Highway Maintenance: The case for Outsourcing part 2

Competing for Highway Maintenance:
Lessons for Washington State-Part II


by Dennis Lisk
January 1999


I. Introduction

In Part I of Competing for Highway Maintenance: Lessons for Washington State, we examined five governments around North America who implemented competition from the private sector into their highway maintenance programs. For the most part, these governments learned that through competition from the private sector they could deliver public services at a lower cost with better quality.

In our earlier examination we laid out four concrete goals that all competitive governments should strive for:

Lower Costs: Private companies are disciplined to seek efficiencies through the need to operate at a profit while providing superior service at a competitive price. By employing the techniques of competition, governments force themselves to find efficiencies within their operations and lower their costs of performing a service.

Higher Service Levels: Monopolies – government or private – frequently lack the stimulus to innovate and improve service delivery. By opening themselves to the challenge of competition, governments can learn to upgrade their services within existing budgets and simultaneously achieve cost savings.

Better Management: Governments can streamline their operations by using the same accounting procedures and productivity measures that the private sector uses, which are more accurate and comprehensive than traditional government methods.

Changed Government Culture: When a government chooses competition over monopoly its culture changes – instead of performing more functions with less expertise, competitive governments liberate themselves to perform a smaller set of core functions better than ever before.

The purpose of Part II of our analysis will be to examine how these four goals can be applied to the provision of highway maintenance in Washington State.

II. Washington’s Highway Maintenance Program

Between 1997 and 1999 the State of Washington spent $248.6 million on highway maintenance. This is approximately nine percent of the state Department of Transportation’s total budget of $2.2 billion. During the 1997-1999 biennium, the state employed 1,427 full-time employees to maintain a network of 7,035 miles of roads and bridges.

During the last two years, the Washington State Department of Transportation (WSDOT) adopted a new method to manage the highway maintenance program called the Maintenance Accountability Process (MAP). This was done at the recommendation of the Dye Management consulting firm, which the state legislature hired in 1995 to answer questions about WSDOT’s performance, efficiency and management of highway maintenance. According to WSDOT, the purpose of MAP is "to provide a clear link between maintenance objectives, maintenance activities, maintenance service levels, the budget, and actual performance."

The state’s nearly 1,500 strong maintenance workforce performs a variety of functions. Using MAP, WSDOT divides its maintenance program into nine separate groups of activities and assigns a "level of service" rating for each. Below is a chart describing each activity and its level of service rating for fiscal year 1998. The rating system is like a report card, with an "A" given for services that are performed excellently, and an "F" for services that are performed poorly. The rating system also tells policy makers at what levels of funding WSDOT believes it would be necessary to achieve an "A" level of service rating for each activity.

Chart 1: FY 1998 Maintenance Accountability Process Level
of Service Ratings
Maintenance Category
Level of Service Rating

Roadway Maintenance & Operations

Pavement patching and repair B
Crack sealing B

Shoulder maintenance
C+
Sweeping and cleaning B
Safety patrol C

Drainage Maintenance & Slope Repair
Ditch cleaning B
Culvert maintenance F-
Storm drainage maintenance F
Silt drainage maintenance F+
Slope repair F+

Roadside & Landscape Maintenance
Litter pickup C-
Noxious weed control D+
Nuisance vegetation control D
Landscape maintenance C-

Bridge & Tunnel Maintenance
Repair of bridge decks and structures D
Bridge cleaning F
Urban tunnel maintenance B+
Operation of movable bridges C+

Snow & Ice Control

Response time to snow and ice on roadway, accumulation of snow on roadway, presence of sand and deicers,pass opening and closing dates of seasonal roadways.
C+

Traffic Services
Pavement striping B
Pavement marking F+
Repair/replacement of regulatory signs C
Repair/replacement of advisory signs B
Repair/replacement of guideposts D
Guardrail maintenance A
Traffic signal n/a
Highway lighting maintenance n/a
Issuance of oversize permits B-

Rest Area Maintenance

Cleanliness of building, appearance of landscaped areas, sidewalks, pavement.
B

Supervision, Training and Support Maintenance n/a
Third Party Damages and Disaster Maintenance n/a


Although the state has adopted Dye Management’s Maintenance Accountability Process, it has not taken any action yet on one of the firm’s other suggestions: that "WSDOT should have expanded ability to contract for routine maintenance." Dye Management said that without contracting "Washington is missing potential opportunities to reduce costs, improve quality, and flexibly manage maintenance." According to WSDOT however, "recommendations regarding changes to state statute (contracting out…) have been set aside for further Legislative policy discussions."

