Rewarding Failure

Streetcars that are too wide, long, and heavy (136 @ $3.5 million per). Bus engines that don't fit and are scrapped (20 @ $116,000 a pop). Manhole covers that take 10 engineers and three months to design (cost: $243,000). Muni's management has produced su

Shortly after Muni hired Alcatel, Alcatel's Docklands system crashed. Docklands hired Booz Allen to help fix the system, but to this day, the Docklands train control software is rife with bugs.

And so, of course, is Muni's.
Booz Allen was able to direct the contract toward Alcatel because -- as with the Breda streetcars -- Booz Allen designed the specifications and micromanaged the selection process for the contract.

With the Breda bids, one of the two major contenders was disqualified on a minor technicality. With the Alcatel bid, the winner was allowed to promise more than it was capable of delivering.

Years later, the Alcatel system failed its most crucial test -- guiding a mixed fleet of Boeing and Breda streetcars through the Market Street tunnel while the transition between signal systems was made. When Emilio Cruz was interviewed by Rescue Muni, a nonprofit watchdog group, about why Muni hired Alcatel, he said, "We were sold a bill of goods."

Alcatel representatives did not respond to phone calls seeking comment for this article.

A spokesperson for Booz Allen Hamilton confirmed that the Breda streetcars are too long for the Muni Metro and are overweight. The spokesperson confirmed that Booz Allen drew up the specifications for the Breda cars according to Muni's parameters and oversaw the specifications for the Alcatel system, which still does not work properly. When asked why there were problems with measurements for the streetcars, the spokesperson replied, "Those reasons are lost in the dawn of time." The spokesperson also said, however, that the streetcar contract could have been put out to bid after problems cropped up with the Breda vehicles, but "Muni asked us not to."

The Alcatel goods came at a very high price.
Alcatel was awarded a $34 million contract for a project that Muni had initially estimated to cost $25 million. With options and cost overruns, the job is now costing $80 million. (Muni chose to pass millions in cost overruns from the Alcatel project directly on to local taxpayers, rather than seeking more federal funding, which would subject the failing project to closer federal scrutiny.)

Muni has handed a series of nice breaks to the North American subsidiary of Alcatel Alsthom Cie General Electricite, a $30 billion multinational corporation located in Paris, France. Instead of suing Alcatel -- as the mayor threatened -- Muni has twice rewritten the terms of the original contract to suit Alcatel's technical and scheduling needs. Muni is withholding $5 million in Alcatel payments -- but that's small restitution for trading a reliable signal system for one that may never work.

Consultants have been feeding on San Francisco's transit system for decades. Shortly after the turn of the century, San Francisco Mayor Eugene Schmitz and most of the members of the Board of Supervisors went to prison for accepting bribes from a consultant to a private streetcar company. An early Muni consultant, Bion J. Arnold, built tracks into empty dunes that had been bought up by his land-speculating friends. After World War II, a pair of military-industrial consultants, Col. Marmion "Insider" Mills and Col. Sidney Bingham, engineered Muni's switch from environmentally friendly electric streetcars to smoke-spewing diesel buses sold by General Motors.

But Muni does not need to hire consultants to mess up capital projects. Muni can do that on its own.

Muni's most recent internal financial reports show that of Muni's 82 ongoing capital project line items, 46 are over budget -- to the tune of $91 million. Muni can't perform simple addition and subtraction, say its overseers, who note, among other things, $100 million in accounting errors at the agency. And, outraged auditors sputter, Muni has a disturbing habit of throwing away original budgets and schedules in childish attempts to hide cost and time overruns.

Incompetence or something worse? Cascades of large and small "mistakes," chronicled in government records, keep raising the question:

* Two years ago, Muni's engineering division needed to quickly spend some federal money that was earmarked for rehabilitation. It wasn't enough money to rehab a whole building, but it wasn't an insignificant sum, either. As it turned out, there were a series of manholes along the city's cable car lines that were constructed of a "light-weight metal material that warps." The hatch covers did not need to be redesigned, really; all that was needed was a heavier metal cover. Ten engineers were budgeted to spend up to three months deciding what metal to use for the new covers. The cost: $243,342.

* Last summer, Muni paid a consultant to design a computer center at Muni headquarters on Presidio Avenue. After the design was almost complete, Muni executives decided to move the computer center to a temporary office at 875 Stevenson St. So a new design became necessary -- for an office that Muni hopes to leave by the end of 1999.

* Not long ago, Muni paid $2.3 million for 20 massive diesel bus engines, but did not add them to its property inventory. By the time an auditor stumbled across the $116,000 engines, they had been left to rust, because they were the wrong size for Muni's buses. The auditor suggested the engines be sold for scrap value.

* City Budget Analyst Harvey Rose was appalled in 1996 when he found that Muni was "jeopardizing multimillion dollar investments" by completely replacing its fleet of streetcars, buses, and trolleys before finding anywhere to store the new vehicles. And attempts to provide more storage and maintenance space have gone almost humorously awry. Building expansions and improvements have repeatedly been torn apart because architectural drawings specified sizes that turned out, later, not to fit the equipment to be housed.

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