Firm Behind State Road Plan Paid Millions for Other Work for DOT, STIB

February 11, 2015

Investigative Reports

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Road WorkA global engineering and construction firm that prepared a recent plan projecting more than $70 billion in transportation needs in South Carolina to 2040 has received a total of nearly $13 million in state payments since fiscal 2012 – mainly from the S.C. Department of Transportation and State Transportation Infrastructure Bank, records show.

And the Massachusetts-based company has ties to Gov. Nikki Haley, who last month proposed a hike in the state’s gas tax.

The Nerve’s review of online state comptroller general records found that the CDM Smith firm has been paid more than $7.6 million by DOT and $4.1 million by the State Transportation Infrastructure Bank (STIB) over the period, which includes the first half of this fiscal year.

The firm, which, according to its website, has more than 5,000 employees and provides “lasting and integrated solutions in water, environment, transportation, energy and facilities to public and private client worldwide,” also received a total of $1.15 million during the period from the S.C. Department of Health and Environmental Control, $81,321 from the S.C. Department of Natural Resources, and $8,000 from the state Budget and Control Board, records show.

The total amount of payments to CDM Smith for the period came to $12,968,555, The Nerve’s review found.

In December, the DOT Commission adopted its updated “Multimodal Transportation Plan – Charting a Course to 2040,” which was prepared by CDM Smith. The report estimates “total highway, bridge and transit needs” in the Palmetto State to 2040 at $70.45 billion, including nearly $60 billion for the “expansion, preservation, and modernization needs of South Carolina’s 41,500 miles of state-maintained roadways.” It also includes $2.4 billion for the proposed, controversial Interstate 73 project, and $1.2 billion for “bicycle accommodations.”

The plan projects a nearly $43 billion collective funding gap to 2040, or an annualized shortfall of about $1.5 billion yearly. Last month, Haley proposed an increase of 10 cents, or nearly 60 percent, over three years in the state’s current 16.75-cent-per-gallon gas tax – the nation’s third-lowest – contingent upon restructuring the DOT and reducing the state’s income-tax rate to 5 percent from 7 percent over 10 years.

The Nerve last month reported, citing documents used by Haley as the basis of her proposal, that the average income-tax bill would drop by just $100 over the 10-year period under her plan, while the projected yearly average 1 million filers owing no taxes wouldn’t be exempt from her proposed gas-tax hike.

When Haley, a Lexington County Republican, was a state House member before her first election as governor in 2010, she worked as a consultant for the Columbia-based Wilbur Smith Associates engineering firm, which merged with CDM in 2011. A company history posted on the CDM Smith website notes that the Wilbur Smith company, founded in 1952, and CDM, founded in 1947, “grew from their strong regional roots to a global footprint – through a combination of organic growth and acquisitions – each step of the way building their reputations for industry leadership, technical excellence, and exceptional client service and diversifying their service portfolios to meet the evolving needs of public and private clients.”

The Nerve’s review of online comptroller general records found that the Wilbur Smith firm received a total of nearly $2.4 million in state payments from fiscal years 2008 through 2012, including about $1.2 million from DOT and $1 million from STIB.

In 2012, Haley faced a House Ethics Committee hearing over allegations that she illegally lobbied for Wilbur Smith from 2006 to 2008 when she was a House member and failed to publicly disclose $48,000 in income from the firm. The committee ruled she did not use her office for personal gain, rejecting the claims involving Wilbur Smith, and separate allegations that she pressured lobbyists or their clients to donate to the Lexington Medical Center Foundation, where she was a $110,000-a-year fundraiser while a House member.

A CDM vice president from the company’s Columbia office who testified during the hearing said Haley’s job was a “passive” position, noting she was hired in 2006 to keep her “eyes and ears open” about new private-sector work for the company, though he also said she didn’t find any new clients in her 23-month tenure with the firm, according to media reports.

The Nerve on Tuesday sent written questions to Haley spokeswoman Chaney Adams seeking comment about whether the governor had any involvement in the selection of CDM Smith to produce the latest transportation plan, or whether she has had any other contact with the firm since becoming governor. No response was given.

The Nerve also contacted CDM’s corporate headquarters in Cambridge, Mass., seeking comment but received no reply.

DOT spokesman Pete Poore didn’t respond Tuesday to written questions from The Nerve about how much CDM was paid to produce the transportation plan and other related matters, including whether CDM’s report could be unbiased given that the firm has received millions in recent years from DOT and STIB for other work.

Online records with state Comptroller General Richard Eckstrom show that of the $7.62 million paid by DOT to CDM from fiscal 2012, which started July 1, 2011, through the first half of this fiscal year, more than $3.1 million was listed as “Engineering & Architectural” or “Other Professional Services” under a category labeled “Contractual Services,” while nearly $4.5 million was listed under a section labeled as “Fee – Arch, Engr & Other.” About $3.5 million of the $4.1 million paid by STIB to CDM during the period was listed under the fee section. The comptroller general records don’t provide the specific purpose of the payments or other details.

DOT has faced increasing criticism in recent years for failing to adequately maintain existing roads and bridges in the Palmetto State, which has the fourth-largest, state-maintained road system in the nation. As for STIB, it has funneled several billion dollars over the years for large transportation projects mainly in the Charleston, Myrtle Beach and Greenville areas, which critics contend was based more on political considerations than on objective criteria.

A state law passed in 2013 requires DOT to transfer $50 million each fiscal year to STIB, which can use the money to leverage hundreds of millions of dollars in bonds for “bridge replacement, rehabilitation projects, and expansion and improvements to existing mainline interstates.” An analysis released this month by the South Carolina Policy Council – The Nerve’s parent organization – found that STIB bonds are the largest category of the state’s bond debt with total liabilities at over $2 billion in fiscal year 2014.

The Nerve in 2013 reported that Sen. Hugh Leatherman, R-Florence and a member of STIB’s seven-member governing board, played a major role in shaping the final version of the 2013 law (Act 98) requiring the $50 million annual transfer to STIB.

Leatherman, who also is the Senate president pro tempore and Senate Finance Committee chairman, is a minority stockholder in Florence Concrete Products Inc., according to his most recent annual income-disclosure statement, where he was president when he joined the Senate in 1981 and served in that position until 1993.

The Nerve in 2013 reported that from July 1993 until March 2013, Florence Concrete Products received more than $30 million in state funding, mainly through DOT.

Reach Brundrett at (803) 254-4411 or rick@thenerve.org. Follow him on Twitter @thenerve_rick. Follow The Nerve on Facebook and Twitter @thenervesc.