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Losing CA high-speed rail bidders get $2 million payout from state

Losing CA high-speed rail bidders get $2 million payout from state

I recently covered an example of what passes as sensible budgeting in California: The High Speed Rail system.

You would be hard pressed to find a more epic example of a hideous blend of cost overruns, cronyism, and incompetence.

So when Governor Jerry Brown touts fantasies of disappearing budget deficits, the following example of California financing shows why many citizens remain skeptical of his claims, according to The San Diego Union-Tribune :

The California High-Speed Rail Authority has agreed to issue a $2 million “stipend” to all four of the losing bidders, an obscure practice used for some large-scale construction projects. Bullet-train officials say the incentive was designed to attract bidders and therefore spur better, more competitive proposals.

The California High-Speed Rail Authority’s chairman Dan Richard, said such a practice will generate lower bids, which doesn’t make logical sense.

Dean Riehm, a San Diego activist who has been following the “bullet train” fiasco, notes that there is an entirely different reason for the approach:

Allow us to translate what Dan Richards was attempting to communicate: “There is no way in hell we would be able to attract any serious bidders and ask them to design and build a high-speed railroad when we don’t yet own any of the land upon which to build this without that $2 million cushion. There is too great a risk for bidding firms for us not to pay them off afterwards.”

Additionally, bidding “stipends” are not a normal practice in the construction business, as noted in the San Diego U-T article :

Eric Christen, executive director of the Poway-based Coalition for Fair Employment in Construction and a project opponent, said in his 13 years in the business he has never seen a payout for losing bidders.

“If it was the only thing that these guys were doing like this, well, I might give them the benefit of the doubt,” Christen said. “But it’s one after another, after another, after another.”

As to the amount of the stipends, he said, “The numbers to me as a taxpayer and as a private citizen are shocking.”

But not shocking to those of us who watch how Sacramento does business.


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I wish I’d known – I could have put together a losing bid for way less than $2M, and then walked away a rich and happy man. How about if they re-open the bidding, and let everyone in CA bid? That way (a) CA solves its problem with poor people: everyone will be at least a $2 millionaire and (b) we solve CA budget deficit, because all those people will have to pay a chunk of it back. 🙂

The Drill SGT | February 5, 2013 at 6:35 pm

I play in the Federal services and construction markets and all the RFP’s (requests for proposals ) I see have a clause that says:

The Feds don’t pay proposal costs, nor your costs if you lose.

PS: Wife is a 34 year Fed contracts attorney.

[…] Dear Readers:  Please check Legal Insurrection for my most recent political punditry – Losing CA high-speed rail bidders get $2 million payout from state […]

Well, losing is hard. A California group hug and a couple of million dollars should help those that are success challenged maintain their self esteem.

A small price to pay.

Democrat Party State of California where we have term limits that don’t protect us from the excesses of career politician job hoppers, where we have nothing to show for the hundreds of millions in state bonds obligated to pay for embryonic stem cell research and now: high speed rail hallucinations presented by Governor Edmund G. Brown Junior.

What we really have is the plaintiff’s attorney’s full employment act and still, lawyers can’t find enough ambulances to chase and law schools wonder why enrollment is down.

And my state Senator, Darrell Steinberg, has to thumb his nose at Microsoft over the Sacramento Kings then at Rick Perry over, Duh, businesses leaving California for another state. Darrell, the dough drain has been in progress since Speaker of the Assembly, Emeritus, Willy Brown, thanks for tuning in!

Thank you, Leslie.


a participation trophy.

It’s hardly just California, although as usual they are among the creative leaders in blowing money they don’t have.

The entire Democratic Party and voters live in a fantasy world in which anything is possible if you wish for it, math doesn’t count, and all the children are above average.

130 There is such an investment in our “Capitol City” by both parties that they are now both working to protect the funding. Yes, all politics are local and the DC metro area is local to itself, except it’s constituents can tax the rest of the country.

Now, not only do we need term limits for our politicians, but we now need a rotating Capitol City so it is harder for the political class to put all their efforts into one location.