Taken for ride? D.C. paid $5 million in improper charges for late, overbudget streetcars

The Golden Horseshoe is a weekly designation from Just the News intended to highlight egregious examples of wasteful taxpayer spending by the government. The award is named for the horseshoe-shaped toilet seats for military airplanes that cost the Pentagon a whopping $640 each back in the 1980s.

This week, our award is going to the government of the District of Columbia, for making $5.2 million in improper payments to the prime contractor on the city's streetcar project.

According to September 2020 report by the D.C. inspector general, the D.C. Department of Transportation (DDOT) has been billed $55.3 million by the Nebraska-based HDR Engineering Inc. since 2010, when the D.C. Streetcar program began — almost 10% of which turned out to be non-allowed charges 

According to the report, the payments that shouldn't have been made include charges for duplicate services, excessive overhead and service fees, and unauthorized subcontracting work. Further, a little over $900,000 in costs were paid for services that "may not have been rendered."

"DDOT project managers lacked the expertise to review and approve invoices for payments," the IG audit report found. "Instead, DDOT relied on the prime contractor to certify the accuracy of invoices for payment."

The D.C. Streetcar, which is essentially an above-ground subway car, currently runs for a little over two miles on H Street Northeast and Benning Road. The project's construction has been plagued by delays and budget overruns. The nation's capital has spent more than $200 million on the project so far, with plans to extend the streetcar line in place.

This report is an example of a government entity squandering excessive amounts of their constituents' money, while failing to exercise the basic monitoring and oversight required to ensure those dollars were spent efficiently.

The initial DDOT contract set a budget target of $10 million for the DC Streetcar program. Over the life of the project, however, "the contract was modified several times to a final ceiling price of $68.5 million," according to the IG report

Although agreeing with a large portion of the inspector general's report, the DDOT replied that the department would seek only $4,049,822 in reimbursement from the engineering company — about $1.15 million less than the report contends the city is owed.

As of mid-September, DDOT had still not asked HDR to explain or account for the excessive and fraudulent costs documented in the report.