Archive for October, 2009

Fur Flies Before Data Release

October 30, 2009

The White House, The Associated Press, the Economic Policy Institute, and the Republican National Committee are going toe-to-toe about the Recovery Act’s impact ahead of the big ARRA jobs numbers which are set to be released this afternoon on www.recovery.gov. The White House has already indicated that it expects the numbers to show that the stimulus created or saved 650,000 jobs. Moreover, the 3.5 percent GDP figure released yesterday suggests that federal initiatives have had a profound effect, but perhaps did not go far enough.

We here at Good Jobs First, ducking the food fight, remind everyone of our observation last week that the jobs numbers are being under-reported. Despite critics’ claims, let’s remember: the numbers released today are from actual recipients of stimulus grants and contracts, not the White House. As of yesterday, the data are “locked” and cannot be changed until the next reporting period. Initial impressions indicate that recipients may have done a poor job reporting job creation and retention, in part at least because recipients lacked clear guidance from the Office of Management and Budget.

When the data do come out, we will offer our own independent analysis.

Preview: State ARRA Job Numbers Are All Over the Map

October 27, 2009

This Friday, October 30 is when the Recovery Accountability and Transparency Board is scheduled to release Recovery Act (ARRA) recipient data covering the more than $200 billion in stimulus funds that are passing through state governments. It will be a red letter day in the history of open government.

The states were required to submit their data earlier this month. While most have kept mum about their results, some have “leaked” key numbers (or much more) via their own Recovery Act websites. My colleagues and I at Good Jobs First have scanned those sites and offer this preview of what Friday has in store.

Probably the most anticipated numbers are those relating to job creation and job retention. States are supposed to provide such estimates relating to the dozens of federal grant programs funded by ARRA, including the huge amounts they have been receiving through the state fiscal stabilization fund.

As with the federal contractor ARRA data released on October 15, there are bound to be inconsistencies in the way the state job numbers get reported. This is already suggested by the states that have announced their results. Here are the ones we have found (amounts are full-time equivalents):

California: 100,000

Florida: 22,457

Georgia:  23,879

Idaho: 699

Illinois: 18,000

Iowa: 4,434

Maine: 894

Michigan: 19,498

Minnesota: 11,800

New Hampshire: 3,007

New Mexico: 4,100

Oklahoma: 6,706

Oregon: 8,000

Pennsylvania: 2,907

Rhode Island: 1,703

Tennessee: 7,710

Washington: 2,900

West Virginia: 370

In theory, the number of jobs should very roughly correlate with the amount each state has received in ARRA funds. Yet if we take the amounts above and compare them to the total ARRA funds paid out in those states, that is not always the case. Here are the figures for dollars paid out per full-time-equivalent job created or retained:

California $161,562

Florida $216,674

Georgia $130,332

Idaho $549,652

Illinois $296,696

Iowa $248,928

Maine $629,170

Michigan $206,765

Minnesota $165,803

New Hampshire $105,510

New Mexico $127,561

Oklahoma $174,474

Oregon $195,679

Pennsylvania $1,249,085

Rhode Island $303,056

Tennessee $223,996

Washington $749,411

West Virginia $1,205,977

While about half the group are in a reasonable range from about $105,000 to $216,000 (keeping in mind that not all funds have a direct impact on jobs), the others begin to veer off. For Pennsylvania and West Virginia to report an amount per job more than ten times that of New Hampshire suggests that something is wrong with the reporting system.

If the rest of the state data released on Friday show similar inconsistencies, the national jobs total should be viewed as something much less than definitive.

Reposted from the STAR Coalition website.

Clarification: The $200 billion figure mentioned above is estimated spending on the covered programs *over the life of ARRA.* The amount spent so far is likely to be only about $30 billion. This is based on the GAO estimate that about $50 billion has passed through the states (of which about $20 billion represents Medicaid, which is not covered by the recipient reporting system).

Is the Recovery Act Stimulating Privatization?

October 22, 2009

AFSCMEKey portions of the $787 billion American Recovery and Reinvestment Act, especially the state fiscal stabilization fund, are designed to prevent job loss among teachers and other state and local government employees. But what about the rest?

The assumption seems to be that most of the job creation and retention will take place in the private sector. Yet one question that has received little attention since ARRA was signed by President Obama in February is whether the spending will contribute to the process of privatization and contracting-out of functions previously performed by public sector workers.

