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TRANSPORTATION

The Transportation Secretariat manages the Commonwealth's
transportation infrastructure. The various transportation agencies
operations were reviewed to identify areas for improvement and
elimination of duplication. This review covers the four agencies
within the Secretariat of Transportation.

Virginia Department of Transportation

Designing roadways, and administering roadway design;
administering highway construction contracts, providing and
overseeing highway maintenance.

Department of Motor Vehicles

Motor vehicle titling and registration; driver licensing and
administration; motor vehicle insurance monitoring; and traffic
safety administration.

Department of Rail and Public Transit

Administering grants and other monies available for rail and
public transportation in Virginia.

Department of Aviation

Administering grants and other monies available for aviation
structure improvements and education in Virginia.

While state employees are concerned with providing services as
efficiently and effectively as possible, the systems and
organizational structure sometimes prevent this. Occasionally,
systems and organizational structure create a major hurdle to
employees seeking to provide effective and efficient services.

Government clearly needs a infusion of competition to reduce
expenditures in an environment where citizens are demanding more
customer service from governmental agencies. There is significant
anecdotal and statistically significant evidence to support the
underlying assumption that infusing competition into government
will lower the cost of services and retain quality.

Virginia Department of Transportation

Creating a More Efficient District Office Structure

Recommendation TR1: Study the entire Virginia Department of
Transportation organizational structure, and determine how this
structure related to the transportation strategic plan to
streamline the structure, flatten the management layers, and
introduce competition.

Personnel in the nine district offices coordinate the
activities of the residency offices located within the district
boundaries. In addition, district office personnel manage location
and design work for secondary roads, right-of-way purchasing,
environmental regulatory filing coordination, traffic engineering,
pavement management, inventory maintenance, and construction
contract administration.

Day-to-day highway maintenance operations are performed by
employees of the 220 area maintenance headquarters. These
employees perform a wide variety of tasks such as road and bridge
repair, roadside mowing and tree-trimming operations, snow removal,
road-sign repairs, and ditch-cleaning.

Personnel in the 45 residency offices coordinate the
activities of the area headquarters located within the residency
boundaries. Also, residency offices manage issuance of various
permits, authorization of final acceptance of road projects with
respect to street entrance and egress, utilities, inspections of
ongoing construction projects, negotiation with elected officials
with respect to project development, and processing additions to
the state secondary road system.

The existing organizational structure may result in excessive
administrative costs, since there are many management layers
through which approvals have to be obtained, and from which work
instructions must flow.

Creating a More Efficient Maintenance Organizational Structure

Recommendation TR2: Eliminate or combine area headquarters
facilities that are no longer needed.

The 220 area maintenance headquarters are organized as
follows:

Standard area headquarters: The typical area maintenance
headquarters is staffed by the area superintendent responsible for
all area maintenance headquarters operations; a maintenance
supervisor responsible for day-to-day operating activities; a
timekeeper responsible for tracking hours worked by each person,
ordering stock, paying bills; and approximately 12 to 20
maintenance workers.

Co-located area headquarters: These are formed when two
standard area headquarters are located within, and conduct their
operations from, a single facility.

Sub-area headquarters: Two nearby area headquarters
facilities that share supervisory and timekeeper functions, one the
sub-area headquarters and the other the standard area headquarters.

Storage facility: This is a facility used to store materials
such as stone or salt.

The department originally located area headquarters facilities
adjacent to prison camps because of the use of inmate labor and
proximity to county seats of government or on remnant parcels
remaining from road relocations. The interstate road system
designation also significantly influenced facility location.

The department has opened an average of one new area
headquarters facility for each of the last twenty years. The first
separate area headquarters facility was opened in the early to the
mid- 1940's. At the end of 1945, there were between 65 and 90 area
headquarters facilities, serving approximately 93,820 lane miles of
roadway, each with a total pavement width of fourteen feet. At the
end of 1994, there were 220 area headquarters facilities serving
119,197 lane miles of roadway, each with a total pavement width of
up to thirty feet.

This represents approximately a 27 percent increase in lane
mileage, with a corresponding increase in the number of area
headquarters facilities of up to 267 percent. Some increase in the
number of area headquarters may be attributed to higher maintenance
expectations and increases in the amount and width of paved roads,
as well as the vehicles traveling the roads; increases in snow
removal operations; and increases in customer service expectations.

To determine the necessary number of employees for each
facility, a benchmark must be established. This benchmark is the
average number of personnel necessary to perform the typical daily
work assignments in a rural headquarters, not including supervisory
or other administrative personnel.

The typical work assignments include the following
programmatic functions:

- mowing and litter control;

- ditch-cleaning operations (five people) and traffic
control (two people);

- maintaining nonhard-surface roads (using a
motor-grader);

- road patching in conjunction with plant asphalt-mix
schedules (five people patching and two people for traffic
control);

- responding in person to citizen service requests
(personally examining entrance requests, dead animal disposal);
and,

- time away from work due to vacation, sick time.

Streamlining the Vehicle Repair Function

The department's equipment division operates 77 district,
residency, and residency satellite shops. It maintains 26,000
pieces of rental and nonrental equipment including dump trucks,
grader/loaders, bulldozers, snow plows, chain saws, and tractor
mowers, fleet vehicles, and agency-owned vehicles owned by agencies
other than the department.

District Equipment Shop: This shop normally contains of one
repair manager, two repair supervisors, and one mobile repair
supervisor to assist the residency on major repairs. The staff
also includes 15 to 18 technicians including equipment repair
technicians, welders, body and paint technicians and service
technicians. The employees perform major and minor repairs for all
types of equipment, fabricate special parts for equipment, repair
accident damage, repair specialty equipment, serve as a support
unit for residency shops to relieve backlogs, offer technical
assistance, maintain specialized equipment assigned to the district
complex, and provide mechanical support during emergencies.

Residency Equipment Shop: This shop usually contains five to
six equipment mechanics and one equipment repair supervisor, all of
whom perform major and minor repairs on all types of equipment from
chain saws to heavy construction equipment.

