Hi There, all you eager young voters!
Thanks for coming to learn more about Prop G!
- We start with why we think “G” is a bad idea.
- Then we give examples, government audits, and criminal cases showing where “design-build” and other procurement processes that would be allowed by “G” allow for corruption.
1. Allow A City Councilmember To Decide Who Wins Big City Projects?!
Currently, Sunnyvale requires new projects to go to the lowest bidder - period - end of story. No council member or group of council members can influence that decision. As the Sunnyvale City Attorney writes “This competitive bidding process is based on the bid price alone and does not permit the City to consider … other factors”. (Note that City Attorneys work for and receive their performance evaluation from the same 7 city council members who voted for Proposition G.)
“G” would change that! Prop G would allow “other factors” to decide the awarding of contracts. This is soooo... simple - if the contract isn’t going to the lowest bidder, then it’s costing taxpayers more than it has to.
If "G" passes then it’s only a matter of when the corruption sets in - and you won’t read about it - it will show up quietly in poor maintenance for parks, greater fees for garbage service, water rates, higher property taxes - all because new city contracts are going to the best-connected bidder, not the most cost-effective.
If the city council and staff can decide on what “other factors” can be considered, they can be influenced by a bidder to decide on a factor favoring them. This isn’t a hypothetical issue - it is the source of a lot of corruption which we will discuss later. IF IT CAN HAPPEN - IT WILL HAPPEN!
Corruption isn't something that only happens in 3rd world countries. According to the Harvard University Center for Ethics, California is in the worst tier of corruption ("Very Common") overall with a score of 19 (higher is worse), with only 4 states worse (!!) and not by much (19.5 - 22.5). For comparison - Oregon = 8, Massachusetts = 6, New Jersey = 20.5, Illinois = 21 - see map below. California is tied for corruption with Mississippi, Georgia, and Pennsylvania!
Map from:
Corruption is very real in the majority of cities at one level or another. A UN study of 134 cities around the world found over half the people in them had experienced corrupt practices at one level or another as seen in the graphic below - nearly 60% had to give bribes to get a service, nearly 30% almost daily or monthly. 84% cited corrupt local elected politicians, 82% cited local government officials - in both cases about a third saw this either "almost daily", or several times a month.
Graphic from https://unu.edu/article/corrupt-cities-and-post-pandemic-ethical-antidotes
Vote NO on G! Keep corruption out of Sunnyvale
2. Design-Bid-Build (current - low cost) vs. Design-Build (Measure “G”)
The most basic problem with “design-build”, is that the designer has every reason to increase the cost of the “design” since they will be doing the “build” as well. As some of the following examples show, this often comes about after the contract is awarded as changes are recommended by the designer (who is also the builder).
City council members are no more familiar with large construction processes than the average voter so will go along with the suggested changes and the cost increases they generate. I saw this first hand when I was myself a city councilmember and the new city hall was being designed. I argued first for a simple (and very low cost) add-on to increase office space. After the city council went with a complete tear-down and totally new building I served on the review committee with the designers. I resigned after a few months because it had turned into a charade. Whatever the designers suggested was approved without any serious questions.
3. Other Problems with Design-Build
Loss of Independent Oversight & Quality Control Check Points
CA state auditors specifically pointed out that:
1. In the traditional design-bid-build that Sunnyvale currently uses, the architectural/engineering firm acts as an independent advocate for the contracting agency (Sunnyvale, in our case), actively overseeing the contractor's work to ensure adherence to quality standards and design specifications.
2. In (Measure G's proposed) design-build, because the designer and builder work for the same entity (or are the same firm), the internal checks and balances are removed. The owner loses an independent advocate on site to call out subpar construction or substituted materials.
4. Examples of Design-Build cost overruns and corrupt influences:
California High Speed Rail design-build change orders produced huge additional costs.
In an enormous “design-build” fiasco, the State Auditor found that the High Speed Rail Authority had approved more than $600 million in change orders on three Central Valley construction contracts. The original contracts totaled approximately $2.5 Billion, and change orders added $600 Million to approximately $3.1 billion, while also contributing to an 11-month schedule extension. In addition, the HSR Authority estimated that it would need an additional $1.6 Billion in contract changes resulting in a $2.2 Billion increase over the initial $2.5 Billion estimate for an 88% increase in costs.
Don’t think some “oversight committee” is going to fix these problems. The State Auditor found that in four of 11 change orders it examined, the Authority either:
approved more money than its independent oversight firm recommended, or
approved work the oversight firm initially believed was already covered by the contract.