On October 15 the Recovery Accountability and Transparency Board released the first batch of recipient reporting data covering some $15 billion in direct federal contracts. Although this is a small portion of overall ARRA spending (information relating to the much larger realm of federal grants to states and others will be released on October 30), it begins to shed some light on the privatization question.

My colleagues and I at Good Jobs First have been examining the universe of around 9,000 recipient reports summarized in a national spreadsheet available on the Recovery.gov website. Many of the entries are unremarkable. They involve contracts for functions such as manufacturing and construction that have traditionally been concentrated in the private sector. It is not surprising that the federal government gave an ARRA contract to Chrysler to supply vehicles and one to Clark Construction to build a new headquarters for the Coast Guard.

Yet many of the other entries appear to be part of the contracting-out phenomenon. You can tell this, first, by looking at the names of the contractors: one firm called Federal Contracting Inc. leaves little doubt as to its orientation. There are others that have a reputation for being involved in high-profile outsourcing deals. An example is IAP Worldwide Services, a politically connected firm (former Vice President Dan Quayle is on its board of directors) that got a controversial contract to take over management of the Walter Reed Army Medical Center in Washington.

Or else you can look at the description of the projects. A company called 4W Solutions got a contract from NASA for “administrative activities, configuration management of documents, procurement-related analysis and support for report integration/administrative support for Cross-Agency Support construction contracts.”

To be a bit more systematic in our analysis, my colleagues and I decided to match the Recovery.gov list of contractors to the membership list of the Professional Services Council, the leading trade association for the federal outsourcing industry.

PSC’s members range from large and notorious contractors such as KBR (formerly the Halliburton subsidiary Kellogg, Brown and Root), Xe Services (formerly Blackwater) and CACI International (linked to the Abu Ghraib torture scandal) to small and obscure consulting firms. During its 27-year history, the association has sought to banish the use of the term “Beltway Bandit” to refer to federal contractors and has pushed for legislation that would maximize the amount of federal work that gets outsourced. It has also resisted the recent move toward insourcing.

We found that, of the 382 PSC members listed on the association’s website, about 50 are on the list of ARRA federal contract recipients (name variations make an exact count difficult). In all, these members and their affiliates have been awarded about 250 ARRA contracts with a total value of more than $800 million.

Some of these involve engineering and construction services, but others deal with functions that are more inherently governmental, such as a contract given to Deloitte Consulting to provide “program management oversight” for ARRA grants made by the Federal Aviation Administration.

In an economic crisis such as the current recession, all job creation is to be welcomed. But it would be a shame if some portion of Recovery Act money is being used in ways that do little more than shift work from the public sector to the private sector.

(Thanks to Tommy Cafcas, Caitlin Lacy and Leigh McIlvaine for their research help.)

Reposted from the Dirt Diggers Digest

Update: I should have mentioned that KBR and Xe Services are not among the recipients of ARRA contracts, but CACI has two.

Further update: We spent more time analyzing the spreadsheet and found many more ARRA contracts that can be attributed to PSC members through joint ventures, affiliates, etc.  Our tally is now about 470 contracts worth a total of about $3.5 billion. These include some huge contracts associated with clean-up projects at Department of Energy nuclear facilities.

In the Bronx, could a loss lead to a win?

October 22, 2009

blogphotokara2No, it’s not baseball, it’s NYC’s land use process. This week, the New York City Department of City Planning voted 8 to 4 in favor of a plan to develop the Kingsbridge Armory in the Bronx into a mall, even though the deal lacks a Community Benefits Agreement (CBA). So why are supporters of creating a CBA optimistic?

In New York City, where heads of commissions and board leaders are predominantly mayoral appointees, rarely is there dissent or even serious questions raised about proposed projects. But years of organizing and learning the ins and outs of development policy by members of the Kingsbridge Armory Redevelopment Alliance (KARA) have put officials on a bumpy ride. “No” votes from Planning Commission members representing Manhattan, Brooklyn, the Bronx and the city’s Public Advocate (there was one recusal from a Mayoral appointee) opens up significant leverage for organizers as the project needs final approval from City Council members in those boroughs.