Residency Satellite Shops: Within some residencies are
satellite shops that serve the maintenance headquarters. These
shops consist of one bay and one mechanic who performs minor
repairs and maintenance on maintenance headquarters equipment.

Operator Service Areas: These areas at residency maintenance
headquarters are used to perform preventive maintenance on
equipment. Maintenance headquarters equipment operators perform
preventive maintenance services, including oil changes,
lubrication, air or other filter changes, and equipment cleaning.
These employees also perform minor repair activities, such as
fixing a flat tire, replacing light bulbs, and changing windshield
wiper blades.

Because department shops in many rural areas traditionally
attempt to repair all vehicles using internal shop mechanics and
facilities, outside commercial repair facilities are not utilized.
In the last three years however, the equipment division has
discovered that certain types of repairs are more expedient to
privatize due to the nature of the repair and the availability of
vendors. These include windshield replacement, exhaust system
replacement, rebuilding/replacing engines, rebuilding components or
alternators, starters, and automatic transmissions.

Individual department garage repair shops currently do not
have comparability standards to other department shops, other
governmental fleets, or the private sector. This lack of standards
may significantly reduce the competitiveness of the department
garage repair services.

Recommendation TR3: Develop appropriate national or other
independent standards for shop mechanics to follow when performing
vehicle repairs.

By establishing repair standards, less than efficient
facilities and mechanics will become easier to identify.
Ultimately, adherence to appropriate nationally utilized standards
will provide a productivity benchmark for all the department repair
facilities, which could reduce vehicle repair costs significantly.

Equipment managers are also responsible for operations that
are unrelated to equipment repair and maintenance. Consequently,
accountability for the equipment repair function is reduced and
time is taken away from the manager's primary mission. These
activities include warehousing nonequipment related supplies;
providing security for facilities; providing janitorial services
for facilities; performing repairs on drawbridges; performing
repairs and maintenance to weigh scales; repairing asphalt storage
tanks; maintaining rest area facilities; maintaining overhead sign
lighting; coordinating and managing surplus property sales;
repairing/maintaining buildings. Recommendation TR4:
Streamline the equipment operations function by moving nonessential
functions to other Virginia Department of Transportation
operational areas.

If the equipment division should not retain certain
responsibilities, reduce equipment overhead by privatizing these
functions or transferring them to another organizational unit.
Privatizing or transferring these functions will reduce overhead
costs for equipment repairs and maintenance, and reduce overall
costs for these repairs. Reducing costs will make equipment repair
shops more competitive with the private sector.

Recommendation TR5: Streamline the reporting relationships for
equipment personnel, so that performance standards will be
comparable across Virginia.

Currently, residency shops report to the resident engineer.
District shops report to the district maintenance engineer. Each
resident engineer and district maintenance engineer sets separate
standards, goals and objectives for each shop and decides the
priority of work for each shop. Statewide, this results in
inconsistency among shop operations, and inconsistency with the
goals and standards set by the department's central office
equipment division.

This revised reporting structure will allow the equipment
division administrator to review all shops using consistent
performance standards, shop workload, shop facilities, and staffing
measures. Once shops are evaluated using the same criteria, the
equipment administrator can determine opportunities for increased
productivity, cost reduction, consolidation of facilities and
optimal shop staffing. Consistency in shop operations will allow
customers to receive service no matter which shop they use. As a
result, customers will be more likely to use the closest shop,
thereby promoting the idea of invisible boundaries.

To ensure a continued high level of service to the residencies
and the districts, resident engineers should continue to be in the
rating chain for shop managers. District equipment and facilities
managers should use a customer opinion form to evaluate the
timeliness and quality of service provided by each shop to the
residency or the district it serves. The equipment division
administrator should use these verified opinion forms as input into
the district equipment and facilities manager's evaluation.

Recommendation TR6: Set up a scheduled preventive maintenance
program for all Virginia Department of Transportation vehicles.

Recommendation TR7: Set up a planned component replacement program
for all Virginia Department of Transportation vehicles.

The majority of repair and maintenance functions are
unscheduled. Operators bring in vehicles as they break down or
when weather conditions prevent field activities. Unscheduled
repairs cause peaks and valleys in mechanics' productive time.

Recommendation TR8: Establish a tire management program which
would serve as an evaluative tool to tire purchasing.

Tire replacement is the department's highest part cost.
Currently the department does not monitor the life cycle cost of
tires or the difference in life cycle cost by specific manufacturer
and type of tires to determine which tires are most cost-efficient
for various types of equipment.

Recommendation TR9: Monitor mechanic training and certification
programs more closely.

Automotive service excellence certification is an excellent
method by which to train mechanics and increase repair efficiency.
To date the equipment division staff has achieved automotive
service excellence certifications in 25 different equipment repair
areas including state inspections, refrigerant recovery, master
truck technician, electrical systems, gas engine repair, diesel
engine repair, and brake repair.

Each district equipment manager should review current
individual certifications and assist employees in setting
certification goals as part of their performance evaluation The
managers, with the assistance of the district training coordinator
should also monitor employee certification to assure a broad base
of equipment repair knowledge, skills and abilities from which to
draw.

Recommendation TR10: Identify repair facilities that are present
and future candidates for consolidation or elimination. Eliminate
and consolidate as needed.

There are 77 equipment repair shops statewide. There is
potential for consolidating some of these shops to achieve
economies of scale. After a preliminary review of each shop's
location, certain shops may be candidates for consolidation due to
their proximity to other shops.

Factors besides proximity should be considered when assessing
the feasibility of consolidating shops, including the effect on
customer service, the extent to which facilities would have to be
renovated to adapt to the additional workload, changing local
demographics, and economies of scale.

Recommendation TR11: Develop a statewide guideline to be used for
all repairs, which would contain the parameters under which repairs
are either performed by a private enterprise firm or performed by
the Virginia Department of Transportation internally. This
guideline would be based upon a cost/benefit analysis.

