RD389 - Annual Report on Initiatives on Outsourcing, Privatization, and Downsizing within the Department of Transportation - FY2010


Executive Summary:
The Virginia Department of Transportation’s (VDOT or The Department) FY 2010 expenditures totaled $3.07 billion. The Department spent $2.29 billion, or 75% of those expenditures externally: $1.87 billion with private sector vendors (61%), and another $0.42 billion in transfer payments (14%) made to localities who maintain their own roads. When debt obligations are included, VDOT’s total external expenditures in FY 2010 comprised 83%, or $2.54 billion of the $3.07 billion. Figure A below reflects the breakdown of expenditures.

Figure A: Breakdown of FY 2010 VDOT Expenditures by Department of Accounts Category

FY 2010 VDOT Expenditures (in millions):

Private Sector Vendors: $1,865.6/61%
Transfer Payments: $420.8/14%
Debt Obligations: $253.7/8%
Personal Services: $530.1/17%

The Department continues to expand outsourcing, privatizing, or downsizing where supported by good business practices. Highlights of activities in these areas are set forth in Table 1.

Table 1.0: Highlights of FY 2010 and FY 2011 Outsourcing, Privatization and Downsizing Activity:

FY2010:

Outsourcing:
• 100% of Interstate Maintenance outsourced by April 2009, ahead of July 2009 schedule.
• Interstate Maintenance Outsourcing expenditures $209 million.

Privatizing:
• Received solicitation and executed interim agreement with Elizabeth River Crossings, Inc. for Downtown/Midtown/Martin Luther King PPTA project and determined the project was operationally and technically feasible.
• Cancelled previous procurement of Route 460 Improvements project and solicited Route 460 project with revised commercial terms.
• Continued development of the I-95/395 HOT Lanes projects.

Downsizing:
• Met the Appropriation Act requirement that the Department’s full-time filled positions do not exceed 7,500.
• Completed transfer of Dulles Toll Road to Metropolitan Washington Airports Authority on October 1, 2009. This affected the transfer of 43 full time employees.

FY2011:

Outsourcing:
• Plans for outsourcing management, maintenance, inspections and operations of the Woodrow Wilson Bridge (WWB) have begun through a request for proposal (RFP). The RFP covers a portion of I-495 (4 miles in VA currently under contract) and the WWB under joint agreement with Maryland. The contract ($36.6 million) was awarded in June 2010 and will be managed by VDOT.
• VDOT will issue an RFP for the staffing, maintenance, and repairs of 39 Safety Rest Areas and Welcome Centers throughout the Commonwealth. Current contracts are due to expire December 2010. The expected award date is late 2010 and will be managed by VDOT.

Privatizing:
• Implementation of the Interim Agreement Phase 2 Deliverables in the support of a Comprehensive Agreement with ERC, Inc., etc.
• Continue Procurement on the Route 460 Project.
• Continue development of the I-95/395 Hot Lanes Project.
• Setting up separate PPTA office.

Downsizing:
• Undergo targeted hiring to rebuild the organization in key areas