California’s Transit Industrial Complex is Monetizing Mobility

Those of us who prefer smaller, more cost-effective government often applaud privatization. But if private companies can profit by making the public sector bigger and more expensive, they will do so. That’s the case with the private engineering firms that profit from such costly California rail boondoggles as the high-speed rail project.

The phenomenon of companies working with politicians and bureaucrats to spike costs is well known at the federal level, where the term “military industrial complex” dates to Eisenhower’s farewell speech in 1961. Regardless of one’s attitude toward defense spending in general, it is hard to deny that many U.S. weapons systems have become overengineered and overpriced to the benefit of defense contractors.

That phenomenon also occurs in state and local transit projects in California, thanks to Proposition 35. Passed by voters in 2000, the “Fair Competition and Taxpayer Savings Initiative,” as it was called, fundamentally altered the landscape of public works, allowing government agencies to contract with private firms for architectural and engineering services on any public works project.

Before Proposition 35, legal precedent largely mandated that these services be performed by state civil service employees. The “Yes on 35” campaign, officially known as Taxpayers for Fair Competition, argued that this restriction was responsible for a multi-billion dollar backlog of critical infrastructure projects, leading to traffic gridlock, overcrowded schools, and delays in vital seismic retrofitting of highways and bridges. They positioned the initiative as a common-sense reform that would inject private-sector efficiency, speed project delivery, and ultimately save taxpayer money.

The “Yes on 35” campaign raised over $10 million largely from contracting firms, their employees, and their professional associations. Among the major donors were firms that work on rail transit projects including:

• AECOM
• Bechtel Corporation
• Jacobs Engineering Group
• HNTB
• HDR Engineering
• Parsons Brinckerhoff (now WSP)

From Donors to Contractors: A Return on Investment

The passage of Proposition 35 opened the floodgates for its corporate donors to compete for and win lucrative, long-term contracts. These firms and their employees have continued to donate to California politicians who support rail transit, apparently in the hopes that these officials will secure more money for their projects.

One of the biggest private players in California’s public works is HNTB Corporation, a 100-year-old design and engineering firm headquartered in Kansas City. HNTB has delivered signature projects nationwide, including New York’s Cuomo Bridge and Seattle’s East Link light rail. In California, its portfolio includes Caltrain electrification, Los Angeles Metro expansions, BART’s Silicon Valley extension, the OC Streetcar, the design of LA’s Sixth Street Viaduct, and California high-speed rail.

Over the years, HNTB’s donations have reached governors, legislators, and local officials with direct influence over transportation policy. Recipients Gray Davis and Jerry Brown were critical to launching and sustaining the high-speed rail project. Gavin Newsom, another beneficiary, kept the Central Valley segment moving forward even while recognizing the rail plan’s initial scope could not be accomplished. In Los Angeles, Antonio Villaraigosa and Mark Ridley-Thomas oversaw major Metro expansions while also receiving contributions. In the Bay Area, Jim Beall and Fiona Ma pushed for transit bonds and budgets that helped fund projects where HNTB had roles. These donations are legal and transparent, but the high correlation leaves one wondering whether tax dollars are being allocated with maximum independence and efficiency.

Large infrastructure projects often face delays and budget challenges. Still, California’s record shows a pattern of overruns that leave taxpayers paying more while contractors remain insulated from the consequences. The projected costs of the state’s high-speed rail project has ballooned from $33 billion to over $100 billion. HNTB, which won a $30 million construction management contract in 2015, continues to collect compensation as the project evolves. The Caltrain electrification project rose from $1.5 billion to nearly $2 billion, with additional overruns later adding hundreds of millions more. HNTB played a key role in its design and planning.

HNTB has also been a major beneficiary of the Link21 project, which is supposed to create a second rail tunnel beneath the San Francisco Bay despite utilization of the existing BART tunnel being far below capacity. HNTB has won two contracts on  Link21 at a total cost of $84 million.

The other transit engineering firms (which work on a range of non-rail projects as well) who helped fund “Yes on 35” have also scored major contracts. Here is a quick summary:

AECOM

• BART: AECOM holds a $40 million on-call contract for General Engineering Consulting services.
• Los Angeles County Metropolitan Transportation Authority (LA Metro): The firm is deeply involved in numerous LA Metro projects, providing services that span from initial planning and design to full construction management on various rail lines.

Bechtel Corporation

• BART/VTA: Bechtel was awarded a $490 million contract in July 2024 for construction management of the BART Silicon Valley Phase II extension, a project to bring BART service to downtown San Jose. Bechtel was also a lead partner in the original construction of the BART system.

Jacobs Engineering Group

• California High-Speed Rail: Jacobs was selected as the lead designer for Construction Package 2-3, a 65-mile segment of the high-speed rail line in the Central Valley, representing a key role in a multi-billion dollar phase of the project.
• BART: As of late 2024, Jacobs held a $40 million on-call contract for general engineering consulting services.

Parsons Brinckerhoff (now WSP)

• California High-Speed Rail: A consortium led by Parsons Brinckerhoff secured a $700 million contract in 2015 to serve as the program manager for the entire high-speed rail project.
• Link21 Program: Through the Arup-WSP Joint Venture, the firm has a $22 million contract for Planning and Engineering services for this major initiative to build a second transbay rail crossing.

HDR Engineering

HDR has secured lead roles in critical planning and engineering for nearly every major rail project in the state.

• California High-Speed Rail: HDR is leading the design and advisory services for the High Desert Corridor, the rail line that will connect the state’s high-speed system to the Brightline West train to Las Vegas.
• Link21 Program: HDR holds a $12 million contract for strategic advice for the new transbay crossing.
• BART: The firm has a $40 million on-call contract for general engineering consulting.
• LA Metro: HDR is the lead design and environmental firm for the landmark Link Union Station (Link US) project to modernize and expand LA’s primary transit hub.
• San Diego (SANDAG) and Orange County (OCTA): The firm is leading the environmental clearance and engineering for the project to move the coastal LOSSAN rail line inland away from eroding bluffs.

We are not alleging that any of these companies have done anything illegal; their donations are a matter of public record. However, we do see a connection between Prop 35, contractor campaign-finance activities, bloated rail capital projects, and revenues going to these contractors. One should not conclude, however, that having public agencies do their own engineering is a panacea. Critics have accused BART’s own engineering department of designing bloated projects to justify its existence.

Together with transit unions, car-hating urbanists, and public employees at regional planning agencies and transit operators, these companies are part of a transit industrial complex. This complex of interests is raising the cost of mobility for drivers and taxpayers alike to fund an array of grandiose, expensive, and often-delayed rail transportation projects.

Marc Joffe is a California Policy Center Visiting Fellow. Athan Joshi is an Intern at California Policy Center.