A 1998 audit of WSDOT for the legislature’s Joint Legislative Audit Review Committee said that Washington State spends about 18 percent more on highway maintenance than the national average. Subtracting the costs of snow removal, the state spends about 7 percent above the national average for maintenance. Clearly, there is reason to implement cost-saving procedures, but doing that requires committed political leadership. The first lesson of any successful competitive government, as outlined in Part I of Competing for Highway Maintenance, is that only with the commitment of elected officials and agency managers will competition work. Until the 1998 legislative session there had been no committed political leadership to make highway maintenance more competitive.

III. Maintenance Contracting in Washington State

Even though the state spends more than the national average to maintain its highways, it is unable to consider a successful alternative method to lower its costs: allowing the private sector to compete. Currently, Washington State contracts with the private sector for only 1.9 percent of highway maintenance service. Apart from states that do not contract out at all, that is one of the lowest percentages in the nation. The primary reason WSDOT is unable to contract out more work is because it is currently against the law for them to do so. Without legislative intervention, WSDOT is simply unable to take advantage of a nationally proven and successful method for saving money and improving service for taxpayers.

For the last decade, three separate studies commissioned by the state have recommended that Washington contract out highway maintenance work with the private sector. The most recent of these studies, the 1998 audit of WSDOT, summed up the issue clearly:

"…based upon the experiences of other states…we believe that when fully implemented, a new approach to maintenance contracting could result in real cost savings of 10 percent or more over current expenditures and at the same time improved service levels."

Until 1998, the state legislature took no action on the recommendations to contract out for highway maintenance.

IV. House Bill 2892

During the 1998 legislative session, State Representative Maryann Mitchell (R-Federal Way) introduced House Bill 2892 – to authorize the Washington State Department of Transportation (WSDOT) to contract with the private sector for highway maintenance. The bill, for the first time, would have exempted WSDOT from the provisions of the Spokane Community College case [Washington Federation of State Employees v. Spokane Community College, 90 Wash. 2d 698, 585 P. 2d 474 (1978) and codified by the legislature in RCW 41.06.380] which today prevents state agencies from instituting privatization policies of any sort. HB 2892 passed in the Legislative Transportation Committee by a vote of 17 to 10, but did not reach the full House in the 1998 session. Although the bill died with the end of the legislative session, highway maintenance will be part of the agenda in the 1999 session.

Pros and Cons

Proponents of HB 2892 argued that the state could lower costs and improve service if it were allowed to contract with the private sector for highway maintenance.

Not surprisingly, the main opponents of HB 2892 were state employees, who regularly oppose any form of privatization. In a "Fact Sheet" about the bill, the Washington Federation of State Employees set out four primary reasons why HB 2892 was "a bad idea":

The bill did not "create a level playing field" for competition between state workers and the private sector and it would not save money.

The bill failed to adjust the $30,000 bid limit past which the state must contract for services, implying that the limit should be raised to allow state employees to perform more work than they currently are able to do.

The bill "would create more unemployment in rural Washington," since "most of the maintenance employees live and work in small towns."

The Federation accused privatization of not being "the panacea you have been led to believe," citing a 1997 study by the Economic Policy Institute that said that "there is no evidence that contracting out saved money or improved service quality."

HB 2892 – What it Would Have Done

How would HB 2892 accomplished its goal of allowing the private sector to compete for highway maintenance service? The following is a list of the major provisions of HB 2892:

The first part of the bill stated that WSDOT "may purchase maintenance services by contract with individuals or business entities."

It directed the Transportation Secretary to notify the Department’s Maintenance Director and an appropriate labor representative when the Department would be purchasing maintenance services and grant them an opportunity to "offer an alternative competitive bid to the proposed contract." This alternative bid must have included the following: (1) the current prevailing wages; (2) an "overhead factor" of no less than 66% of the base prevailing wage; (3) equipment charges which reflect fair market values and; (4) the cost of sales tax and business and occupation taxes.

The bill directed WSDOT to submit an annual report to the Legislative Transportation Committee disclosing all maintenance contracts and their cost.

HB 2892 instructed WSDOT to first test the idea by conducting a three-year pilot project to begin on July 1, 1998 and end June 30, 2001.