With the strong backing of the relatively new Bronx Borough President Ruben Diaz and a unique showing of labor support – including the retail workers, building trades, Central Labor Council, teachers and SEIU 32BJ – KARA is in a strong position to push for CBA negotiations with Related Companies even though the developer is not required to participate in such talks.

“We are not asking for anything radical or extreme. We are simply asking that, in a borough that has the highest poverty rate in the nation and has consistently seen the highest unemployment numbers in New York State, Related and their future tenants provide living wage jobs with benefits that allow Bronxites a chance to provide for their families and to build a better life,” said Diaz.

As the project winds its way through the City Council for the final phase of approvals, KARA and the Bronx Borough President hope that the developer who wants to develop “Shops at the Armory” (with tens of millions of dollars of subsidies, a rock-bottom purchase price of $5 million for the landmarked building and the benefit of a $30 million new roof thanks to New York City taxpayers) will come to the negotiating table.

Considering that massive development projects in New York City, and the Bronx in particular (think Yankee Stadium, Gateway Mall, Croton Water Filtration Plant), have been easily approved without real community benefits, KARA is ahead of the curve and could shepherd in the first real CBA in the Big Apple.

Phantom ARRA Contractors

October 20, 2009

Much has been said about the glitches in the Recovery Act recipient reporting that began last week with federal contractors. For there to be glitches there has to be reporting, but what about those recipients that did not fulfill their reporting requirements?

To check for possible scofflaws, I compared the list of top ARRA contractors on the federal government’s USA Spending website with the national spreadsheet of recipient reports on Recovery.gov. Limiting the comparison to those companies (totaling 56) with at least $25 million or more in ARRA contracts according to USA Spending, a few contractors appear to be completely missing from the Recovery.gov list.

These include:

  • Savannah River Nuclear Solutions (SRNS), which USA Spending says is receiving $1.3 billion in ARRA funds from the Energy Department. SRNS is owned by Fluor Daniel, Northrop Grumman and Honeywell, which do report on what appear to be separate smaller contracts.
  • Ford Motor, which according to USA Spending got ARRA contracts totaling $91.6 million to supply motor vehicles. General Motors and Chrysler got similar contracts and submitted reports.
  • Suulutaaq/Sloan Fencing JV, which according to USA Spending got a $53 million ARRA contract to supply fencing to the Army.

There are bound to be others in the rest of the long list of contractors.

To make things more confusing, there also appear to be ARRA contractors that are listed on Recovery.gov but missing from USA Spending. One example that surfaced is Innovative Technical Solutions Inc., which appears on the Recovery.gov spreadsheet with about a dozen contracts worth over $90 million, yet according to USA Spending it has received no ARRA contracts.

Apparently, we have a long way to go before we can even begin to accurately measure the impact of Recovery Act spending.

Reposted from the STAR Coalition blog.

Groups Call for Recovery.gov Overhaul Before Major Data Release on October 30

October 20, 2009

For Immediate Release October 16, 2009

Washington, DC – Three non-profit organizations that have been tracking the Recovery Act today called for the Obama administration to overhaul its jobs data system before releasing its first large set of data on October 30th.

Based on what they called very disappointing data quality and presentation in the release of a very small amount of federal contracting data yesterday, OMB Watch, Good Jobs First, and the Economic Policy Institute said they are seeking to meet with officials at the Office of Management and Budget (OMB) and the Recovery Accountability and Transparency Board (Recovery Board) to detail the groups’ complaints.

“Both the quality of the data and its awkward presentation preclude meaningful analysis by analysts, taxpayers, or the news media,” said OMB Watch executive director Gary D. Bass. “The data must improve if the Recovery Act is to meet President Obama’s pledge of true transparency.”

Given these limitations, the jobs data should be viewed with extreme caution. In particular, inconsistencies in reporting methodologies across recipients precludes a comparison of job creation across contractors. Further, job totals will likely be too low and not comparable across states. Estimates of the “cost” of jobs – either in aggregate or for individual contractors – will be inaccurate and misleading as well.

Yesterday, the Coalition for an Accountable Recovery (of which the three groups are members) issued a press statement itemizing numerous problems with the Recovery.gov data, citing both obvious data irregularities and structural problems that make downloads tedious and data analysis almost impossible. The release is at http://www.CoalitionForAnAccountableRecovery.org.

