Records Show Trump’s Border Wall Is Costing Taxpayers Billions More Than Initial Contracts

Records Show Trump’s Border Wall Is Costing Taxpayers Billions More Than Initial Contracts

On the same day in May 2019, the Army Corps of Engineers awarded a pair of contracts worth $788 million to replace 83 miles of fence along the southwest border.

The projects were slated to be completed in January 2020, the Corps said then. Four months into this year, however, the government increased the value of the contracts by more than $1 billion, without the benefit of competitive bidding designed to keep costs low to taxpayers.

Within a year of the initial award, the value of the two contracts had more than tripled, to over $3 billion, even though the length of the fence the companies were building had only grown by 62%, to 135 miles. The money is coming from military counter-narcotics funding.

Those contract spikes were dramatic, but not isolated. A ProPublica/Texas Tribune review of federal spending data shows more than 200 contract modifications, at times awarded within just weeks or months after the original contracts, have increased the cost of the border wall project by billions of dollars since late 2017. This is particularly true this year, in the run-up to next week’s election. The cost of supplemental agreements and change orders alone — at least $2.9 billion — represents about a quarter of all the money awarded and more than what Congress originally appropriated for wall construction in each of the last three years.

President Donald Trump made construction of the border wall a signature issue during his 2016 campaign, claiming that his skills as a builder and businessman would allow his administration to build the wall in a more cost-efficient way than his predecessors. “You know the wall is almost finished,” he told a crowd of supporters in Arizona recently, and they weren’t paying a “damn cent” for the border wall. It was “compliments of the federal government.”

Yet an accounting of border wall contracts awarded during his presidency shows that his administration has failed to protect taxpayer interests or contain costs and stifled competition among would-be builders, experts say. In all, Trump’s wall costs about five times more per mile than fencing built under the Bush and Obama administrations.

Experts say the frequent use of so-called supplemental agreements to add work or increase the price has amounted to giving no-bid contracts to a small group of pre-selected construction firms, many with executives who have donated to Trump or other Republicans.

Some contracts and add-ons have been handed out without press releases or announcements, making it harder for the public to track the expanding costs.

Charles Tiefer, a University of Baltimore contracting expert, said the contracting actions involving the border wall project are unusual for the normally restrained Corps, whose contracts aren’t typically characterized by massive price increases. Tiefer called the amount of money awarded through modifications “amazingly high.”

“These (border wall) modifications do not look like something the Army Corps of Engineers would get by competitive bidding,” Tiefer said. “The taxpayer is paying much more than if the whole contract were out for competitive bids.”

The Government Accountability Office told ProPublica and the Tribune that it was looking into the contract modifications as part of a broader review of the process the Corps has used to award border wall contracts using military funds. The report is expected to be released early next year.

While adding work to a contract is not unusual on its own, some of the very rapid and significant supplemental agreements in some of the border wall contracts raise red flags and don’t always provide enough information to determine if they are problematic, said Stan Soloway, president and CEO of Celero Strategies and former deputy undersecretary of defense for acquisition and reform during the Clinton administration.

Raini Brunson, a spokesperson for the Corps, said she couldn’t comment on specific contracts, instructing reporters to file records requests for more information. But she added that modifications are “made all the time for a variety of reasons.” And while the Corps doesn’t provide specific updates on a regular basis, she said contract awards and modifications are posted on federal procurement websites and in databases accessible to the public.

But the sites can be difficult to navigate, and the databases often don’t reflect recent changes. Neither U.S. Customs and Border Protection nor the Corps publicly maintains a comprehensive list of all border wall contracts and their modifications. Some projects lack enough detail on government websites to even determine basic facts, such as what the additional work is for.

Some of the border wall contract modifications essentially amount to new projects that in some cases then undergo their own modifications.

A review of recent Corps non-border wall contracts shows no recent contract add-ons that approach the scale of border wall awards. Two contracts for walls surrounding a Florida reservoir awarded in early 2019 for about $130 million have had no cost increases, according to federal procurement data.