All these provisions raise separate and unique issues which this paper will now examine in more detail.

Highway Maintenance Contracting and the Law

The first provision of House Bill 2892 was written to overcome the legal barriers that prevent the State of Washington from contracting with private businesses for provision of services, including highway maintenance. Under current law, WSDOT is barred from considering cost-effective alternatives to provide highway maintenance by the State Supreme Court decision in what has become known as the Spokane Community College case, Washington Federation of State Employees v. Spokane Community College.

This 1978 case involved Spokane Community College’s attempt to contract with a private firm for the janitorial services in a newly-constructed administration building. The contract would not have resulted in termination of employment for any public employees working as janitors for the rest of the college, and would have saved the college money. Nevertheless, the Court agreed with the state employees union when it ruled that the college had no legal authority to enter into a contract for new services that had "regularly and historically been provided, and could continue to be provided, by civil service employees."

To accommodate the Court’s decision, the state legislature enshrined into law the principle stated above. RCW 41.06.380 set forth the procedure by which state agencies may contract out services with private vendors. The law states that services provided by state employees before April 1979 must continue to be provided by state employees and that the state cannot enter into contracts with non-state employees that result in job loss for state employees.

The audit of WSDOT posed questions about the department’s legal standing to engage in contracting out of maintenance work. To answer these questions, the audit team asked the state Attorney General, "what are the specific legal restraints to privatizing highway maintenance services beyond the current levels?" Senior Assistant Attorney General William Williams answered that question by saying,

"The only legal restraint is state statute, as interpreted by the courts. To accomplish the outcome expressed in the question, legislation would be required to give the department clear, unambiguous authority to contract out maintenance work that is currently being performed by state employees. If the intent is that the department could have the discretion to either use state forces or contract out the work, and that the department could not bargain away its discretion, then legislation would have to be enacted to eliminate contracting out as a bargainable issue."

Today, only a specific action of the state legislature – like HB 2892 – to exempt certain programs or agencies from the law, or the law’s outright repeal, would allow state agencies the flexibility to take advantage of lower prices in the private sector.

Labor Relations

The next major section of HB 2892 dealt with a two-pronged issue: if the state allowed contracting out of highway maintenance, then how could they also involve in competitive bidding public employees currently performing highway maintenance? And, once the decision is made to involve public employees, how can a level playing field for competition between the public and private sectors be created? Essentially, the bill chose a managed competition approach, similar to the examples of Massachusetts and Indianapolis described in Part I of Competing for Highway Maintenance. The bill set up a process whereby private companies and public employees could compete for the same contracts.

The original version of HB 2892 did not include a section spelling out how to allow state maintenance workers to compete for contracted services. This prompted a letter from Governor Gary Locke’s office to Representative Mitchell, which said that "inherent in the notion of managed competition is collective bargaining on economic issues," currently unavailable to state workers. The Governor’s office also said that "we need to lay the groundwork to make managed competition successful for DOT," and that before the 1999 legislative session "relevant stakeholders should meet…to make recommendations for managed competition legislation…" After the Governor’s letter was published another version of HB 2892 was offered – this time with a provision allowing state employees the ability to compete for contracts, but also saying that contracting out of service would not be a bargainable issue if state workers were allowed to collectively bargain in the future.

Some argue that managed competition can only be effective in a fully unionized environment that includes collective bargaining. Others argue that it is the fact of employee involvement, not the specific structure, that is important. Managed competition champion and Indianapolis Mayor Stephen Goldsmith said that "you don’t have bad people working in…government. You have good people stuck in bad systems." His conclusion: if managed competition is to be effective, employees must be empowered to innovate in the way they organize to accomplish a task. One of the lessons of successful competitive governments like Indianapolis’ is that when freed of monopolistic barriers, government employees can be as creative as the private sector and will respond to competition with intelligent ways to save money, improve service and win contracts. Stephen Fantauzzo, a public employee union leader in Indianapolis, summed up competition best by saying that it "stops asking workers to park their brains at the door."

Washington does not now have collective bargaining for state employees. While collective bargaining may be a convenient method for management to deal with, in its absence, innovative management can still find appropriate structures – quality circles, bidding teams, or the like – to permit employees to prepare responsive bids. Effective public sector competition is as much a challenge to public managers as it is to public employees, which the substantial downsizing of management from the example of Indianapolis demonstrates.