Based upon a pilot study of repairs, there are some
maintenance and repair functions that are candidates for
privatization. A comparison (based on a sample) was performed on
the cost of repairs currently performed by the department shops and
comparable repairs done by the private sector. While the
department is comparative and competitive in some areas, there are
some maintenance and repair functions that are candidates for
privatization depending on various cost factors. These factors
could include the location, amount of backlog, cost of repair,
complexity of repair, quality of repair, and
competitiveness/availability of commercial service.

Recommendation TR12: Develop guidelines to be used for relating
mechanics' compensation packages to appropriate private sector
standards or if none exists, to other external or internal
standards. The guidelines should also related mechanics'
compensation to certification levels achieved.

The Virginia Department of Transportation shop mechanics are
not eligible for any pay-for-performance package, an incentive
frequently employed in the private sector to enhance
competitiveness and reward mechanics' efficiency. Further, the
department shop mechanics are not compensated based on additional
training received.

Streamlining the Central Warehouse/Inventory Function

Recommendation TR13: Implement drop shipment on local purchase
options for the district offices, and discontinue shipping goods
through the central warehouse when it is not cost beneficial to do
so.

Recommendation TR14: Discontinue carrying items with a
less-than-optimal turnover ratio.

The department maintains the substantial majority of its
inventory at the central warehouse in Richmond, but operates all
across Virginia. It incurs expenses to transport inventory to
where it is needed. The department bundles the shipping requests
to save costs, but bundling creates delays. The warehouse handled
$14 million in goods in fiscal year 1994 with a direct cost of
$925,011.

The highest volume of items shipped include aluminum sign
sheeting, antifreeze, automotive batteries, rock guards, tire
chains, and tires. There are some items stored and shipped by the
central warehouse that would be less expensive if purchased
locally, or drop-shipped to the districts to simply bypass the
warehouse process. Preliminary tests indicate that cost savings
would accrue for many of the 4,600 inventory items if they were
drop-shipped to the districts.

Streamlining the Roadway Design Function

The department maintains a staff of approximately 530 people
in its Richmond central office who design interstate and primary
roads. If the design work exceeds the staff's capacity, the
department contracts with private engineering design firms. There
currently is no formal mechanism in place to decide the most
efficient way for the department staff to divide work assignments
between inside staff and outside design firms. Private firms
perform all specialized work, such as tunnel design.

Environmental regulatory agencies have significant
participation into how, where, and even whether the department
builds a road project. To formalize the environmental approval
process, the department's environmental section prepares an
environmental impact statement. State-funded projects are not
subject to the degree of environmental approval required on
federal projects, and therefore can obtain environmental clearance
more quickly than federal projects.

Recommendation TR15: Selectively funnel state and federal money to
various projects, so that environmental review time across all
projects may be reduced.

The Federal Highway Administration provides a significant
portion of the department's funding for highway projects. The
department funds many projects with a combination of federal and
state funds. Whenever the department uses federal funds, projects
must meet all federal regulations and requirements, including
environmental requirements that cost considerably more in time and
money for preconstruction activities than complying with state
project requirements.

The department has historically used federal fund
disbursements for as many projects as possible. They supplement
them with state funds as the highway program is developed.
Fluctuations in the economy, changes in priorities, and many other
factors often cause changes in the level and type of funding during
the plan development process. Therefore, most projects are
developed conforming to federal guidelines so that funding can be
adjusted as necessary. However, selectively programming projects
initially for state funds would save time and money. Increasing
the number of state-funded projects would not only benefit the
department, but would also save time and money for the
environmental review agencies.

Recommendation TR16: Lower the cost of complying with state
environmental regulations by eliminating the requirement for the
Virginia Department of Transportation to obtain a separate permit
from the Department of Environmental Quality.

Recommendation TR17: Permit the central office location and design
staff to set staffing requirements around Virginia, so that
workflow can be more efficiently controlled.

Although current the department staffing methodology provides
the district offices with the flexibility to meet changing demands
in the construction and maintenance programs, it does not permit
adjusting design employment levels on a statewide basis. District
administrators' general employment needs may be incongruent with
optimizing design staff location statewide.

The department assigns design projects to units statewide
based on their respective capacity to perform the required work
within the established time schedules. This could create a
situation in which design projects are not assigned
cost-effectively. The department should reduce the manpower at
locations having a substantially lower workload requirement.
Managers should be held accountable for the efficiency and
effectiveness of the work performed at their respective locations.

Recommendation TR18: Accelerate the procurement process by
permitting sole source procurements without a lengthy approval
process.

Recommendation TR19: Review state environmental regulatory
requirements imposed that exceed federal requirements, such as the
wetland policy.

The Department of Environmental Quality's wetland mitigation
policy is more stringent than federal requirements. The standard
Corps of Engineers wetland mitigation ratios are 2:1 for forested
wetlands, 1.5:1 for emergent wetlands, and 1:1 for other wetlands.
The Department of Environmental Quality's wetland mitigation ratio
policy is 2:1 for all wetlands, exceeding federal standards.
Adopting this recommendation would reduce right-of-way and
construction costs.

The activities related to compliance with environmental
regulations during project development include coordinating with
state and federal regulatory agencies, documenting environmental
impacts, approving necessary environmental documents, and securing
the required permits from the regulatory agencies. Also, the state
environmental review process provides critical, project-specific
environmental data at an early stage in the project development
process. However, only a few projects are exempt from this review
process and many are subjected to the process that have little or
no environmental impact.

All projects involving disturbance of previously undisturbed
terrain, or requiring right- of-way easement purchase are subject
to the state environmental review process. Projects of this nature
(such as, adding a right turn lane) that have no added
environmental impact should be removed from the review process.

Also, the department's monthly inter-agency coordination
meeting should be maximized. Special permit conditions that are
arbitrarily based should be eliminated.

Recommendation TR20: Eliminate duplicate project environmental
review functions currently performed by multiple agencies by
designating an agency as the reviewer.

Some agencies have duplicate review functions. For example,
erosion control measures on a project may be reviewed by a
department inspector, the Department of Conservation and Recreation
inspectors, Department of Environmental Quality inspectors (if a
permit is involved), and by any other agency that has issued a
permit for that project. To eliminate duplication and confusion,
one agency should be designated as the lead reviewer for each
project where two or more state environmental agencies have
jurisdiction.

