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Federal Highway Administration Is Undermining Pay-to-Play Reforms in Illinois

Jan. 27, 2009

Federal Highway Administration Is Undermining Pay-to-Play Reforms in Illinois


Public Citizen Asks Transportation Secretary LaHood to Intervene


WASHINGTON, D.C. – Public Citizen today urged the new Secretary of Transportation Ray LaHood to end the Federal Highway Administration’s (FHWA) practice of withholding highway funds from states that attempt to curb corruption by enacting “pay-to-play” reforms. Most recently, the FHWA threatened to withhold federal highway funds from Illinois because of the state’s effort to clean up its contracting process. Given the recent scandals, the state’s new restrictions on government contractors contributing to political campaigns merit praise, not punishment.


“Pay-to-play” is the all-too-common practice in which businesses make campaign contributions to public officials in the hopes of winning lucrative government contracts. Illinois is the most recent state caught up in sensational pay-to-play scandals, in which Gov. Rod Blagojevich allegedly sold government contracts (and nearly a Senate seat) in exchange for campaign contributions. The Illinois Legislature responded by joining eight other states, dozens of local jurisdictions and the Securities and Exchange Commission in restricting campaign contributions from government contractors.


But not if the Federal Highway Administration has its way.


On two occasions – once in New Jersey in 2004 and now in Illinois – the agency has withheld billions of dollars in desperately needed highway construction funds because of state pay-to-play laws. FHWA officials under the Bush administration deemed pay-to-play laws not “cost effective” and found that they fail to conform to federal contracting standards.


“Today’s federal contracting standards are among the poorest in the nation – riddled with pay-to-play corruption,” said Craig Holman, government affairs lobbyist for Public Citizen, which sent a letter today to LaHood about the issue. “States should be applauded, not punished, for attempting to clean up their contracting process.”


The FHWA under the Bush administration claimed that pay-to-play laws restrict the pool of bidders for government contracts. FHWA Division Administrator Norman Stoner on Dec. 2, 2008, wrote to the Illinois Department of Transportation that “(f)ederal regulations expressly prohibit many kinds of requirements that undermine the competitive contracting requirements.”


“It is incumbent upon the incoming Transportation Secretary to recognize that awarding government contracts on the basis of campaign contributions rather than merit is not ‘cost effective,’ ” said David Arkush, director of Public Citizen’s Congress Watch division. “We saw in New Jersey that contracts awarded to big campaign contributors turned into costly boondoggles that were poorly managed and poorly administered.”


The infamous Parson’s debacle several years ago brought pay-to-play in New Jersey to the front page. A poorly administered $400 million government contract awarded to Parsons Infrastructure Technology Group, a major campaign contributor to state officials of the then-Republican administration, amounted to nothing less than an indictment against New Jersey’s government contracting process. In a scathing report, the State Commission of Investigation charged that the primary duty of government to safeguard citizen interests in government contracting had been “set aside in favor of a deeply flawed initiative that cost too much and produced too little in the way of satisfactory results.” New Jersey has since adopted one of the most sweeping pay-to-play laws in the country but was forced by FHWA to exempt highway construction contracts.


“Pay-to-play restrictions are a narrow remedy focusing on a specific problem and are designed to ensure that government contracts are awarded on merit rather than favoritism,” added Holman. “States have the right to ensure that their contracting procedures conform to the highest ethical standards and offer the best value for taxpayers. This is a lesson the federal government should learn.”