers in the $77 million General Obligation Bond. Other contracts including 42nd Avenue renovation is experiencing a contract overrun and there are others that are overrun as witness all the supplementals added thereto over time by council/mayor’s actions.

Apparently, some contractor’s submit low bids to win city contracts, knowing what the council has budgeted, which is often higher than the winning bid, but in the end more often than not all that’s budgeted and even more, some of the time, is paid to the contractor.

This type of contracting should be replaced by incentive type contracting which rewards contractors for contract completion ahead of schedule and/or under budget and penalizes them for exceeding the schedule and/or bid dollars. Cost Plus type public contracts should never be used because they tend to encourage loose contractor control and in the end cost much more and by their very nature would violate fiduciary responsibility of our elected.

For example, the US Military uses cost plus contracts when a quantum leap in technology is sought to produce a superior weapon system and/or when great secrecy is needed to protect the technology. No such city requirements exists and no such cost plus contracts are warranted nor can be justified. Our taxes are already too high without cost plus contracts which would no doubt require more tax hikes.

Our elected won their elections and the responsibility to keep Tukwila taxpayers informed on facts and issues our city faces and the state of its financial condition, including transparency of gross errors or mistakes made by our elected government. Gross errors such as including the $77 million General Obligation Bond sold to taxpayers by our elected, which was basically a promise that it would pay for the Public Safety Plan envisioned by the mayor, seven council members and the staff. We now know that our elected missed that number by about 100 percent. Taxpayers are awaiting an explanation of how our mayor and the whole council made such a gross error that will cost the taxpayers twice as much as promised in taxes, whether or not we’re told, it will likely be over a period twice as long as initially stated (not 20 as promised but 30 to 40 years). That gross mistake does not bear much resemblance to the fiduciary and due diligence we expect of our elected as implied or stated by the candidates when seeking our votes. We are now long awaiting an official explanation from our mayor, barring that the council president’s explanation is required of what went wrong.

The mayor’s column in the Reporter usually covers the progress on projects that are underway in the city, but ignores the rest of the story which is the costs associated therewith. The reason might be it’s a sad story fraught with contract cost overruns and gross errors in estimates with zero studies and computer modeling to confirm what appears to be bids designed to win contracts, which more often than not require council modification (sometimes several) to add cost overrun dollars. The council is considering the idea of cost plus contracts to make supplementals which add dollars to cost overrun contracts, to avoid tough contract negotiations. A very bad idea. Such contracts are often more costly and can be abused by contractors. Not recommended in city contracting due to lack of fiduciary oversight, council control and transparency.

Bill Holstine

Editor’s Note: The “mayor’s column” referenced above is part of the city of Tukwila’s paid advertisement in the Reporter.


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