Recommendation TR21: Use lump-sum contracts where the scope of
work can be narrowly defined.

Under a cost-plus-fixed-fee contract, the department
reimburses consultants for their work based on a unit cost for all
services and an agreed-upon amount up-front for overhead charges.
The total cost of a contract is unknown until project completion.
Under a lump-sum contract consultants receive a fixed amount agreed
to up front for design services.

Currently, the department primarily uses cost-plus-fixed-fee
contracts instead of lump-sum contracts when contracting for
outside design work. In the appropriate circumstances, the
department may save money on design projects by using the lump-sum
instead of the cost-plus-fixed-fee contractual arrangement.

With respect to contracts, the department should eliminate its
policy of requiring Commonwealth Transportation Board approval of
consultant contracts and supplemental agreements and permit them to
be approved by the Commissioner as set forth in the Code of
Virginia.

Also, the department should begin the use of competitive
bidding for appropriate projects, and should develop criteria for
determining whether it will use the competitive bidding, or the
prequalifying (competitive selection) process for particular
projects.

The department should be permitted to solicit annually or
biannually for consultant firms with specific qualifications to
design projects. These firms would be placed into a pool from
which the department could draw, saving a prequalification for each
project awarded by the department.

Recommendation TR22: Align with federal requirements, the Virginia
Department of Transportation's requirements for the Department of
Minority Business Enterprise firm participation.

Recommendation TR23: Reduce the 30-day public hearing notice to
"reasonable time frame" to match federal guidelines.

The department currently provides a 30-day public hearing
notice. Given the number of projects subject to the public hearing
process, the cumulative time delay in getting projects started is
substantial and costly.

Under the changes contained within this recommendation, the
same number of public notice advertisements would be published,
however there would be a significantly shorter amount of time
between publishing dates while providing ample notification.

Recommendation TR24: Conduct construction field review earlier in
the roadway design projects, which will facilitate more effective
plan revision due to earlier review in the planning process.

The traditional field inspection activity and value
engineering studies are conducted on a plan that is 55 to 70
percent complete. It is at this point that the value engineering,
construction, and maintenance disciplines initially comment on a
proposed plan design. Comments this late can cause costly plan
design revisions and process delays due to the percentage of the
plan completed. Additionally, the department forms normally
associated with the field inspection process (LD-105 and LD-105A)
create redundant efforts and process delays and should be
eliminated.

Recommendation TR25: Perform value engineering studies at the
interim field review stage in design process.

An earlier performance of value engineering will result in
fewer plan redesign efforts and increase the number of scoping
stage studies. Value engineering is a very broad overview
examination of plans to detect the availability of cost-savings
measures, such as eliminating turn lanes, or altering pavement
thickness. Performing this study earlier in the plan development
process will enable these types of broad, sweeping plan changes to
be effected without a major redrafting of the plan.

Recommendation TR26: Conduct public hearings earlier in the plan
development process, eliminating costly multiple drafting of plans
and enhancing public input.

Under the existing public hearing policy, plan development is
significantly underway when public involvement in the planning
process commences. If a public hearing causes a significant change
in a roadway design, plans have to be redrawn. This wastes time
and causes the needless expenditure of funds. A public hearing
conducted early in the plan development process will reduce
needless redrafting of roadway project design plans.

Recommendation TR27: Empower the Virginia Department of
Transportation Commissioner to approve and delegate approval of
public hearings.

The entire Commonwealth Transportation Board must approve
location and major roadway design features when a formal hearing is
conducted.

Recommendation TR28: Expand certification of the Virginia
Department of Transportation's in-house environmental staff.

Expanded certification of the department's in-house
environmental staff will streamline environmental study completion.

Most oversight environmental agencies will not have to duplicate
the Virginia Department of Transportation's efforts. The staff
should be certified in all areas required for completion of
environmental studies.

Recommendation TR29: Approve a waiver policy for projects where a
"willingness to hold a public hearing" is posted.

Where a district administrator deems that no tangible benefits
would result from a public hearing, then with concurrence from the
department's location and design engineer, the hearing may be
waived. Citizens may appeal this determination.

Recommendation TR30: Determine the feasibility of advancing funds
for preliminary engineering on all systems by conducting a two-year
analysis on primary system projects.

Under this proposal, the department would be able to begin
construction projects more quickly preliminary engineering for
projects would not have to wait until money is available in the
Six-Year Improvement Program.

Recommendation TR31: Include private sector team members on value
engineering study teams.

Currently, value engineering teams are assembled from the
department personnel and trained in the value engineering process.
This can interrupt plan development on other projects if personnel
are pulled from them to staff value engineering teams. This
recommendation would allow the use of consultant personnel to
augment the department personnel, based on a prenegotiated hourly
rate.

Recommendation TR32: Lower the management approval level for field
inspection approval for secondary road projects.

The field inspection report for all roadway systems is
currently reviewed and approved by the state location and design
engineer or his representative. Under this recommendation, the
Virginia Department of Transportation's district administrators
will approve the field inspection report.

Recommendation TR33: Investigate hazardous materials sites sooner
in the roadway development process.

Currently, investigations for hazardous materials or toxic
waste sites are not initiated until preliminary engineering is
authorized for improvement projects. If any contamination is found
during preliminary engineering, mitigation efforts may delay
projects for months or even years. This can cause a significant
waste of funds. Money already expended on roadway development is
useless until waste sites are mitigated.

Under this recommendation, the department should investigate
for hazardous materials or toxic waste sites as soon as projects
are added to the six-year plan. In this manner, funds that might
otherwise go toward design a roadway that will be significantly
delayed or can go toward roadways that will be built sooner.

Recommendation TR34: Give counties the authority to hire their own
design engineers for roadway projects.

Currently, the department permits Chesterfield County to do
this. This gives localities the flexibility to respond more
quickly to available funding for projects, and allows more complex
local projects to be designed sooner, since they do not have to
compete with design time with other projects within a given
transportation district.