Creating a Level Playing Field

One of the challenges to making managed competition work properly is creating a level playing field for competition. One of the lessons learned by competitive governments was the benefit of instituting accounting systems like Activity-Based Costing, which help them focus on finding efficiencies within their own operations while assuring accurate cost comparisons between the public and private sectors. Government accounting systems are not usually structured to measure all the costs that private companies bear in the marketplace. To compete fairly with the private sector, governments have to adopt an accounting system that calculates the total costs of providing services. According to studies on this topic by the Reason Foundation, this would include:

Direct Costs - Salaries and wages of employees working 100% on delivering the target service. Frequently overlooked are the health and retirement benefits the employees are earning. Also, the costs of supplies, materials, travel, printing, rent, utilities, and communications that go to 100% of delivering the target service.

Direct Costs Frequently Overlooked - Interest costs on capital items purchased for exclusive use of delivering the target service; pension costs of employees who work exclusively on target service; depreciation costs of facilities and capital equipment used to deliver the target service. For example, public sector agencies that own heavy machinery frequently do not budget for depreciation or amortization as private sector companies do. Yet, these remain true economic costs.

Overhead Costs - Indirect costs that benefit not only the target service, but at least one other government service. This would include all the direct costs mentioned above that would be incurred by other government services administering and supporting the target service delivery. For example, the salaries of job foremen responsible for managing several projects should be allocated among those projects

Cross Subsidization Costs - Sometimes in managed competition, only a portion of a department’s targeted service is contracted out, leaving other parts of a department protected from competition. Often, the portion of the department that must compete for a contract artificially lowers its bid by passing off actual, direct costs to other parts of the department that are protected from competition.

Taxes - The impact of taxes must be included: private contractors include in bids any applicable sales taxes imposed on them, as well as business and occupation taxes, personal property taxes and other taxes which are part of the cost of doing business.

House Bill 2892 made an attempt to deal with some of these issues, but not comprehensively enough. First, the bill stated that only current prevailing wages of maintenance workers be included as a direct cost, but there was no mention of how cost would be allocated for salaries of managers. Also, there was no inclusion of the costs of benefits for either salaried managers or wage-rate employees, and no mention of the costs of pensions for those workers. While the bill included the costs of equipment at fair market value, it did not specify what the word "equipment" included. Is "equipment" strictly the capital items used directly for highway maintenance work, or do other things fall under this broad category? The costs of communication, printing, rent and utilities should also be spelled out as costs for the government to include.

Many of the issues outlined above deal with how state workers would assemble an alternative bid on maintenance projects, one of the thorniest provisions of HB 2892. The bill stated that in calculating an alternative bid, state workers would have to include current prevailing wages and an "overhead factor" of no less than 66% of base prevailing wages. The reasoning behind these provisions was to provide simple and agreeable standards that would achieve equal costs between the private and public sector.

State workers objected to these provisions because they felt it would set up a situation that forced them to offer a bid that would be much higher than their current cost of doing business. As it stands now, private contractors who perform road construction for the state must pay their employees the current prevailing wage set by the state. In contrast, WSDOT employees performing highway maintenance are not paid prevailing wages (but do have 365-day a year jobs), creating a potential divergence in wages between private and public sectors. State workers also insist that their overhead costs do not equal 66% of prevailing wages. Furthermore, the state workforce pays lower finance charges on their equipment than private contractors, and does not pay sales tax or business and occupation taxes.

How can these difficult issues be solved? First, the state must decide its policy on prevailing wage. In order to create a level playing field, the state has three policy choices: first, raise state highway maintenance workers wages up to the prevailing wage; second, abolish the prevailing wage requirement altogether on jobs covered by HB 2892 – thereby liberating the market to decide wage rates; or third, add state employees’ current wages into the total labor pool, which would have the effect of lowering the prevailing wage level nearer to what state workers are earning currently.

Even more intricate problems face the state in trying to level the cost of overhead between public and private sectors. HB 2892 chose to solve these problems by arbitrarily setting the cost of overhead at no less than 66% of base prevailing wages. This figure was simply a rough estimate for the average amount of "overhead" a construction company charges for work on state highway projects. Choosing 66% may be a convenient legislative compromise but, before being adopted, should be subject to a careful study. Furthermore, adoption of a formula number minimizes opportunities for innovation that could redeem costs (as Indianapolis showed). A more analytical and precise bidding formula should serve the state better in the long run.