Of the Corps’ five largest active non-border wall contracts in fiscal 2020, three received no additional money through supplemental agreements, and a fourth received three supplemental agreements totaling $584, according to usaspending.gov. A fifth contract, to replace locks along the Tennessee River, did increase substantially, but 98% of the rise was due to pre-agreed contract options, not after-the-fact supplemental agreements or change orders that have been added on to so many border wall contracts.

Building a wall along the southern border has been one of Trump’s core promises and perhaps one of his most politically divisive battles.

The Supreme Court has agreed to hear a lawsuit brought by advocacy groups over a move to shift billions of dollars from the military for border wall construction after Congress refused to fully fund the project. The federal government’s own watchdog agencies are reviewing some of the contracts after lawmakers raised concerns that political favoritism played a role in how the government awarded them.

Among the biggest beneficiaries of the wall contract changes is Galveston-based SLSCO, which has won the second-most in border wall contracts since 2017, about $2.2 billion, including nearly half a billion dollars in supplemental agreements. North Dakota-based Fisher Sand & Gravel has also won more than $2 billion in contracts since building a controversial private border fence in the Rio Grande Valley, which a ProPublica/Tribune investigation found was in danger of toppling if not fixed and properly maintained. On May 6, federal officials gave the firm a $1.2 billion contract, first reported by the Arizona Daily Star; the government did not publicly announce the massive award. The company’s CEO, Tommy Fisher, could not be reached for comment. SLSCO officials referred questions about its border wall contracts to CBP.

“Spiraling Costs”

When Trump first touted his plan to build a “beautiful” wall all along the southern border, he said it would cost $8 billion — $12 billion tops — and that Mexico would pay for it.

The nation’s self-anointed “best builder” bragged in 2017 that his construction know-how and savvy would bring the price of his border wall “WAY DOWN!” once he got involved in the process.

In the last three years, the administration has awarded nearly 40 contracts to 15 companies worth at least $10 billion to build more than 500 miles of fencing plus roads, lighting and other infrastructure, according to the most recent usaspending.gov data compiled by ProPublica and the Tribune. (Initially, the president proposed building 1,000 miles of wall, but he later revised that figure down to 450 to be completed before the end of his first term.)

In an October update, the administration said it had identified $15 billion — most of it from military funds — to build a total of 738 miles, which comes out to roughly $20 million a mile.

That’s compared with the $2.4 billion the government spent from 2007-15 to build 653 miles of fence, as well as gates, roads, lighting and other infrastructure, according to the GAO.

Roger Maier, a CBP spokesman, said it’s not reasonable to compare prior expenses to current ones. “CBP is constructing a border wall system which includes a combination of various types of infrastructure such as an internally hardened steel-bollard barrier 18’ to 30’ high, new and improved all-weather roads, lighting, enforcement cameras and other related technology to create a complete enforcement zone,” he wrote in response to questions. “This is very different than the barriers we constructed in 2007-2009 where it was just the 18’ steel-bollard barriers in some locations and vehicle barriers in others.”

So far, Trump’s administration has completed 360 miles, with an additional 221 under construction, according to CBP. Very little of that has added new fencing where there was none, though. Most of the work has been replacing shorter vehicle barriers and dilapidated fences with more imposing 30-foot bollard poles largely on land already owned by the federal government in Arizona and California.

Much less work has been done in Texas, one of the busiest border regions in terms of drug and migrant crossings, but which features the border’s largest stretch without barriers. That is due both to the Rio Grande that snakes its way along the 1,200-mile Texas border, dividing the U.S. and Mexico, and the fact that most of the land is privately owned.

Trump declared a national emergency in 2019 after the Democrat-led House refused to give him more than $5 billion to fund the border wall, instead offering $1.4 billion to build fencing in the Rio Grande Valley Sector. The impasse led to a 35-day partial government shutdown before Trump bypassed Congress. By declaring a national emergency, Trump was able to shift billions of dollars from the Department of Defense and the Treasury Department. The rest comes from CBP appropriations.

