Monday, June 29, 2009

"Shed a tear for the good ol’ days of risk and reward. "

Texas - Where you can win for losing . . . if you are a tollroad bidder


Copyright 2009

If you are like me, you are probably feeling nostalgic for the good ol’ days when private was private and public was public. But those two are now getting all mixed together in places like Texas, where you would have thought they knew the difference between the two - and that mixing the two up is to bad effect. I guess it's now the Lame Star State.

Those of you who are old enough will recall that the private sector used to be a place full of the entrepreneurial spirit. Risk and reward. Free market spirits would take their good idea to the market place, where it would either sink or swim, lose money or make a barrel full of money. And that was what made it exciting to be an entrepreneur.

The public sector was a place where good souls who wanted to promote public ends and didn’t know their balance sheets from their business plan went to eke out life of a salary. No great financial risk, but no great financial reward either.

But then, in the 1980's things started to get all mixed up. Suddenly being a civil servant was full of risk. You might get your pay . . . and you just might not if Congress and the President decided to have a hissy fit over the budget or other issues but the budget was where they slugged it out.

But if there was one place where you could be sure they knew about risk and reward and public versus private it was surely Texas.

But no more. For “entrepreneurs” (who are now scarcely worthy of the name) who bid on a Texas tollroad there is no risk. At worse they walk away with a six figure consolation prize. Well, that’s enough to make it almost worthwhile to through something together just to see how it all plays out.

It’s in the new bill signed by Texas Governor Rick Perry.

Also on Friday, Governor Perry signed Senate Bill 882 into law. This measure allows TxDOT to pay amounts "in excess of $250,000" to design-build firms that submit unsuccessful bids for major toll road projects.

At the same time, he vetoed a bill to ban the state’s $10.5 million ad campaign promoting highway tolling.

Taxpayers will foot the bill for efforts to promote the tolling of roads throughout Texas after Governor Rick Perry (R) vetoed legislation that would have reined in public relations efforts at the Texas Department of Transportation (TxDOT). Only one member of the entire legislature voted against the proposed bill that would have amended existing law to clarify that pro-tolling advertising campaigns could no longer be bankrolled with state funds.

"This section does not authorize the department to engage in marketing, advertising, or other activities for the purpose of influencing public opinion about the use of toll roads or the use of tolls as a financial mechanism," House Bill 2142 stated.

In one year, TxDOT spent $10.5 million on 130 public relations and government affairs staff, including a full-time lobbyist. The agency also created a special report designed to convince the US Congress to hand TxDOT the authority to toll existing freeways (view report). The group Texans United for Reform and Freedom (TURF) found the lobbying campaign so outrageous that it filed a lawsuit to stop the effort. The suit was put on hold after it appeared that the legislature had addressed the issue.

And where will those dollars from reimbursement of loser "entrepreneurs" come from? You got it. Deep from the heart of taxes.

Yes, shed a tear for the good ol’ days of risk and reward.

In a new report out this afternoon, GAO notes:

OMB’s guidance on using award fees includes principles such as limiting the opportunities for earning unearned fees in subsequent periods, linking award fees to acquisition outcomes, designing evaluation criteria to motivate excellent performance, and not paying for performance that is unsatisfactory.

At least someone understands that losing is part of what makes a free market function.

© 2009

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