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Victor Mendez, Administrator, Federal Highway Administration
Keynote speech to the American Road and Transportation Builders Association Conference
Washington, DC
September 24, 2009

It's a great privilege to head the Federal Highway Administration as we - along with you - meet the transportation challenges of the 21st century.

This is an exciting and critical time to be involved with public transportation. All of us are charged with figuring out what our future transportation system will look like, how we're going to pay for it, and how it will contribute to a more vibrant economy, greater personal mobility and a cleaner environment.

That's a tall order under any circumstances, but especially in these times when everyone is facing some difficult issues. As you well know, SAFETEA-LU, the major surface transportation authorization bill, expires next week. And the Highway Trust Fund, the conventional tool we've used to fund transportation projects, is spending more than it's taking in.

So there's no doubt we face a number of challenges, many of them inter-related. But we could also be facing a "perfect storm" of opportunities if we choose to see it that way. That's going to require us to think creatively, proceed professionally and never lose sight of our responsibility to deliver the safest, most efficient, most environmentally friendly system to the American public.

Those qualities have always been the hallmark of your organization, and I'm pleased to discuss those issues today because they're also central to the mission of the Federal Highway Administration and the Department of Transportation.


I'd like to begin by talking about safety because it's truly the highest priority of the Department. Every man and woman who works at the Department, starting with Secretary LaHood, sees safety as their primary calling.

Measured by the numbers, our safety story is a good one. In 2008, the number of people killed and injured on our roads continued to fall. The number of fatalities, just more than 37,000, reached their lowest level since 1961.

But 37,000 is way too many lives lost. While we're proud of the decline, we're certainly not satisfied. I'm committed to working with Congress, my former colleagues in the states and any other stakeholders to continue and accelerate this downward trend.

One thing we're doing right away is gathering experts here in Washington next week to examine the problem of distracted drivers. The Secretary's Distracted Driving Summit will try to come up with recommendations on how to stem what is becoming an epidemic on our roads, as people use their vehicles as places to make phone calls, check emails, and even have a meal when they should be focused on driving.

But the summit is just one piece of an overall commitment to saving lives that runs throughout the Department.

Of course, one key factor in highway safety is to have safer highways.

Improving our highways, our bridges, and our interchanges has been a major focus of the American Recovery and Reinvestment Act, which President Obama signed in February.


The Recovery Act is one of the great success stories in modern legislative history, a truly historic investment in our country's people, our country's economy and our country's future.

During my first two months at the agency, much of my energy has been focused on implementing the highway portion of the Recovery Act.

We're meeting the President's goal to jump-start the economy, put Americans back to work, keep families in their homes and create an infrastructure that will help our economy thrive well into the 21st century.

Among its provisions, the Act makes $26.6 billion available to the states for highway investment. Government is often criticized, with some justification, for getting money out too slowly. But in this case we're not only getting money out the door quickly, we're also doing it wisely. And as we spend each dollar, the President has demanded a focus on transparency and accountability.

In that spirit, I'd like to give you a progress report today.

Progress is a word I use with great pride because that's exactly what we're seeing. This program is more than a promise. It's producing results.

FHWA has already obligated more than 7,800 highway projects, worth more than $19 billion. That's 72 percent of the funds we have available.

Imagine that. Just seven months ago, President Obama signed the Recovery Act and we were starting with zero projects and zero dollars obligated. Now, with 7,800 projects and $19 billion obligated, that's what I call real progress.

With every new project, states advertise for contracts, contractors begin hiring, and suppliers prepare to deliver steel, asphalt and concrete.

This has been a real lifeline, especially for Americans who work in construction and have really felt the brunt of this recession. But it's not just the people at the construction site who are seeing the benefits. Lawyers, accountants and staff are also being brought on board to get projects running and manage them.

Projects are running ahead of schedule and under budget. We're routinely seeing states report bid prices of 15-20 percent below estimates. And by stretching those Recovery dollars, states will be able to complete other projects and create even more jobs.

And every new project helps our highway system move people and goods more efficiently and effectively, which is vital to our future.

I don't think I'm exaggerating to say the Recovery Act has done more to energize construction firms, families and communities than any other Act in recent memory.

But the Recovery Act is just a down payment on the bigger work that has to be done. It's time for all of us to take a sweeping look at what we do, how we do it and how we pay for it.

And, as we engage in that process, we need to ask some hard questions that might not get asked in times of greater economy certainty. Questions like: Can we do it better? Should we do it differently? And is it really benefitting the American public?


Clearly our ability to address, much less answer, those types of questions depends largely on funding. We all know that building and maintaining our transportation infrastructure takes long-term planning and a stable flow of federal dollars that reflects our true priorities.