Recommendation TR35: Require the Virginia Department of
Transportation to competitively contract out a greater proportion
of its design work, including, but not limited to, surveying,
mapping, and aerial photography work. The Virginia Department of
Transportation's cost comparison should be based on fully-allocated
costs.

Data from many states demonstrate significant competitive and
cost improvements when there is greater competition for design
work.

Promoting Greater Efficiency Through Privatization

Recommendation TR36: Select a pilot county, and put all road
maintenance services currently performed by the Virginia Department
of Transportation out for bid to the private sector, the Virginia
Department of Transportation, and the locality (if the Virginia
Department of Transportation and the locality desire to bid), to
enhance the competitiveness of the Virginia Department of
Transportation's maintenance services.

Recommendation TR37: Consider, from a cost/benefit perspective,
whether pavement management (inspection of existing roadways to
determine their condition) should be privatized.

Recommendation TR38: On a pilot basis, competitively contract for
preventative maintenance on the Virginia Department of
Transportation's equipment fleet.

Recommendation TR39: Competitively bid a greater portion of road
maintenance work to the private sector. Virginia Department of
Transportation would be permitted to participate in the bidding if
it so desires.

Enhancing of Printing Efficiency

Recommendation TR40: Let the Virginia Department of Transportation
print shop become the central printing center for large jobs, for
capital-area state agencies.

Modernizing the Pavement Management Function

Recommendation TR41: Automate the pavement management program by
choosing the most cost-effective of these options: having three
regional pavement management teams, each equipped with a van
containing automated pavement examination equipment; or,
contracting with a private firm to conduct the pavement analysis.

Recommendation TR42: Require the Virginia Department of
Transportation to adopt a nationally-accepted and comprehensive
pavement rating system, that can be used to ascertain the relative
road conditions statewide, and to help in determining the
effectiveness of road maintenance activities over time.

The department is currently examining a very small sample of
the pavement in each district to determine the overall pavement
condition for that district. Further, with the Internodal Surface
Transportation Efficiency Act legislation, the department will need
increased pavement-grading capacity. Internodal Surface
Transportation Efficiency Act requires the grading of additional
roadway systems beyond the department's current grading efforts.

The department currently does not have a coordinated,
consistent statewide rating system for the pavement for all road
systems. It is therefore impossible for the department to state,
with any degree of accuracy, the relative condition of roadway
systems when compared with one another.

The use of automated pavement management tools will reduce
future anticipated staff needs, and ultimately lower the cost of
managing pavement. Also, automation will remove pavement rater
bias, ensuring that funds are directed to areas of greater pavement
maintenance need. In combination with system improvements,
maintenance fund allocation will be more scientifically-based.

Improving the Snow Removal Process

Recommendation TR43: The Virginia Department of Transportation
should develop and implement a statewide snow removal policy,
considering the following: the optimal movement of goods along
Virginia's highways during icy conditions; and optimizing traffic
movement along major and minor arterial routes. The transparent
boundary concept should be put into use wherever practicable.

Recommendation TR44: Test urethane blade use.

This blade has not been previously used in Virginia, but is
touted as an alternative to rubber-tipped blades that avoids some
of the problems associated with rubber-tipped blades (no
durability, relatively higher cost than carbide-tipped blade).

Recommendation TR45: Obtain more accurate data concerning the
damage caused exclusively by carbide-tipped blades. Various test
sections of roadways should have a "before and after" snowstorm
pavement marking assessment performed.

Recommendation TR46: Explore new technologies (including enhanced
use of chemical applications to roadways) that might help in
preventing ice/pavement bonding.

This bonding contributes an unknown amount to the pavement
damage resulting from clearing the roads of ice and snow.

Increasing Road Accessibility for Tractor Trailers

Recommendation TR47: Allow access to all roads by single
tractor-trailer combinations, but limit double-trailer combinations
to the existing Surface Transportation Authorization Act system.

Where clear safety problems are presented by operating
single-tractor-trailer combinations, the Virginia Department of
Transportation Commissioner has the authority to limit access of
these vehicles as well. Currently, 95 percent of trailers being
manufactured are 102" wide; however, most of the roads in Virginia
are only legally accessible by the 96" wide trailers. This wider
trailer has become the trucking industry standard, but Virginia's
law and practices has not changed to recognize this fact. By
making highways more open to the wider trailers, while still
maintaining authority to close roadways that are unsafe for these
trailers, economic development activity will be enhanced for some
areas of the state that currently have poor or nonexistent Surface
Transportation Authorization Act approved routes.

Streamlining the Central Motor Pool Operations

Recommendation TR48: Reduce state employee travel by increasing
monitoring of state- owned vehicles and personal vehicles used for
state business to minimize the number of cars required to transport
groups of employees to identical locations, and reduce
discretionary trips.

Recommendation TR49: Require state personnel to use
audio-conferences and teleconferences instead of face-to-face
meetings, wherever possible.

Recommendation TR50: Require agencies to use mileage charts to
determine the most central location for necessary meetings
requiring attendance by employees from across the state.

Recommendation TR51: Require state employees to use transit
services instead of day cars for trips in local metropolitan areas
where feasible.

Recommendation TR52: Establish the Division of Fleet Management in
the Virginia Department of Transportation as the travel center for
Richmond-based state employees requiring automobiles for travel.
Employees should use the Division for all automobile travel, and
the Division should determine the least expensive travel mode
(personal vehicle, leased vehicle, or fleet vehicle) for each trip
taken, taking into account the anticipated distance to be traveled,
and the length of time the vehicle will be utilized.

Recommendation TR53: Increase state employees' satisfaction with
the trip pool services, by sponsoring customer focus groups to
follow up on an earlier survey.

Recommendation TR54: Determine and periodically reevaluate the
optimal trip pool size based on customer demand and cost of meeting
all legitimate automobile travel needs. A formula should be
developed which could use statistically significant historical data
to predict future demand.

Recommendation TR55: Reevaluate the replacement period for
vehicles, using a life- cycle cost formula to determine which
vehicles have the lowest life-cycle cost. This cost would be based
largely, but not solely, upon the estimated salvage value of
various models. Vehicles with the lowest life-cycle cost should be
purchased.

