Report No. 2008-58
September 2008
Complete Audit Report
The following report is our audit of Metro (St. Louis).
Metro provides public transportation services to the Metropolitan St. Louis area including light rail, bus and demand response services. In addition, Metro operates the tram system for the Gateway Arch, the Arch Parking Garage, the Gateway Arch Riverboats, and the St. Louis Downtown Airport. Metro began construction of the MetroLink light rail system in the late 1980's and opened the original 17 mile stretch from Lambert International Airport to downtown St. Louis in 1993.
The Cross County Extension project was the result of a regional transportation planning process conducted by the East-West Gateway Council of Governments and was made part of the regional transportation improvement plan. This corridor had been identified as a "tier 1" priority extension in 1991. In 1999, the East-West Gateway Board selected the preferred alignment and conceptual design for the Cross County Extension Project and estimated the project cost would be $404 million in constant 1999 dollars, or $471.3 million in 2005 dollars. The reference to 2005 dollars was used because that was the projected year of completion. The East-West Gateway Board determined that the Project would be funded by the regional Proposition M sales tax. Federal participation was not a consideration at that time as no federal funds would be available for that purpose for several years. In May 2000, Metro hired the Cross County Collaborative (CCC), a joint venture of four engineering companies, to perform design, project management, and start-up services for the project. This project extended the Metro Link system 8.2 miles west and south from the existing Forest Park Station running west through Clayton and south or southeast along Interstate 170 to Lansdowne Avenue in Shrewsbury, Missouri.
The financial impact of the Cross County Extension Project has placed numerous burdens on Metro's operating budgets for future years. These burdens could significantly impact the operations of Metro and the users of their services. Metro did not control the cost of the Cross County Extension Project and now faces significant funding shortages. Metro did not ensure the final design of the project prepared by the CCC was substantially complete and free of errors and omissions before proceeding with solicitation of construction bids. Metro also (1) did not retain the services of a project management oversight consultant prior to the completion of the final design, (2) did not ensure utility relocation design work was completed timely and did not ensure utility relocation work was coordinated with construction work, (3) did not follow federal guidance by requesting lump sum bids, and (4) issued bid documents that contained conflicting provisions regarding the contractors' responsibility for excavation of rock and utility relocation. As a result, the final estimated cost of the project, $686 million, exceeded the original project budget of $550 million by about $136 million.
Through April 2008, 1,636 construction change orders totaling about $147 million had been approved. Metro did not always require a record of negotiations to be maintained when processing change orders and approved some change orders containing questionable items. Metro required aggressive work completion schedules that included short periods of time between the completion of the construction of the track bed and start dates for trackwork and rail systems. Metro, in response to problems encountered during construction, authorized change orders for acceleration of the remaining work by contractors that included significant amounts for premium time and inefficiencies to avoid reimbursing contractors for additional delays.
Metro did not ensure the project change order control system for the Cross County Extension Project was properly utilized, and did not require the cause of the change to be identified and recorded through the use of reason codes as change orders were processed. Metro did not perform any analysis of the reason codes that may have resulted in an earlier identification of significant and developing problems on the project. Federal guidelines recommend the use of reason codes within the project change order control system.
As the project was being designed and built, entities including several local governments, the Missouri Department of Transportation, and Washington University requested design changes and entered into funding agreements, referred to as betterments, to compensate Metro for some or all of the additional project costs. The audit made recommendations to ensure agreements are written, specify the parties responsible for cost overruns, establish payment schedules, and for Metro to continue negotiation with entities regarding unrecovered costs.
The Metro Board of Commissioners approved and paid bonuses, executive stipends, severance payments, and retroactive raises since 2003 totaling at least $704,600 to three executive employees who reported directly to the board. The board also approved one time economic bonuses totaling over $810,000 and granted retroactive pay increases totaling over $166,000 for salaried employees. In addition, retention incentives totaling $145,460 were made to 14 employees of the engineering division without explicit approval of the board. The practices of providing these types of additional compensation payments are unusual and questionable in most government agencies. In addition, these practices may violate Article V of the interstate compact under which Metro was established.
We also noted concerns regarding Metro's compliance with its open meetings and records policies, review of invoices for legal and professional services, and questioned their practices allowing certain types of expenditures.
Complete Audit Report
Missouri State Auditor's Office
moaudit@auditor.mo.gov