In one example, the contractor sought more than $21 million for unanticipated bridge work; the independent oversight firm estimated $7.4 million, while the Authority ultimately approved $18.6 million. The Auditor said the Authority couldn't provide documentation explaining how it arrived at the higher figure.
Reference: https://information.auditor.ca.gov/reports/2018-108/chapter1.html
(b) The Belmont Learning Center Scandal (Los Angeles, CA)
The Context: In the late 1990s, the Los Angeles Unified School District (LAUSD) used a design-build approach to fast-track the construction of a massive high school complex atop a former oil field.
The Issues (Cost Overruns & Subjective Evaluation):
The project’s original cost estimate ballooned from $150 million to over $300 million, making it one of the most expensive high schools in U.S. history at the time.
Environmental hazards (methane and hydrogen sulfide gas under the soil) were inadequately evaluated prior to contracting.
Wikipedia
Corruption & Legal Investigations: A formal investigation by the Los Angeles District Attorney’s Office highlighted that the "best value" subjective evaluation inherent to design-build created an environment prone to favoritism and a breakdown in public trust. The District Attorney's report explicitly warned that design-build lacks the safeguards of traditional competitive low-bid systems, opening the door to public suspicion, conflicts of interest, and fiscal mismanagement.
(c) Maryland Purple Line Light Rail (Maryland)
The Context: A major $5.6 billion public-private design-build project intended to build a 16-mile light-rail line connecting Montgomery and Prince George’s counties.
The Issues (Excessive Costs & Change Orders):
Rather than protecting the state from extra costs, environmental litigation and design disputes caused costs to spiral.
The original design-build contractor walked off the job due to over $800 million in cost overruns and delays, leading to a multi-year settlement process.
By the time a replacement contractor was hired, overall project costs increased by over $1.4 billion, demonstrating that transferring design/construction risk to a single contractor does not always insulate taxpayers from huge cost increases.
(d) California High-Speed Rail (Segment 1 & 2)
The Context: The California High-Speed Rail Authority used design-build contracts for initial civil work construction segments in the Central Valley to get "shovels in the ground" quickly.
The Issues (Premature Scope & Guaranteed Maximum Price Inflation):
Contracts were awarded via design-build before rights-of-way, land acquisition, and utility relocations were fully finalized or secured.
Because contractors were awarded fixed-price/design-build packages on incomplete groundwork, the Authority faced thousands of change orders.
Costs for initial contract segments doubled, leading state audit reports and legislative oversight panels to heavily criticize the premature use of design-build before baseline project constraints were settled.
(e) San Francisco Department of Public Works - 2022
As a classic case of what can go wrong if city officials are given too much power to decide who gets city contracts and approvals, consider the following case:
Mohammed Nuru, ($278,586 annual salary) the former Director of the San Francisco Department of Public Works was sentenced to 7 years in federal prison after Nuru pleaded guilty to a multi-year wire fraud and bribery scheme involving his use of his discretion in choosing contractors. He extracted over $1 million in cash, perks, and favors from eager contractors seeking city work over twelve years. These illicit funds helped finance his Stonyford ranch, covering mortgage costs via laundered payments, custom home construction, and property upgrades supplied directly by favored vendors. He had an affair with the SF mayor and gave her some of the bribery money he got. And he asked for and got a $36,500 Rolex! He impeded the investigation for almost a week after he was charged, warning all his partners in crime about the investigation.
U.S. Northern District Judge William Orrick said Nuru’s sentence reflected how severely Nuru’s crimes as a public official breached public trust.
“...you made the city’s decision-making and competitive bidding a farce… By awarding [contractors] and favoring them in exchange for money, gifts, trips, a job for your son and construction for a home, a vacation home, what you’ve done is to question the fairness of every matter, every decision you made at DPW. During my time on the bench, I’ve sentenced people for really horrible things.... In many ways, what you’ve done is at least as reprehensible.”
There were over a dozen officials and corporate entities charged in the city scandals.
Nuru’s nickname of “Mr. Clean,” for his department’s efforts to spit shine the city, proved to be the height of irony.
“Mr. Clean”!! You can’t make this stuff up!
All this and more in:
Disgraced Former SF Public Works Chief Mohammed Nuru Sentenced to 7 Years for Bribery Scheme | KQED
Former SF Public Works Director Mohammed Nuru sentenced to 7 years in federal prison - CBS San Francisco