State workers insist that their overhead would be lower than 66% of the prevailing wage. That may or may not be true. The one method for establishing a fairer and more precise figure than 66% would be the establishment of a rigorous accounting system with features that include all the costs mentioned on the previous page. Using such a system, legislators and policymakers can know exactly what overhead is and how much it costs. Moreover, the workers and agency managers performing maintenance on a daily basis will gain a better understanding of areas in their own operations where they can save money. After going through such an exercise, state maintenance workers might find that they truly do have less overhead than 66%.

Such an exacting accounting standard, normal in the private sector, may be challenging to implement at first, but it can have a profound impact for the better on the culture of government. Public agencies would finally consider all the costs they incur to provide a service. Consequently, when external pressure from competitors in the marketplace grows there will be a sharper focus on driving down those costs to stay competitive.

HB 2892 also required the public employees’ alternative bid to include the costs of sales tax and business and occupation taxes, but there are other taxes and fees – like gas taxes – from which the government may be exempt, which private companies must still pay. The bill also dealt with another challenge to creating a level playing field by requiring the government offer to arrive as a sealed bid, a normal requirement private contractors must meet, but not always required of government bids.

Annual Report to the Legislature

The next part of the bill mandated WSDOT "to submit an annual report to the Legislative Transportation Committee…disclosing all the maintenance service contracts awarded during the prior fiscal year." The intent of this provision is to make WSDOT accountable for their decisions. A provision like this though, must be vigilantly followed up every year. In Texas, although an annual report on the status of contracted out maintenance was required, it was never actually submitted. The Texas legislature learned over time that adopting a general mandate for competition was not sufficient. To accomplish its goal it needed to require specific amounts of competition, starting low and increasing over time, in order to force the Texas Department of Transportation to change long-established ways of doing things.

Pilot Project

The final major section of HB 2892 instructed WSDOT to set up a three-year highway maintenance contracting-out pilot project. The question of whether or not to do pilot projects to test privatization policies is one that divides proponents of competitive government.

William Eggers, a leading privatization expert formerly with the Reason Foundation, argues in his book Revolution at the Roots that attempting a pilot project to introduce a competitive policy is a "failing strategy" and a "surefire way to stymie privatization and competition." He says that picking a pilot project is similar to adopting a strategy which has as its goal "avoiding failure," rather than "achieving success." Eggers’ main point is that once you start a competitive policy with no more than a pilot project, the "opponents of change will focus all available firepower on delaying, distracting, and derailing the effort."

Eggers points are valid and they do apply to Washington State, where competitive government policies have long-standing and entrenched opposition. Yet, it is precisely because the critics of competitive government in Washington State are so fixed that a pilot project must be attempted first. The most successful example of competitive road maintenance – Massachusetts – also faced stubborn political opposition, but one of the reasons they succeeded was because they began with small pilot projects with smaller margins for failure. Once the policies were tested and had succeeded opponents found that the sky was not falling, and the groundwork was laid for a wider implementation of a winning policy.

In their highway maintenance study, Dye Management provided several critical components of a successful pilot project:

Select for work by contractors two maintenance areas with diverse characteristics of climate, geography, and traffic volumes. As a control group, select two more maintenance areas with similar characteristics for work by State forces.

Seek and obtain lump-sum bids for maintenance of the contract sections that would include all maintenance work and provide for emergencies like floods and earthquakes. The contract would have to be worth at least $1 million annually for three years to entice qualified contractors to invest their talents.

Have an independent agent set a baseline level of service for all four maintenance areas. Also have that agent perform monitoring to compare the actual level of service results in each maintenance area to determine whether service improves or declines over time.

Measure actual costs in all four maintenance areas and establish a true measure of overhead costs for state workers.

HB 2892 adopted the three year term for a pilot project, but did not specifically address any of the other provisions above. Moreover, if it had passed it would have allowed only a few months for both the private and public sector to prepare. A longer period of time to inaugurate the pilot project would have been useful in helping such a project to succeed.

V. Washington’s Highway Maintenance Industry

Currently, WSDOT has a legally protected monopoly to provide almost all highway maintenance service. As we have seen, legal barriers in Washington prevent private contractors from competing for highway maintenance service. If those legal barriers were removed and private contractors were allowed to compete, Washington State could tap into an industry that is capable and willing to compete effectively for highway maintenance work.