That's why the reauthorization of SAFETEA-LU is so important.

The life of SAFETEA-LU can be measured in days, not weeks or years. It expires next Wednesday. The Administration has proposed an 18-month extension, which will take us through March of 2011.

I'm well aware that approach is not uniformly popular among my hosts here today. There's legitimate disagreement on what's the best way to proceed. But let me explain our thinking.

An extension of 18 months will allow us to make some targeted reforms, while giving Congress the time to develop the complex policies that will form the heart of the full reauthorization.

Rather than the series of short extensions we received in the last cycle, we think 18 months is the right amount of time to "extend the clock," if you will, while we work with Congress on the best long-term solution.

I'm going to say a few more things about funding in a minute, because it's clearly one of the big challenges we face. But I think we all have to recognize the "perfect storm" I spoke of earlier. The public is demanding we do things faster, do them cheaper, and do them greener than ever before.

They've laid down a challenge for all of us to create and implement projects that are more durable, more livable and more accountable than we've ever seen. That means we're going to have to come up with innovative ways to design projects, to build projects and to pay for projects.


The only solution that I can see is a stepped up effort to incorporate innovation, research and new technologies in everything we do.

Some of this challenge rests at your feet as the people who actually "build things." For instance, the public is demanding economy. They want infrastructure to last longer and require less maintenance. So I hope you'll step up your research into developing construction techniques and materials that are more durable.

Given the demand for a cleaner environment -- and the key role transportation can play in that -- I urge you to look for ways to reduce greenhouse gas emissions and create long-term environmental solutions.

I know you didn't invite me here to deliver a "to-do" list, but I think there are real solutions out there to important public concerns, and the only way we'll find them is to share best practices and make a stronger commitment to innovation and research.

I also don't want you to think that all these new challenges fall on your shoulders and not on ours. We bear the responsibility as well. And I've laid down some ambitious goals and asked our people to find innovative solutions in a range of areas, including how programs are delivered and financed.

We in government must learn concepts from the private sector that will allow states to deliver highway projects at lower cost and in less time. Design-build is one. This concept, embodied in the role of the general contractor, has served the construction industry and consumers well for generations.

The department is now promoting this same approach in order to cut the time it takes to get major highway projects from conception to delivery. I'm sure you're aware of the statistics showing that it takes 13 years to create, plan, build and open a major new highway running from my town to yours.

Think about that - 13 years. That means a project that opens to its first vehicle today was started long before you could Twitter your friends about it or post video of it on YouTube. Those forms of social media were unheard of 13 years ago. It's so long ago that today's young celebrities like Taylor Swift were just in pre-school!

I can assure you that no one in this room would wait 13 years for the builder to finish your house because every time he needed lumber or roofing or an electrician he had to start looking from scratch.

On large projects like highways we can combine many of those functions under one central management to make the process work more efficiently. I've set an ambitious goal to cut that 13-year delivery time in half.


Like you, we also have a key role to play in improving the environment. That's been a major priority for Secretary LaHood, who's committed the department to playing a leadership role in helping create a greener America.

You saw the first and most highly publicized example of that over the summer with the CARS program, affectionately known as Cash for Clunkers. When we closed the books on that program last month, more than 700,000 clunkers had been taken off the road and replaced with more fuel efficient vehicles.

Not only did the program bring customers to auto showrooms and put auto workers back to work, but we made a significant contribution to reducing greenhouse gas emissions.

Longer term, the Secretary has directed the department to create and implement what he calls a Livable Communities Initiative. His goal is to improve the quality of life in communities -- large and small, urban, suburban or rural -- all across the country.

The initiative really starts with a new way of thinking. We, and other partners in the federal government, are charged with breaking down the "silos" that currently limit highway folks to thinking only about highways, housing people about housing, and the EPA about air and water.

Even within our own Department, we'll continue to improve the coordination among the different modes of transportation so we can work better together.

We must start thinking that way if we want transportation to play a major role in creating neighborhoods where people want to live, reducing our dependence on private vehicles and foreign oil, and promoting a greener environment.

In the future, we're going to take a more holistic approach so that federal investments in water, air quality, housing and transportation are coordinated. There's a new partnership among the top people at the Department of Housing and Urban Development and the Environmental Protection Agency to get behind this effort.

The key word from the standpoint of transportation is "options." Livable communities, by definition, offer people choices in how they travel from home to work, from home to school, and from home to play.

Transportation policy should help unite and strengthen communities by offering people choices among highways, light rail, public transit, even bikeways - and by reducing congestion and pollution.

