AECOM poor choice for EIS given conflicts of interest

By Wendy Bacon

Those who have submitted contributions to People’s EIS have pointed out serious flaws in Westconnex EIS reports. On Friday, Ashfield Council published its submission, which includes further critical reports from independent consultants.

It is therefore relevant to look more closely at the company that prepared the M4 EIS.

If you look inside the volumes of the M4 EIS report, you will see that they have been signed off by AECOM. This is the company that has been commissioned by Westconnex to produce the 5000 page EIS for the M4 East. It will also be responsible for the EIS M5 tunnel report that will be lodged with the Department of Planning before the end of this year.

Although not known to many Australians, AECOM is a huge global engineering company which has 100,000 employees involved in everything from oil and gas to military contracting in 150 countries. If you imagined that the NSW Baird government would insist that Westconnex hire a company with a key focus on environmental science and social impact assessments to do an independent evaluation of a project of this significance, you would be wrong. Visit AECOM’s website and you will see that it features tall buildings, US tanks and a huge ferris wheel. Look at its recent releases and you will see that a couple of months ago, AECOM was awarded a contract to provide engineering and technical support services to the Naval Surface Warfare Center (NSWC) Dahlgren Division. Just a few weeks later it announced had won a $95 million contract to support the Corpus Christi Army Depot (CCAD) in Texas. It owns Tishman Constructions that has been contracted to build new headquarters for Citi bank in Lower Manhattan in New York.

AECOM

Over the past 12 months, AECOM has more than doubled its revenue to $20 billion via several acquisitions, the biggest of which was URS Corp. It claims to have “dramatically accelerated its strategy to create an integrated-delivery platform with superior capabilities to design, build, finance and operate infrastructure assets around the world.” In February this year, AECOM was the first big company to sign a covenant with the UK defence forces pledging that by 2017 it would like to see “75% of the companies in its supply chain demonstrate their support for the Armed Forces through their recruitment, charitable work or other initiatives.” In Australia the company announced that it would become more involved in maintenance, construction and military contracts. It is also moving into the area of real estate financing which is another shift away from its more traditional Australian focus on engineering and design.

One might like to think that a company of this size would have the clout to produce a study with the independence that the public has a right to expect for a project that will affect the lives of millions and cost the public $15.5 billion. AECOM undoubtedly employs highly skilled environmental scientists and engineers, many of whom would prefer to be working on more socially constructive projects. But the company in Australia is under a lot of pressure. Last year the SMH reported:

“Its (AECOM’s) Australian business also needs to find new sources of income to counter falling revenues. Its Australian revenues dropped by around $US150 million (A$190 million) in the 12 months to September 2014, halving a $US300 million (A$381 million) drop in revenues over the previous 12 months as demand for mining-related services weakened, according to AECOM’s annual report.”

The Australian arm is only a small part of the global company and is totally dependent for its survival on turning around a solid flow of contracts to satisfy the company directors and managers in New York, who in turn must keep profits flowing through to the managers of the hedge and retirement funds that are its major shareholders on the New York Stock Exchange. Government contracts are crucial in providing a solid flow of funds and jobs, which are dependent on healthy margins on contracts. This may explain why there appears to be many gaps in the EIS which gives the impression of being hastily thrown together to meet the tight deadlines set by the Westconnex Delivery Authority, NSW Roads and Maritime Services and the project’s biggest fan the Minister for Roads Duncan Gay.

Stop Westconnex campaigners were out and about in NY this week - AECOM's headquarters are in New York
Stop Westconnex campaigners were out and about in NY this week – AECOM’s headquarters are in New York

But apart from its interest in ongoing contracts in the competitive global world of infrastructure provision, there are other reasons why when it comes to Westconnex, AECOM is far from independent,

For a start AECOM is deeply involved in a number of other aspects of Westconnex. It has been paid for a range of other services including project concept development, tunnel design and for communication services. The apparent conflict of interest between its involvement in the construction process and its management of the EIS was raised earlier in the year by New Matilda in an article by the author and Luke Bacon.

AECOM has also been working with Urban Growth NSW to develop proposals for redevelopment along Parramatta Road. Urban Growth NSW works in close partnership with Westconnex.

It is not clear how AECOM manages these apparent conflicts of interest internally because questions from the media and the public to AECOM about its relationship to Westconnex and its role in the planning process are steered back to the communications branch of Westconnex.

According to searches of the NSW tender database and freedom of information searches by online publication New Matilda, the NSW government has already paid AECOM more than $33 million to work on the Westconnex. Of this amount, AECOM has be paid nearly $5.8 million for the M4 EIS.

AECOM has also been paid nearly $25 million to work on the Stage 2 M5 tunnel, including:

  • nearly $13 million to be the ‘technical and environmental’ advisor for the M5 tunnel

  • $1.3 million for ‘industry partner design’ which presumably meant working closely with the construction companies and sub-contractors who were interested in constructing the Westconnex M5 tunnel. These industry partners would have included Leightons Contractors with which AECOM has an ongoing business relationship including through the Kempsey by pass project on the Pacific Highway, the construction of a command headquarters for the Australian Defence Forces and a major road project in Western Australia.