By quickly glancing through the Maintenance Accountability Process’ list of maintenance activities, one can identify areas where the private sector is already performing in the private marketplace. For the purposes of this analysis we will not attempt to examine the private sector potential for all the different maintenance functions in the MAP. Instead we have chosen to concentrate on two maintenance functions with which drivers are familiar on a daily basis: road surface maintenance and landscape maintenance.

The quality of a road surface can determine more than just the pleasure of one’s driving experience, but also the cost of wear and tear on one’s automobile. The State of Washington has a monopoly on landscaping its roadways despite the fact that hundreds of skilled and successful landscape contractors in the state are ready, willing and capable of doing the work.

Road Surface Maintenance

One way the State of Washington could improve the quality of its road surfaces would be to take advantage of the choices offered by thriving, private industries in the state like the asphalt paving industry. Over 10,000 people working for an array of companies across the state have helped to make asphalt paving a $300 million industry in Washington.

There are almost 40 separate companies in the state offering asphalt paving services. About half of these companies both produce asphalt and provide paving services as well. The largest of these dual role businesses often have a network of plants around the state. In total, there are about 100 asphalt production plants spread among major population centers and along major highways in Washington. The other half of these 40 companies provide paving services alone. Asphalt production and paving companies in Washington range from multi-national corporations to small, mom-and-pop businesses. The largest companies employ between 3,000-4,000 people, bring in revenues of $100 million a year, and are publicly traded companies. Most of the other businesses bring in $10-100 million per year, depending on their size, and are privately held concerns.

The current state of the asphalt paving industry is generally healthy, following the general condition of the overall economy in the Northwest over the last few years. Much of the asphalt paving industry’s work is devoted to public projects – large road construction projects and smaller projects for municipalities. Other projects include parking lots at commercial centers and roads to new residential developments.

Landscape Maintenance

An informal survey of the Yellow Pages reveals that there over 220 separate companies in the Seattle area alone listed as "landscape contractors." This number does not include all the firms who are practicing landscape design and architecture. In Washington State there are currently about 5,000 firms performing all different kinds of landscaping services. The total size of this industry in terms of sales revenues is around $30 million per year.

The landscaping industry in Washington State is extensive, with companies of all sizes and types competing with each other. A rough estimate of the Washington Association of Landscape Professionals’ membership shows that nearly 16% are sole proprietors, employing only a handful of people, with gross annual revenues of up to $100,000. On the other end of the spectrum, around 17% are large, sometimes nation-wide, corporations with annual revenues in the millions of dollars and up, employing between 50-150 people. In between are a variety of companies of different sizes and types; most are privately held concerns.

Generally, these companies’ profitability tracks with the condition of the local economy. Currently, the economy is generally performing well, and profit margins of 25-35% are commonplace. In tighter economic times this can shrink to just 5%. In the economic climate the state has been experiencing there has bountiful work for landscape contractors. Despite this fact, contractors would not decline new opportunities to perform landscape maintenance on state highways.

VI. Conclusion

Today, traffic congestion in the Central Puget Sound corridor is now ranked near the worst in the nation, equivalent to the gridlock residents of Southern California suffer every day. The picture only worsens if estimates of traffic patterns for the next two decades prove to be correct. Millions more people everyday will be squeezing onto Washington’s already crowded highways. This will take a toll not only on those drivers, but increasingly on the roads and bridges bearing them.

It is imperative that the condition of Washington’s roads and bridges do not deteriorate under the coming onslaught of new drivers. Transportation policy makers have many enticing and crucial trade-offs to make in the next few years. One choice they should never forget is their responsibility to maintain existing roads and bridges in decent and safe working order. Maintaining current infrastructure is just as wise an investment as funding new roads and transit projects.

One way policy makers could afford more of these investments would be to embrace the innovation and energy of the private sector. Currently, funds from the state’s gas tax go toward both highway construction and maintenance. If, through private sector competition, the state was able to reduce the amount it spends on highway maintenance, it could reinvest the savings in doing what is necessary to solve traffic congestion: build more roads.

It is clear from our two reports that jurisdictions around the country have found ways to stretch limited transportation dollars further by using the private sector to assist them in maintaining their highways. If done correctly, competition from the private sector can not only lower costs while increasing levels of service, it also can instill a bright, new spirit in how government works.