Recommendation TR56: Reconfigure the existing rate structure for
vehicular use charges, using the following parameters: use a
life-cycle cost to determine the cost for each appropriate class of
vehicle, take the time value of money for vehicles that are
permanently or temporarily assigned to agencies, but that are used
very little (the existing flat rate should be adjusted upward to
reflect a reasonable depreciation period and interest cost of the
money expended for the vehicle); and trip pool vehicle usage fees
should be based more on a fair market value arrangement, where the
length of time the car is used, and the distance traveled, are
determinants in the fee charged to users.

During fiscal year 1994, state employees traveled 46.3 million
miles in vehicles from the central fleet. The state reimbursed
employees for an additional 56.9 million miles of travel using
their personal vehicles. The amount of personal reimbursement for
fiscal year 1994 was approximately $13.7 million.

The centralized fleet operations provide approximately 2,700
vehicles for state agencies to use on long term assignment, and
approximately 225 vehicles in a trip pool for short term use.
Currently, the average vehicle replacement occurs at 6.5 years,
with an average of 105,000 miles. The current sedan replacement
methodology may not be the most efficient. Replacement costs and
operating costs over a vehicle's useful life may not be the best
determinants for replacing vehicles.

The department should determine the true optimal replacement
point for each type of vehicle in the fleet on an annual basis. In
particular, the department should include a vehicle's estimated
salvage value in a life cycle cost formula to determine which
vehicle would have the lowest life cycle cost, then use this
criterion to select purchased vehicles.

There seems to be a substantial amount of vehicular travel by
state employees, and a disproportionate amount of personal
reimbursement mileage which, at its relatively higher rate, is
inefficient in light of available alternatives.

State employees travel approximately 156 million miles
annually using the central fleet vehicles, vehicles owned by
agencies, and personal vehicles. One-third of the total miles are
traveled in personal automobiles, at the higher personal
reimbursement rate.

The division of fleet managements' mission should be expanded
to include coordinating the travel needs for travel within Virginia
of state employees whose travel originates in the Richmond area.
The division of fleet management will advise employees of the most
economical means of travel.

State employees' dissatisfaction with the trip pool is mainly
the result of an insufficient supply of trip vehicles to meet
agency demand. If trip vehicles are unavailable, employees often
use their personal vehicles, and are reimbursed for this usage at
a higher rate (24› per mile) than the operating cost of trip pool
vehicles (19› per mile).

The existing vehicle assignment criteria do not take the time
value of money into account with respect to state vehicle usage.
Also, the rental rates charged for vehicles do not vary with
vehicle miles traveled and days in a user's possession.

Miscellaneous Other Improvements

Recommendation TR57: A Northern Virginia Transportation Planning
Board should be created to assume a significant portion of the
responsibilities of the Washington Council of Governments
Transportation Planning Board, and all of the responsibilities of
the Northern Virginia Transportation Commission.

Since the passage of the Internodal Surface Transportation
Efficiency Act, Metropolitan Planning Organizations have been given
enhanced authority over the spending of resources and the
imposition of onerous regulations pursuant to the Clean Air Act.
Many of these actions would have previously been decided at the
state level. The establishment of the Northern Virginia
Transportation Planning Board will alleviate the problems caused by
other states attempting to regulate Virginia transportation
activities.

Department of Aviation

Studying Aircraft Taxation

Recommendation TR58: The Department of Aviation should study
whether there is a statistically significant correlation between
aircraft personal property tax rates and aircraft basing decisions.

If this correlation exists, localities should be made aware of it.
The study should also identify existing disparities between
localities receiving personal property tax revenues from an airport
and localities supporting that airport.

Localities may set their own rate for the personal property
tax on aircraft. The rate must be within the statutory limits set
out in the Code of Virginia. Localities set personal property tax
rates according to their individual financial needs. Each locality
should assess taxable property according to true market value.
However, the effective valuation of identical property may vary
from one locality to another according to the device used to decide
market value.

If states and localities are aware of the implications of how
the personal property taxes on aircraft may affect the decision to
locate an aircraft in the Commonwealth or a particular locality,
they may be persuaded to adjust their tax rates accordingly.

Other Efficiency-Enhancing Recommendations

Recommendation TR59: The Department of Aviation and the Department
of Economic Development should begin confidential communications as
necessary, to inform economic development prospects regarding
Virginia's aviation assets.

Recommendation TR60: Transportation agencies should collaborate on
a careful evaluation of existing access programs. Recommendations
for any changes which can be implemented without legislative action
should be instituted as soon as possible.

Recommendation TR61: The Department of Aviation should evaluate
each public-use airport in terms of its existing and future impact
and role. Airports which are development-constrained should be
encouraged to develop effective protection measures, and airports
having land available should be encouraged to make it available for
compatible development.

Planning for a Superport

Recommendation TR62: Legislation should be introduced into the
1995 General Assembly session that would direct the Secretary of
Transportation to study the need for a Superport, within the
umbrella of his existing intermodal transportation strategic
planning.

Privately-funded group of concerned citizens, formally known
as Virginia Gateway 21, is studying the feasibility of constructing
a superport in southeastern Virginia. This privately-funded group
has studied this issue for four years, and needs additional time
and money needed to carry this project to its next phase. This
group has completed a series of studies on this project, which have
been turned over to the Secretary of Transportation.

Department of Motor Vehicles

Enhancing Revenue Collection -- Registration Card Fees

Recommendation TR63: There should be a mandatory mail-in for
registration card renewal with a $5 surcharge for going into a
Department of Motor Vehicles branch office to renew. Registration
cards would continue to be renewed on a staggered monthly
schedule. The mail-in discount would be eliminated. Mandatory
mail-in may be required once every two years instead of annually,
as currently permitted.

Registration fees are collected annually. A two-year
prepayment option is currently in effect for passenger vehicles.
As customers' registration renewal periods expire, the Department
of Motor Vehicle's computer system generates renewal notices, and
prepares them for mail pick-up. Vehicle owners may renew
registration cards either by mailing them back to the Department of
Motor Vehicles central office or taking them into a the Department
of Motor Vehicle branch office for processing.

