Hogging the Road
Washington Dispatch: How a company called Traffic.com landed an exclusive government contract worth millions to gather data on the nation's highways—and then sold the information back to us.
November 1, 2007
The nation's transportation infrastructure has long been a haven for pork-barrel spending. But during 12 years of Republican leadership in Congress, pitching pork was raised to an art form, and the nation's highways especially became a target for private investors looking to get rich. That was thanks, in part, to two of the Congress' all-time pork masters, Pennsylvania's Bud Shuster and Alaska's Don Young, chairs of the powerful House Transportation Committee.
Despite Bush's pledge in 2005 to reduce such patronage, the '05 highway bill became infamous for the number and cost of the earmarks it contained—more than 6,300 in all, worth some $24 billion, according to Taxpayers for Common Sense. While the bill's crown jewel of earmarks, Alaska's "Bridge to Nowhere," was eventually abandoned, most of its other fat slices of pork survived intact.
Among watchdog groups, attention tends to gravitate toward high-profile projects like bridges, tunnels, and interstate highways. Virtually invisible by comparison is a new component of our national transportation infrastructure: the so-called intelligent transportation system, being developed to collect and transmit data related to traveling the nation's highways. In this highly lucrative growth area, the pork has been repeatedly pitched to a single company, Pennsylvania-based Traffic.com.
The company, a subsidiary of the digital mapmaker Navteq, installs sensors along highways and then gathers and distributes "real-time" information regarding traffic patterns, volume, and speed. Under the auspices of the U.S. Department of Transportation (DOT), in more than a decade the politically connected Traffic.com has received over $50 million in sole-source government contracts to establish data-collection systems in at least 25 metropolitan areas. The stated goal of the program is to help state and local agencies manage traffic flow on increasingly congested roads. But the main beneficiary, according to critics, has been Traffic.com itself.
Recently, New York City Democratic Congressman Anthony Weiner lodged a challenge to what he calls the "counterproductive monopoly" enjoyed by the company. In two letters written in early October, Weiner requested a full investigation by the DOT's inspector general and asked his Oregon colleague, Peter DeFazio, head of the powerful House Transportation and Infrastructure Committee's Subcommittee on Highways and Transit, to schedule an "investigative oversight hearing" as well.
Wiener, like other critics before him, argues that in addition to being highly questionable in terms of proper procurement practices, Traffic.com's deal allows it to double dip from government coffers—to receive federal funds to develop its information collection systems and then charge public agencies to use that very same information. He writes, "Only that company has full access to the most useful data from the new sensor infrastructure that is subsidized through $2 million in public funds in each city…. Local agency partners who signed up for this program are discovering that they cannot utilize this data to provide travel times to local travelers without paying significant additional annual fees to Traffic.com."
In fact, after analyzing various contracts between Traffic.com and local transportation agencies obtained through a Freedom of Information Act request by the Sunlight Foundation, Jerry Werner, a former consultant with the DOT and the former editorial director of the National Transportation Operations Coalition, highlighted the extent to which the company is profiting from a system built with tax dollars. He found that while restricting the information it provides to public agencies, Traffic.com reserves much of the most valuable data for sale directly to consumers through the web and vehicle-based systems. Because of this, Werner told Mother Jones, several cities have declined to participate in the program at all. "Local participants are increasingly aware that this program is a scam," he said. An August op-ed in the Atlanta Journal-Constitution went so far as to call the arrangement "highway robbery" and "one of the oldest con games in the book." Traffic.com declined to comment for this story.
The exclusive contract was awarded under the federal Transportation Technology Innovation and Demonstration (TTID) program, which is part of the DOT's larger initiative to build an intelligent transportation system, or ITS. While experts have been analyzing traffic patterns for decades, new technologies now make it possible to significantly increase the amount and specificity of the data collected and to use it more broadly. The idea behind ITS is to create a comprehensive network in which an "intelligent infrastructure"—built of highway sensors, overhead cameras, and other technologies—collects information transmitted by "intelligent vehicles," or cars outfitted with onboard navigation systems, cell phones, and the like.
This system, which is already operational in several cities and states, not only aids planners when it comes to traffic management but, ideally, provides drivers with real-time information about road conditions and up-ahead traffic jams. Across the United States, roadways are becoming more and more crowded: In the 20 years between 1982 and 2002, the number of vehicle miles traveled in the U.S. increased by 79 percent, while lane miles of highway increased by just 3 percent. It would be daunting, and perhaps impossible, to build enough new roadway to satisfy the growth in traffic volume, so the alternative is to reduce congestion by making more efficient use of existing roads. When fully established, ITS will ideally yield benefits ranging from shorter commuting times to fewer road accidents to lower fuel emissions.
The information provided under ITS also stands to serve the interests of homeland security—for example, by helping officials designate a quick exit route in the event of a dirty-bomb attack or a fast entrance route for first responders and the military. Private industry will benefit as well. Such comprehensive traffic data clearly is of interest to media companies, which buy it to enhance their traffic reporting, and trucking companies, whose profit margins are directly affected by congestion. The information also can be used to scout locations for roadside businesses and in preparation for bids for private toll roads and bridges.
HEADQUARTERED IN WAYNE, PENNSYLVANIA, Traffic.com was founded in 1998, the same year the TTID program was created by a bill called the Transportation Equity Act for the 21st Century (TEA-21). The legislation provided a total of $8 million for pilot projects to install sensor systems in Philadelphia and Pittsburgh. If all went well, the TEA-21 authorized a significant expansion of the program.