To those following the border wall construction closely, the contracting process has triggered alarm.

“I’m just extremely concerned about the spiraling costs of the border wall … and about the amount of money that they are having to take away from DOD projects to build this wall,” said Scott Amey, general counsel of the Project on Government Oversight, which is tracking the increasing costs of border wall-related contracts.

“Trump is trying to make good on a campaign promise that he made four years ago, and he’s rushing through the construction of the wall,” he added.

In February, the administration waived 10 federal contracting laws to speed up construction along the southwest border, doing away with rules that promote contract competition and small-business participation, as well as requiring justifications for the exercise of contract options, which prompted experts to issue warnings about the potential outcome.

In awarding additional money through contract modifications, the agency has frequently cited “unusual and compelling urgency” to further erode rules requiring a competitive bidding process. Experts say that “urgency” has little credibility and has led to environmental and other damage along the border.

“Whenever you do that, there are some compliance risks, and … there’s the risk of not getting really adequate, robust competition,” Soloway said. “The more and better competition you have, the more and better decisions you can make.”

A July report from the DHS Office of Inspector General said costs for the border wall could grow exponentially due to CBP’s poor planning ahead of construction in an apparent rush to build the wall.

The agency “has not fully demonstrated that it possesses the capability to potentially spend billions of dollars to execute a large-scale acquisition to secure the southern border,” the inspector general reported.

Until it improves its acquisition planning and management, the DHS watchdog said, “any future initiative may take longer than planned, cost more than expected and deliver less capability than envisioned to secure the southern border.”

In response, DHS and CBP said they were being “chastised” for following the president’s executive order from 2017, which directed the “immediate construction of a physical wall.”

The inspector general countered that DHS’ lead role in building the border wall doesn’t exempt it from “following congressional requirements and established acquisition practices to safeguard taxpayers dollars from fraud, waste, and abuse.”

A Track Record of Violations

There’s no universal list of all border-wall-associated contracts. ProPublica and the Tribune found 68 contracts since late 2017 using CBP news releases, DOD and Corps announcements, and a search of federal databases for a group of 12 companies given pre-approval status by the Corps. Roughly two dozen of these contracts have only been awarded a minimum guarantee of about $2,000 but no border wall work yet. Not included in this list are millions more awarded to companies for peripheral services including acquiring land, aerial imaging, the removal of munitions debris and cactuses, and environmental monitoring.

Of the awarded contracts identified by ProPublica and the Tribune, four companies earned the vast majority of the funds — about $9 billion. The analysis focused on the total value of the contracts, rather than the amount spent to date. Top officials at the firms have been frequent donors to Republican candidates, and records show some of the companies have a host of safety violations from the Occupational Safety and Health Administration for offenses including failing to provide adequate shade to workers and not operating equipment safely, as well as wage violations.

One contract obtained by a Montana company shows how the awards can grow to several times their original size. In May 2019, BFBC LLC, a subsidiary of Barnard Construction, won a $142 million contract just a few days after it learned it was one of 12 construction firms selected by the Corps.

The contract called on the firm to replace about 5 miles of aging, low-slung vehicle barriers with 30-foot-high steel bollards near Yuma, Arizona. The project, one of the first to be paid for with diverted military funds, was widely publicized and featured a quick turnaround, with completion scheduled for Jan. 31, 2020.

What was less publicized was that the contract was open-ended. In technical terms, it was “undefinitized,” which is allowed when the government seeks to begin work immediately, but which experts say provides little incentive to keep costs contained.

Four months later, the contract was “definitized,” bringing the cost to more than $440 million. A DOD announcement says the money was for “replacement of El Centro and Yuma vehicle and pedestrian barrier,” but it gives no additional details.