The three groups will urge OMB and the Recovery Board to:

• Improve systems to catch obvious data errors
• Revise the way downloads are structured (so that a national analysis does not require 150 downloads)
• Issue new guidance covering the remaining seven quarterly reports to make recipient reporting more uniform and reliable

The Recovery Board and other administration officials should also pressure contractors to provide more accurate and complete information as part of their reports.

Even after fixing data errors, the groups added, the recipient reporting system should include a way for the user to distinguish between projects that have begun work – and thus can be expected to have generated jobs – and those that are still in the planning stage and probably have not started hiring. Many of the contractor reports in this week’s data fall into the latter category, creating an artificially low job creation total.

The Coalition for an Accountable Recovery was formed in February 2009 by about 30 organizations to promote transparency and accountability in the $787 billion Recovery Act. In numerous communications, meetings and public events since, it has helped influence the implementation of Recovery Act disclosure systems and engaged diverse organizations to help them learn more about the act and participate in the debate over its implementation.

OMB Watch is a nonprofit government watchdog organization dedicated to promoting government accountability, citizen participation in public policy decisions, and the use of fiscal and regulatory policy to serve the public interest. Good Jobs First promotes corporate and government accountability in economic development and smart growth for working families. The Economic Policy Institute broadens the discussion about economic policy to include the interests of low- and middle-income working families.

Retention Deficit Disorder

October 19, 2009

The American Recovery and Reinvestment Act is designed, among other things, to use government spending to stimulate demand for goods and services from the private sector and thereby enable employers to hire more workers or retain ones who might otherwise be laid off. In fact, recipients of ARRA contracts and grants are required to report their job-creation and job-retention numbers.

The first recipient data (covering direct federal contracts) were released last week, and it is clear that many contractors have not completely grasped the concepts of job creation and retention.

The now cleaned-up national spreadsheet just posted on Recovery.gov summarizes a total of 9,102 reports from prime and sub-recipients of federal ARRA contracts. Of these, 919 describe the status of the work as “completed.”

One would expect that a completed project would have generated some job creation or job retention, yet 335 of these recipient reports list a zero in the column for “number of jobs.” These same recipients have received a total of $87 million in payments.

Some of these recipients have apparently slipped through a loophole in the job reporting system. In some cases, companies that received Recovery Act contracts to provide goods to federal government say they made use of their existing workforce to fill the order and thus created no new jobs. A major example is Chrysler, which reported getting $52.9 million to supply “Light Passenger Vehicles Orders Under Stimulus Plan” but added: “No jobs were created.  Existing employees were utilized to fulfill award orders.”

What is implied, but usually not stated, in such cases is that these workers would not have been laid off without the federal contract and thus their jobs were not, technically speaking, retained.

At the same time, there are some cases in which contractors explicitly state that the ARRA funds prevented layoffs, yet they still entered a zero in the jobs column. For example:

  • Tinsley Asphalt has completed five paving contracts in Tennessee. In each case it reports in the job narrative column that the work “KEPT COMPANY FROM LAYING OFF EMPLOYEES,” yet in each it lists the number of jobs as zero.
  • M W Clearing & Grading in South Carolina reports zero jobs on two demolition contracts while saying in the job narrative: “Although no new jobs were created, employees were kept from being placed on lay off.”

You couldn’t ask for a clearer statement of job retention.

While these companies displayed obvious inconsistencies in their reporting, it is likely that many other contractors reporting zero jobs also had actually engaged in job retention (and perhaps job creation) thanks to ARRA funds.

This is yet another reason not to put too much stock in the 30,000 job total that came out of last week’s reporting. It should also serve as an indication that the federal government needs to do a better job of educating ARRA employer-recipients about the full scope of their reporting obligations.

Reposted from the STAR Coalition blog: http://www.accountablerecovery.org/blog/retention-deficit-disorder

Smoke and Mirrors on the Hudson (updated)

October 16, 2009

HudsonRiver_Small_021708051148This week, real estate pundits anointed New Jersey the winner when Depository Trust and Clearing Corp (DTCC) rejected a benefits package from New York City and took New Jersey up on its $80 million  nearly $90  million offer of tax breaks to move 1,600 jobs across the Hudson River. The firm, a major clearing house for securities, will keep 700 front office jobs at its Lower Manhattan headquarters.