  • nearly $2 million to develop a ‘close-down’ plan for the Alexandria Landfill site (no information on this contract is publicly available although the waste facility on the site closed down 10 months ago). There have been repeated complaints to the NSW EPA, local Councils and in the parliament that work to remove asbestos waste from the site involves environmental breaches.

AECOM has even been paid for business services for Stage 3 which probably means that it has played a role in developing the still hidden business case for the whole Westconnex project. So a company that is already profiting out of the existing Westconnex contracts is involved in the business case for the project.

You can track Westconnex and other company contracts on http://whywestconnex.herokuapp.com/ which tracks all Westconnex contracts that are above $150,000, apart from the large road construction contracts worth billions of dollars. The M4 widening, M4 East and M5 contracts have all been awarded to consortiums that include Leightons Contractors. After a series of takeovers, Leightons are now owned by the Spanish construction giant CIMIC.

AECOM pays $280 million to settle negligent traffic modelling case

While AECOM has used the work of other companies for its air quality, heritage and other studies, it is directly responsibility for the crucial traffic studies. Indeed from as early as January 2013, the then O’Farrell government appointed AECOM to develop traffic modelling which would be used for the development of Westconnex & toll revenue forecasts for its business case.

It’s on AECOM’s traffic modeling that M4 East predictions for air quality and noise depend. From this point of view, AECOM’s record in traffic modelling is crucial.

At the same time as AECOM was finalising its traffic study for Westconnex M4 East EIS, its lawyers were quietly mopping up the first tranche of law suits that followed its wrong traffic predictions for the failed Clem 7 RiverCity tunnel in Brisbane.

RiverCity company went into receivership in 2011 when traffic fell well below predictions. Class actions were launched against AECOM in May 2013.

By then AECOM was already involved in Westconnex. But instead of pulling back, the NSW government has granted AECOM more Westconnex contracts than any other company, apart from the winners of the big billion dollar construction contracts.

In September 2015, some the world’s biggest banks, which claimed that AECOM’s traffic predictions work had cost them more than $1.5 billion, settled their claim against the company for approximately $280 million. That still leaves 650 investors represented by legal firm Maurice Blackburn pursuing their claim for more than $150 million. Their case alleges that AECOM made forecasts without reasonable grounds, and left critical information out of its report published in RiverCity’s Disclosure Statements. AECOM also allegedly failed to reveal that earlier traffic forecasts it had developed for Brisbane City Council showed traffic volumes substantially lower than those in the RiverCity Disclosure Statements. AECOM is defending the action and has made cross claims against directors of RiverCity.

Although its crucial role in Westconnex continues, an AECOM spokesperson told the Wall Street Journal that the company had decided to “no longer provide traffic and revenue forecasting for toll road operators or owners in Australia.”

Surprisingly, the social impact study submitted by AECOM for this M4 East EIS even included a case study of the RiverCity project.

Ex-AECOM executive provides “interface” between companies and NSW government.

Last year AECOM Australia had a change of leadership when Managing Director Michael Batchelor left AECOM in May to set up his own consultancy Nimbus Consulting Pty Ltd, which Westconnex paid $445,000 between January and July this year to provide an “interface between industry and the government”. ( This contract has been removed by http://www.tenders.nsw.gov.au but can still be viewed at http://whywestconnex.herokuapp.com/)

Batchelor describes his job on his LinkedIn profile as providing advice to NSW Roads and Maritime Services on its governance of, and interface with, WestConnex.

When contacted by New Matilda, Batchelor sent a message to say that as a “humble consultant to RMS”, he was not authorised to speak on behalf of WDA and suggested we contact WestConnex.

There was no inference from New Matilda that Mr Batchelor is in any way involved in any corrupt conduct and the same applies to this website. But it further highlights the close relationships between AECOM, other consultants, Westconnex and the NSW government. Recently the delivery of the Westconnex was transferred to a private company, the Sydney Motorway Corporation which although publicly owned is likely to be even less transparent than the Westconnex Delivery Authority.

Independent experts concerned that assumptions underlying Westconnex traffic model are not available for testing

Experts and academics have been critical of the AECOM traffic studies for this project, one complaining that there is insufficient information about assumptions behind the Westconnex Traffic Model for other researchers to test it independently.

This can only add to community unease about the EIS and planning process, especially because AECOM has not used the opportunity of the EIS report to respond to or engage with independent consultants such as SGS Consulting that have questioned its traffic predictions for the Westconnex M4.

The situation would not be so bad if the public could rely on government departments to seriously evaluate the project and engage with critiques. Unfortunately, the Planning Department will publish the responses to the EIS on its website. Westconnex and AECOM will then prepare a ‘responses report’. Planners, health experts and others inside government say they will then be pressured to sign off on the EIS, although many know it is poor social policy.

Is it too much to hope that the Minister for Planning Rob Stokes and professional planners employed by the NSW government take time to seriously consider the substantial critiques of the project? From the public’s point of view, it would be so much better to stop now rather than be stuck with another failed tollway project.

Here’s how to make a submission to the EIS.

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