In the beginning, the key player—the man who sponsored the legislation and stood in a powerful position to promote it—was Pennsylvania Republican Bud Shuster. Shuster, a colorful figure who sat in the House for 29 years, was widely acknowledged by his colleagues to be an adept practitioner of pork-barrel politics. After the Republicans under Newt Gingrich took control of the House in 1994, Shuster became chair of the Transportation and Infrastructure Committee, where he served until his retirement. Thanks to his shrewd politicking on Capitol Hill, Pennsylvania is dotted with projects he shepherded—roads, interchanges, institutes to study transportation, even a federal highway named in his honor, The Bud Shuster Highway.
Shuster ensured that TTID would become another addition to his state's gravy train by greasing the skids for Traffic.com, which was headed at the time by David Jannetta, a former mayor of Altoona with close ties to Pennsylvania state government. In fact, ties between Shuster himself and Traffic.com ran deep: Anne Eppard, Shuster's controversial former chief of staff who was indicted for soliciting and accepting illegal gratuities largely from transportation contractors was an early registered lobbyist for Traffic.com. The congressman s son Robert an attorney also became a lobbyist for the company.
In 2000, Shuster and Pennsylvania Senator Arlen Specter added an earmark to a transportation appropriations bill securing an additional $50 million for TTID in order to expand the program to 25 additional cities. Shuster then moved quickly to ensure that this funding—the largest single contract ever awarded under the ITS initiative—would go exclusively to Traffic.com. When there was grumbling about the contract, Darrell Wilson, Shuster's chief of staff, wrote a January 2001 letter to secretary of Transportation Rodney Slater stating that "the intent...was to ensure that these funds were used to carry on the project which has already received initial funding…. In no way was this intended that DOT conduct a competition for awarding funds."
Later that same month, Shuster left Congress mid-term following a finding by the House Ethics Committee that he'd misused campaign funds. Though there was mounting opposition to the deal with Traffic.com, the company found a friend in yet another skilled provider of pork, Alaska's Don Young, who became the new chair of the Transportation Committee. In addition to championing the "Bridge to Nowhere," Young has been accused of using questionable procedures to push through an earmark for a Florida interchange called Coconut Road, apparently as a favor to one of his big-time contributors. The Justice Department also is investigating whether he received bribes from an Anchorage-based company called Veco.
Young was more than willing to pick up the ball for Traffic.com. He consistently supported the company's grip on the traffic-information business, even as smaller companies vied for an opportunity to bid for at least part of the contract. According to records obtained by the Hill, as of 2006 Traffic.com executives had contributed $4,000 to Young's campaigns; the company had spent more than $900,000 in all on lobbying fees since 2002. In March 2001, Young wrote then-Transportation Secretary Norman Mineta—no stranger himself to the revolving door between government and private industry—reiterating earlier admonitions from Shuster's office and urging him not to open the program to competition.
At first, Mineta was noncommittal. But by the following year, Traffic.com's supporters in Congress had succeeded in attaching language to a defense appropriations bill authorizing the DOT to extend the contract to "the same competitively selected consortium leader" chosen years earlier. In February 2002 Mineta replied to Young's letter. With the new language in place, he said, he had "decided to exercise this authority" and expand the program with Traffic.com as the sole beneficiary of an additional $50 million in subsidies.
Not surprisingly, the realm of homeland security is a potentially enormous area of business for Traffic.com. Back in 2002, Jannetta, the company's cofounder and then-president, told the House Transportation Committee, "We are developing ways to leverage our existing ITS infrastructure to enhance homeland security efforts in our deployment areas." And the company has the connections to help make that happen. One of Traffic.com's current lobbyists, Mark A. Holman from Blank Rome Government Relations, served as deputy assistant to the president for homeland security in 2001-2002. In addition, Jack Tomarchio, currently the deputy director of intelligence at the Department of Homeland Security, is a former Traffic.com lobbyist.
Nevertheless, with $50 million in government contracts at stake, complaints from competing traffic technology companies were starting to get noticed. Traffic.com's exclusive deal "creates a very, very unreasonable opportunity for them that nobody else gets to enjoy," John Cox of Travel Advisory News Network (TANN) told Mother Jones. "There are plenty of sensor companies out there that can do what Traffic.com does at a better price." Another competitor, Utah-based Wavetronix, drew support from the state's powerful senior senator, Orrin Hatch. In 2005, Hatch said on the Senate floor, "One large company should not have a monopoly on…traffic data collection. [Commuters] should benefit from the innovative solutions coming from small businesses in Utah and in other states, not funnel millions of dollars each year to a company that doesn't have to compete for the money."
Hatch managed to insert language into the 2005 highway bill that was supposed to open the program to competition. But two years later, the provision still hadn't been honored. In fact, in response to further inquiries from Hatch in March 2007, new Transportation secretary Mary Peters maintained that the bulk of the program's funding was meant to go solely to Traffic.com.
There is no telling how the situation will play out. A spokesman for the House Subcommittee on Highways and Transit told Mother Jones that Congressman Wiener's request for an investigation was still under consideration. Weiner's office confirmed that he has received no response from the Transportation Department's inspector general. Senator Hatch's office did not return calls, but in June an aide to Hatch told the Hill that "if it becomes necessary to offer new legislation to fix this problem, he'll do it." While that sounds ominous, Traffic.com—with its considerable connections and momentum—will be hard to stop.
A final note: Once the matter of the contract is settled, Congress may want to consider the safeguards demanded by a system with the potential to not only collect aggregate data on when, where, and how we drive, but also, perhaps, to link individual data to individual drivers. Then again, it may not: As a source with lengthy experience related to this issue currently on a congressional staff told Mother Jones, "Nobody up here wants to touch the privacy issue."
James Ridgeway is Mother Jones' senior correspondent.