But did New Jersey really have to fork over all those subsidies? As reported, DTCC claims it didn’t make the decision to move based solely on tax breaks. It’s well known that the business basics of transportation, appropriate space, workforce and access to customers are key in a location decision; without them tax breaks won’t make a difference.

Sadly, when two locations have what a firm needs, site consultants and firms send cities into a competitive frenzy of tax breaks and subsidy offers. But because bidding wars happen behind closed doors, no one knows what the proposals entailed.

New York officials responded, “We’d like all of its operations to be here, but we’d rather use scarce taxpayer dollars to invest in our future than engage in a reckless bidding war with New Jersey.” New York City did engage in negotiations for over a year but DTCC went where many back-office jobs have gone over the years – Jersey City where commercial rents are cheaper.

A startling fact revealed by New Jersey Policy Perspective is that almost $12 million of the $80 million of tax breaks are expected to come from a program not yet fully created much less approved by officials. The bulk of the incentives would come from New Jersey’s Business Employment Incentive Program, (BEIP) which mandate certain job standards. Disturbingly, New York City’s discretionary subsidies are void of any job standards. This should be a wake up call to the Bloomberg Administration that job standards aren’t job killers and start including them in its economic development subsidy deals.

These negotiations are reminiscent of the battles waged between New York City and New Jersey in the 1990’s. You’d think successful businessmen like New York City Mayor Michael Bloomberg and New Jersey Governor Jon Corzine would recognize that playing the bidding game doesn’t benefit anyone but the real estate industry.

Exposing the Executive Pay of Beltway Bandits

October 15, 2009

ARRA logoThe recipient reporting system mandated by the American Recovery and Reinvestment Act is designed to inform the public on how federal stimulus spending is creating jobs. The just-released first phase of that system still has a considerable number of bugs to work out with regard to its job numbers, but it also represents a new step forward in making the operations of federal contractors more transparent.

The rules governing Recovery Act reporting include a requirement (FAR 52.204-11) that certain contractors disclose the amount of compensation paid to their five highest paid executives. These include companies that receive $25 million or more in federal governments as long as federal contracts account for 80 percent or more of their total revenue.

Publicly traded companies already report this information to the Securities and Exchange Commission in their proxy statements, which are made available to the public. The Recovery Act rule is unusual in that it extends executive compensation reporting to privately held firms, which typically keep such information to themselves.

In the new Recovery Act contract data, several hundred contractors provided compensation information, including many that apparently were not required to do so. As shown in the table below, 14 contractors reported compensation in excess of $1 million for their top executive (not including obvious glitches such as a modest-sized excavating company in Washington State that entered $986 million in the compensation column).

Half of the contractors are part of publicly traded companies, and their compensation amounts match what was previously disclosed by those companies. The rest are privately held, meaning that this may well be the first time the pay of their top executives has been officially disclosed.

The most interesting of these is the huge consulting company Booz Allen Hamilton, which since fiscal year 2000 has been the recipient of more than $16 billion in federal contracts. It does business with many agencies, but it is especially close with the Pentagon. Last year it was the 22nd largest military contractor. The Recovery Act reports do not list executive names, but it likely that Booz Allen CEO Ralph W. Shrader was the one who was paid more than $8.4 million last year.

The Recovery Act does not include funding for military purposes, but it forces Pentagon contractors and other Beltway Bandits that happen to be privately held to reveal how richly they are rewarding their top executives with the help of taxpayer funds.

Top Compensation Amounts Reported by Recovery Act Federal Contractors

JOHNSON CONTROLS BUILDING AUTOMATION SYSTEMS LLC
$17,385,308

RAYTHEON TECHNICAL SERVICES COMPANY LLC
$15,056,151

BOOZ ALLEN HAMILTON INC.
$8,457,003

BALL AEROSPACE & TECHNOLOGIES CORP.
$8,111,298

ENERGYSOLUTIONS FEDERAL SERVICES, INC.
$6,336,752

ADVANCED CONSTRUCTION TECHNIQUES LTD
$2,724,660

DANYA INTERNATIONAL INC.
$2,363,143

ROLLS-ROYCE NORTH AMERICAN TECHNOLOGIES INC.
$2,025,860

WEST VALLEY ENVIRONMENTAL SERV
$1,955,909

SCIENTIFIC RESEARCH CORPORATION
$1,471,745

ORBITAL SCIENCES CORPORATION
$1,448,752

STG, INC.
$1,201,762

PARSONS INFRASTRUCTURE & TECHNOLOGY GROUP INC.
$1,128,070

ENVIRONMENTAL CHEMICAL CORPORATION
$1,016,426

Source: Analysis of the combined state spreadsheets provided at the Recipient Reported tab here.