Citizens currently have an incentive of $1.50 per year to
renew vehicle registrations by mail. There is also a multi-year
registration program, which allows customers to register vehicles
half as often, while reducing the number of transactions that the
Department of Motor Vehicles must process. Presently, Department
of Motor Vehicles centrally processes 46 percent of the renewals.
Registration card renewal at Department of Motor Vehicles branch
offices accounts for approximately one-third of all branch office
transactions. Approximately 23 percent of the Department of Motor
Vehicles clerks' time is spent on this activity.

The existing method of registration card renewal
administration is too costly when compared with alternative
registration fee collection methods.

Implementation of the recommendation would free branch office
positions for other duties, reduce Department of Motor Vehicles's
expenditures by eliminating license agent renewals, and reduce
workload by eliminating the task of sorting mail-in discount and
nondiscount renewals.

Improving Revenue Collection For Fuel Taxes

Recommendation TR64: The number of fuel tax collection points
should be reduced from 5,900 to 400, by collecting existing fuels
taxes at the "first point of entry" into Virginia. This should be
implemented in conjunction with a diesel fuel dyeing program (which
would work in concert with the federal program).

Virginia uses a modified wholesale level approach methodology
for fuel tax collection. The tax imposition point varies between
the wholesaler and the retailer depending upon the type of fuel and
uses of the fuel.

The existing fuel tax collection methodology is neither
efficient nor effective. A significant number of fuel tax
collection points increases the difficulty of ensuring compliance
with fuel tax provisions. State fuel tax requirements are not
synchronous with federal requirements, which creates difficulty
complying with fuel tax provisions. Additionally, there is no sure
method to track the movement of fuel into Virginia, which decreases
the probability of discovering improperly taxed fuel.

Typically, fuel will be sold by a distributor through a dealer
to a nontaxable entity. The dealer is responsible for remitting
fuel taxes to Department of Motor Vehicles. Fuel is not taxed
until it is sold to a nonlicensed entity. A dealer has float on
the fuel taxes upon the sale of fuel to a nonlicensed retailer,
until the fifth day of the second month after the month of the
sale. Dealers to whom fuel is sold are responsible for remitting
tax on the fuel they sell to nonlicensed entities.

Implementation of the provisions of this recommendation would
reduce the number of collection points by moving responsibility for
the fuel tax remittance from the dealer level to the distributor
level. Dealers would continue to enjoy the float on the remittance
in that they would not be required to pay over the fuel tax to
distributors until the day before distributors are required to
remit the tax to Department of Motor Vehicles.

The fuel dyeing program is not an additional state program.
The state would piggyback on the existing federal program. Under
this recommendation, the state would use the existing federal fuel
dyeing program, and would receive the authority to enforce
penalties against parties using dyed diesel fuel in a taxable use.
Currently, the state has no authority to penalize parties caught
using dyed diesel fuel in a taxable manner.

While developing legislation, Department of Motor Vehicles
should include input from industry representatives to ensure
support and to address their issues. Among these issues are
changes to business practices concerning the timing of tax payment
and reimbursement of the tax for those persons who will be
purchasing tax-paid fuel at the terminal rack and below
(specifically petroleum marketers).

Limiting Automobile Dealer Regulation

Recommendation TR65: Automobile dealer business arrangements
should no longer be regulated by Department of Motor Vehicles.

DMV licenses and provides a significant monitoring function
for Virginia automobile dealers. Among other things, Virginia law
provides territory protection for franchisees; dictates operating
hours for car dealerships; prohibits manufacturers from directly
owning car dealerships, or service facilities; and provides a
hearing mechanism for aggrieved dealers. The Department of Motor
Vehicles Commissioner is advised by an automobile dealer advisory
board.

DMV is responsible for the testing, licensing, monitoring and
disciplining of Virginia automobile dealers and their
representatives. Statutes set forth in the Code of Virginia, and
regulations promulgated by the Commissioner determine guidelines
for appropriate business conduct. Department of Motor Vehicles
utilizes its own investigative services team and hearings officers
to enforce these guidelines. Additionally, Department of Motor
Vehicles regularly consults with the Motor Vehicle Dealer Advisory
Board on issues concerning regulation promulgation, testing
standards for licensing, and violations of dealer laws.

The existing laws that govern such aspects of automobile
dealership ownership as operating hours, showroom size, and
territorial rights are beyond the scope of a government. Further,
taxpayers are bearing the burden of the cost of administering these
laws.

Creating One-Stop Shopping for the Trucking Industry

Recommendation TR66: One-stop shopping for the trucking industry
should be implemented as soon as possible. An existing interagency
study group is currently formulating this concept.

There are many agencies and entities collecting some fee or
tax related to the operation of a motor vehicle other than
Department of Motor Vehicles. For instance, most localities
collect a personal property tax as well as a fee for issuing a
sticker on a car. Service stations, working through the state
police, collect an inspection fee, which goes to the State Police.
The trucking industry pays not only personal property tax but fees
to the State Corporation Commission as well.

Other Efficiency-Enhancing Recommendations

Recommendation TR67: Development of customer service kiosks should
continue. Department of Motor Vehicles should continue work on
kiosks for its branch offices in conjunction with the statewide
effort directed by the Council on Information Management.

Streamlining the Administration of the Driver Improvement Program

Recommendation TR68: Completely reengineer the existing driver
improvement program changing from a four-step to a two-step
program. Under the new program, the Department of Motor Vehicles
would issue an advisory letter and drivers continuing poor habits
after this letter would attend a clinic given at the local
community college. The Department of Motor Vehicles would no
longer counsel drivers or provide clinics.

Remove the responsibility of teaching driver improvement
clinics from Department of Motor Vehicles, and allow community
colleges to teach them. This will free valuable Department of
Motor Vehicles resources, and will ensure that delinquent drivers
shoulder the full burden of the clinics' cost.