Six months later, in March 2020, the Corps issued a $172 million change order. This time, no press release or announcement hailed the contract modification; a federal database says the money is for “additional miles” near Yuma, but it provides no details.

Then, in April, a week after Democratic members of Congress urged border wall funds be redirected to the then-exploding coronavirus pandemic, BFBC received its biggest contract modification to date: $569 million for 17 additional miles in San Diego and El Centro — or $33 million per mile. A Corps spokesperson told the Daily Beast it awarded the half-billion-dollar contract add-on without competitive bidding because the firm was already “mobilized and working in close proximity.”

Congressional Democrats called on the GAO to investigate what Sen. Jack Reed, a Rhode Island Democrat, called a “no-bid contract to an apparently politically connected, private contractor” as part of the federal watchdog’s broader review of Corps contracts. Campaign finance reports show BFBC’s owner is a longtime GOP donor who has given nearly $200,000 since 2017 to Republican causes and candidates, including to those in his home state of Montana as well as Texas and Arizona. Company officials could not be reached for comment.

Southwest Valley Constructors, a New Mexico-based affiliate of Kiewit Corp. that formed several months after Trump’s inauguration, has received the most in border wall contracts since 2017. This subsidiary alone has been awarded contracts worth at least $2.7 billion for about 100 miles of border wall work in Arizona and Texas. More than $2 billion of that has come from the single May 15, 2019 contract and subsequent modifications.

While most of the work is ongoing, U.S. Fish and Wildlife officials in Arizona have already raised concerns that the company’s work is dropping groundwater levels at a wildlife refuge, according to emails obtained by the Arizona Daily Star. In South Texas, a judge issued a temporary restraining order against the company after descendants of the family that started the Jackson Ranch Church and Cemetery accused it of working in such “hurried manner” that it was causing excessive shaking and vibrations at the historical sites.

The firm already faces three serious OSHA violations related to excavation safety rules that stem from a single inspection, sparked by a complaint. Southwest Valley Contractors is contesting them. Kiewit and its subsidiaries have a long track record of violations related to worker safety, the environment and employment. Since 2000, it has paid more than $5 million in penalties, records show. Kiewit representatives did not respond to a request for comment.

The $2.2 billion Texas-based SLSCO has won since 2018 has been for at least nine contracts for border wall construction, including about $300 million to build 13 miles of fencing on top of concrete levees in the Rio Grande Valley. That fencing skirts the Bentsen-Rio Grande Valley State Park, La Lomita Chapel and the National Butterfly Center, which Congress exempted from border wall construction in 2018.

The firm’s work has come under scrutiny previously: A section of fencing built by the company in Calexico, California, blew over in January during the construction process, which officials blamed on high winds and drying concrete.

The firm has also received more than $410 million in supplemental agreements to a $390 million contract originally awarded in April 2019 to build fencing west of El Paso. Some of that money went to pay for an additional 2.4 miles of fencing; it’s not clear what the rest went to.

As the presidential election approaches, both contractors and administration officials are racing against the clock: Former Vice President Joe Biden, the Democratic candidate, has pledged to cancel the existing contracts if he is elected. If this happens, construction firms would likely be awarded termination fees and get paid based on the amount of work they have completed by the time contracts are canceled.

While there’s not an overall estimate of how much that could cost, court documents filed by the administration as part of the legal battle over the use of military funds provide a window into what a Biden administration might face come January: A single contract awarded to BFBC in November 2019 for 33 miles of fence replacement in Arizona, currently valued at about $420 million, could cost the government nearly $15 million to terminate.

“While ending construction is easy to say, it might not be so easy, because he’ll have to consider the phase of construction, gaps in the wall that could be exploited and the termination costs for existing contracts, which can come with a high price tag for taxpayers,” said Amey, with the Project on Government Oversight. “President Trump might have boxed in Biden, requiring completion of certain portions of the wall whether he likes it or not.”

Published at Tue, 27 Oct 2020 17:00:00 +0000