Notes:

The figure for Johnson Controls Building Automation Systems is apparently the compensation of Stephen A. Roell, CEO of the parent company Johnson Controls Inc., which is publicly traded and thus already reported the compensation of its top officers through its SEC filings. The figure above is the same as that reported for Roell in the company’s latest proxy statement.

The figure for Raytheon Technical Services is the same as that reported for parent Raytheon’s CEO William H. Swanson in the company’s latest proxy statement.

Booz Allen is privately held. Its CEO is Ralph W. Shrader.

The figure for Ball Aerospace is the same as that reported for parent Ball Corporation’s CEO R. David Hoover in the company’s latest proxy statement.

The figure for EnergySolutions Federal Services Inc. is the same as that reported for parent EnergySolutions’ chief financial officer Philip O. Strawbridge in the company’s latest proxy statement.

Advanced Construction Techniques Ltd is privately held. Its president is James Cockburn.

Danya International Inc. is privately held. Its CEO is Jeffrey A. Hoffman.

The figure for Rolls-Royce North American is roughly the same (after currency conversion) as that reported for parent Rolls-Royce PLC chief executive Sir John Rose in the company’s annual report.

West Valley Environmental Services LLC describes itself as “a newly-formed company comprised of four companies – URS Washington Division, Jacobs Engineering Group, Environmental Chemical Corporation (ECC), and Parallax/Energy Solutions – with extensive experience conducting environmental cleanup at Department of Energy (DOE) sites across the United States.” Its compensation figure above is the same as that reported in the proxy statement of URS Corporation for URS Washington Division President Thomas H. Zarges.

Scientific Research Corporation is privately held. Its CEO is Michael Watt.

The figure for Orbital Sciences is the same as that reported by the company for CEO David W. Thompson in the company’s latest proxy statement.

STG Inc. is privately held. Its CEO is Simon S. Lee.

Parsons Infrastructure is a unit of privately held Parsons Corporation, whose CEO is Charles L. Harrington.

Environmental Chemical Corporation (which seems to prefer being called simply ECC) is privately held. Its CEO is Manjiv Vohra.

Reposted from Dirt Diggers Digest.

Lessons from Dell’s N.C. Shutdown

October 7, 2009

Dell has just announced the closure of its computer and peripheral factory in Winston-Salem, N.C. As I recounted in The Great American Jobs Scam (Scam #12), the plant was awarded state and local subsidies in 2004 that could have totaled about $300 million – more than twice the cost of the plant!

Now instead, more than 900 people will be dislocated and the subsidies will not create badly needed jobs in the state’s Triad region hard-hit by textile and furniture shutdowns.

The costly deal was rammed through in a textbook case of corporate-dominated process. After months of secret negotiations with the state commerce department during which the company essentially demanded zero taxes, state legislators were given one day to read and vote on the bill, up or down with no amendments.

Back in my previous life consulting against plant closings, I taught people that tax dodging is one more early warning sign, one more signal of corporate disinvestment. That is, if a factory owner is letting the equipment run down, removing hot new product lines, demanding wage concessions and chiseling on property taxes, it is saying loud and clear: “we do not see our future in your community.”

Looking at Dell (and recalling footloose companies like Sykes, Scam #4), I say the same principle applies to any newly arriving company that demands huge tax giveaways. If it refuses to pay its fair share of the growth-related costs it induces (for roads, schools, police, fire, sanitation, etc.) it is saying either: “We don’t care about the long-term quality of public services here,” and/or “Let everybody pay higher taxes to support the costs we create; that’s not our concern.”

Either way, the message is clear: the company does not want to invest in the fabric and the future of the community. And elected officials should see the early warning signs and run the other way.


Follow

Get every new post delivered to your Inbox.

Join 46 other followers