Virginia's Driver Improvement Program employs a point system
for identifying continually negligent and potentially hazardous
drivers. There is also a remediation system where treatment
gradually intensifies as a driver accumulates points.

The existing treatment system steps are an advisory letter; a
group interview; a personal interview; and driver improvement
clinics. Virginia has one of the most complicated driver
improvement systems in the country. In a 1989 survey, thirteen
states were found to have a two-tier program, eleven had a
three-tier program, and only two used a four-tier program.

Two types of points are employed: safe driving points and
demerit points. Treatment-level assignments for unsafe drivers are
based on an accumulation of demerit points. Safe driving points
encourage and reward safe driving practices by awarding one safe
driving point for each calendar year that a citizen drives
violation free, and by awarding up to five safe driving points for
successfully completing a driver improvement clinic.


As drivers become aware of a lack of direct penalties in a
driver improvement program, deterrence decreases. California, a
state that previously had a program similar to Virginia's, has
abandoned its complex program because of its decreasing effect as
a deterrent.

In spite of the underlying original intent that the Driver
Improvement Program be self-supporting, the cost data shows that it
is not. The Department of Motor Vehicles annually collects
approximately $1.6 million in fees from program participants.
However, the current annual program cost is approximately $2.6
million. Under the recommended changes, this disparity will no
longer exist and the negligent driver would pay the full cost of
their treatment.

Reengineering Insurance Monitoring

Recommendation TR69: Reengineer the existing vehicle insurance
program which, at a minimum, would entail raising the uninsured
motorist fee to a fair market value.

Recommendation TR70: This reengineering should also automate the
insurance monitoring function.

Under Virginia law, vehicle owners have three financial
responsibility options regarding motor vehicle insurance: purchase
vehicle liability insurance and certify to being insured upon
vehicle registration; opt to pay a $400 Uninsured Motorist Fee upon
registration of the vehicle (this Uninsured Motorist Fee does not
provide insurance coverage); or post a $70,000 bond. Owners of
twenty-one or more vehicles can apply for a certificate of self
insurance as an alternative to purchasing liability insurance.

In the uninsured motorists program, motorists pay for the
privilege of not carrying automobile insurance. Insurance-carrying
drivers paying a fee as part of their automobile insurance bill
provide insurance for the uninsured motorist program participants.
Virginia is one of the eight states that does not require all
drivers to carry automobile insurance. For the 1993 fiscal year,
Department of Motor Vehicles received approximately $8 million in
uninsured motorist fees, and incurred $3.9 million in
administrative costs.

With almost 50 percent of the revenues raised through the
uninsured motorist fee used for the administrative costs incurred
in procuring the revenues, efficiency and effectiveness
improvements to the insurance monitoring effort are warranted.
Further, the uninsured motorist fee program should be structured to
permit purchase of automobile insurance by a greater number of
motorists. This fee should be more closely aligned with the fair
market value of insurance rates.

Virginia is the only state permitting motorists to pay a fee
upon vehicle registration to waive the requirement for liability
insurance. Some other states do have penalty fees for motorists
who are uninsured. Six states have no insurance requirements.
Forty-two states and the District of Columbia have either
compulsory or mandatory insurance laws requiring vehicles to be
insured.

The average liability insurance premium in Virginia is $503
annually (National Association of Insurance Commissioners), ranking
Virginia 31st nationally in premium level. The uninsured motorist
fee is a flat $400 annually for each driver participating in the
program which inappropriately places the added burden of insurance
cost on the insured motorists.

Establishing a Paperless Vehicle Title System

Recommendation TR71: Establish a paperless title program, under
which a title would not be printed at the time of purchase when a
lien is filed against a vehicle by a lending institution. Rather,
the lien would be recorded at the Department of Motor Vehicles, and
would be lifted and a title would be printed, when the lien is
satisfied.

A vehicle title is issued upon application and payment of
fees. Depending on whether there is a lien on the title, the title
is then either given to or mailed to the customer or the
lienholder. Presently, Department of Motor Vehicles issues a paper
title upon proper application and payment of fees. In most cases
the title has a lien recorded and is mailed to the lienholder until
satisfied.

The benefit of a paper title upon proper application and
payment of fees is negligible and causes storage and retrieval
problems by lienholder that often equate to customer delays at the
end of the loan when the title cannot be located and a duplicate is
needed. An electronic record can be established more promptly, is
less subject to fraud, and simplifies the establishment process.

Department of Rail and Public Transit

Improving Transit Service

Recommendation TR72: Require all transit authorities, as a
condition of receiving Virginia Department of Rail and Public
Transit grant assistance, to consider using competitive bidding for
no less than 20 percent of all service operated by the authority.
Each transit authority should base its analysis for considering
competitive bidding on the fully-allocated cost methodology, as
recommended by the Competitive Services Board of the Federal
Transit Authority.

The Federal Transit Administration required that federal
grantees consider the competitive bidding of transit services for
new and restructured transit services. At this time this
requirement was enacted, there was $5 million in regular route
service that was competitively bid. Today, there is over $500
million in competitively-bid route service. The Federal Transit
Administration has recently abandoned this encouragement due to
pressure from various special interest groups. However, public
transit service needs to be more competitive if it is going to
attract riders from their personal vehicles.

Each transit authority should base its analysis for
considering competitive bidding on the fully-allocated cost
methodology, as recommended by the Competitive Services Board of
the Federal Transit Authority.

Recommendation TR73: The Virginia Department of Rail and Public
Transit should conduct a study to fully analyze the fully-allocated
costs on a per hour/per mile, and per passenger trip basis for
nonprofit social service agencies to transport elderly and
handicapped citizens. This study should thoroughly document the
true costs of these services, and conclude whether citizens are
receiving the best transportation service possible. This study
should also examine the effect of infusing competition into these
services.

Transporting elderly, handicapped, and rural citizens is
consuming an ever-increasing amount of the public transportation
budgetary pie. Various participants in this transportation sector
have actively worked against infusing competition and the private
sector into this market. The rapidly increasing transportation
costs in this area of public transportation contribute to exploding
health-care costs.
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