One Contract cost more in overruns from prvatization that the whole estimated savings of Christie

by: Jason Springer

Tue Jul 13, 2010 at 12:00:00 PM EDT

In sum, the investigation revealed an ill-conceived state process undermined by mismanagement from within and tainted by manipulation from without. At virtually every critical juncture, the primary duty of government to safeguard citizen interests was set aside in favor of a deeply flawed initiative that cost too much and produced too little in the way of satisfactory results. No meaningful or accurate cost comparison was done to determine whether the state itself could have undertaken an effective I/M program at less cost. As it stands, the privatized version will have cost New Jersey taxpayers approximately $590 million when the contract with Parsons

Infrastructure expires in August 2005 - some $200 million more than the original projected expenditure - as a result of change orders, over-charges, exorbitant expenses for non-operational items such as public relations, questionable fees and mark-ups, and an assortment of programmatic costs borne by the state despite privatization. In order to put the cost estimate in perspective, and to bridge a "due diligence" gap left by the state's original failure to perform appropriate comparisons, the Commission conducted its own financial analysis. The results show that if the state had simply continued to conduct inspections under terms of the old pre-enhanced system, the seven-year cost of the program would have totaled approximately $217 million - little more than one-third the projected payout to Parsons Infrastructure. If the state had assumed responsibility for the enhanced I/M program in place of the private vendor, it would have cost taxpayers approximately $339 million - nearly $250 million less than the projected payout to Parsons.