The Secretary believes that if we're truly serious about combating climate change, encouraging Americans to walk more and drive less, and conserving our precious natural resources, we have to break down those old silos and take an approach that cuts across disciplines and categories.

FHWA is committed to a greener America in a number of ways. We're obligating more than $490 million in Recovery funds to what we call Transportation Enhancements, things like shared use paths and sidewalks, landscaping with native plants to reduce erosion and lower roadside maintenance costs, environmental mitigation to reduce highway runoff pollution, and preservation of historic transportation resources.

This investment pays several dividends. First, we enjoy cleaner air thanks to having fewer cars on the road. Second, people enjoy a healthier lifestyle by getting outside and exercising in the fresh air! And third, we preserve and enhance our infrastructure and actually benefit the environment.

I know a major focus of this organization is funding, and I assure you it's important to me as well. But I think when it comes to funding, the same rules apply as I've laid out in other areas: We need to develop new, sustainable funding mechanisms for surface transportation. We need to be creative and innovative, and share ideas and concepts that leverage the relationship between the public and private sectors.

That includes an appropriate role for the private sector in what are well known as "public-private partnerships," or as this conference calls them, public private ventures.


Secretary LaHood sees these partnerships as significant, serious options when it comes to funding future projects. I certainly agree.

At a basic level, our highway system is already the product of a partnership between the public and private sectors. Transportation agencies routinely bid most construction work to private companies. What we're talking about is extending that type of relationship to areas such as finance and operations.

Last year, the Federal Highway Administration set up the Office of Innovative Program Delivery to help states explore partnerships and other innovative strategies. It's the proverbial "one-stop shop" where states can look for information, education and technical assistance.

For example, the office has developed a model of the legislation states need to approve before their agencies have the authority to enter into these partnerships. When I ran the Department of Transportation in Arizona, we didn't have that authority, although my successor has it today.

But the work of the Office isn't limited to public-private partnerships. They also offer services related to Federally-backed loans, innovative financing, road pricing and tolling.

For example, that office has been very active in helping communities get loans to pay for projects through the Transportation Infrastructure Finance and Innovation Act, known as TIFIA. Let me give you one example.

The Department has approved a $354 million dollar loan to a group of private investors to build the Port of Miami Tunnel. This project will give cargo trucks and tourist buses better access to the port. We think that's important for a couple of reasons.

First, it will help the Port of Miami stay competitive in the vital areas of tourism and trade. Second, it will remove thousands of trucks and buses from local streets, improving traffic flow, safety and the environment.

As you can see from that example, we put a premium on projects that meet the larger goals Secretary LaHood has set for the Department. To the greatest degree possible, we want projects that receive some form of innovative financing to also advance livability, reflect sustainability and enhance the competitiveness of our economy.

We want our staff to be knowledgeable and honest brokers of information as our state partners look for new ways to deliver transportation projects. We want to help states explore a market-based approach to program delivery so they can tap the private sector money that's available.

Next year we'll expand our offerings with a full tool-box of information states can use to evaluate different ways to deliver transportation projects.

This will include documents that will guide states in evaluating new strategies, and a series of workshops to provide training and assistance. So, stay tuned for that!

But as enthusiastic as I am about this subject, there are some things to keep in mind.

First, no one suggests these partnerships are the magic bullet that will solve all our funding challenges. By involving the private sector, we can make our scarce public resources go further. But we have to consider a range of options, of which partnerships are just one.

Second, none of us can lose sight of our responsibility to protect the public interest. The financial risks and rewards for the public and private partners must be balanced so the ultimate consumer - the traveling public - gets real value.

And, finally, the financial returns enjoyed by private investors must be in line with the risks they run and the efficiencies they're able to achieve.

Still, it's clear we need to find new ways to support our transportation system. And it's equally clear some type of partnership between the public and private sectors will be one of those solutions as we move into the future.

Before I take a few of your questions, let me just close by saying how proud I am to be leading the Federal Highway Administration during these very exciting and critical times.

I think despite a different approach to some issues, we all want basically the same thing: a transportation system that will make our Nation more competitive, safer, greener and more livable.

That's asking a lot of ribbons of steel, concrete and asphalt. But throughout our history, even as the Nation expanded, highways and roadways have served to bind it together by allowing the safe, reliable movement of people and goods.

That was true when the first settlers cleared the first path through the woods, and it's true today. America has always risen to the challenge of finding a way to move forward.

And as we do, we'll always keep safety as our top priority. We want the men and women who build these grand projects to be safe. And we want the traveling public to stay safe by buckling their seat belts and driving carefully.

Thank you very much.

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