{"id":550,"date":"2026-10-26T14:06:34","date_gmt":"2026-10-26T14:06:34","guid":{"rendered":"https:\/\/thetheolowgen.com\/?p=550"},"modified":"2026-10-26T14:06:34","modified_gmt":"2026-10-26T14:06:34","slug":"they-bid-thirty-five-dollars-an-hour-and-called-it-mere-speculation-cbs-california-reported-oct-23-that-kpmg-won-a-24-million-california-high-speed-rail-consulting-contract-by-two-points-after-bid","status":"publish","type":"post","link":"https:\/\/thetheolowgen.com\/?p=550","title":{"rendered":"THEY BID THIRTY-FIVE DOLLARS AN HOUR AND CALLED IT MERE SPECULATION | CBS California reported Oct. 23 that KPMG won a $24 million California High-Speed Rail consulting contract by two points after bidding $35 an hour for managing directors, managers and senior associates it assigned no one to, while raising its entry-level associate rate from $45 to $425 \u2014 then billed thousands of hours the authority assigned to $35 managers and senior associates at $425, about $2 million more in four months, after a state hearing officer dismissed a rival\u2019s bid-manipulation protest as \u201cmere speculation\u201d and warned the authority not to pay more"},"content":{"rendered":"\n

They bid thirty-five dollars an hour and called it mere speculation. I know the sentence. It is what the handshake says when a firm writes down a number nobody intends to pay, the state scores the number, a rival points at the number, and the state\u2019s own referee says pointing is speculation \u2014 and then, please, whatever you do, don\u2019t pay more than the number.<\/p>\n\n\n\n

Here is the record. CBS California reported Oct. 23, 2026, on the California High-Speed Rail Authority\u2019s $24 million, four-year consulting contract with KPMG. Under KPMG\u2019s existing contract with the authority, managing directors billed $450 an hour, managers $375 and senior associates $295. In its winning bid for the new contract, those three classifications dropped to $35 an hour, and the lowest-experience class, associate, rose from $45 to $425. Because the state scores a weighted average of expected rates, the $35 positions pulled KPMG\u2019s average down; CBS reports the bid averaged roughly $200 an hour while its billed average was more than double that. The runner-up, CohnReznick Advisory, scored higher on technical qualifications and lost by two points on price. Its protest accused KPMG of offering low rates for positions it didn\u2019t intend to staff, and a review of the bid confirms KPMG never assigned anyone to the three $35 positions; the authority\u2019s own evaluators flagged that and questioned whether the firm could stay on budget. The Department of General Services denied the protest. Its hearing officer wrote that \u201cany argument that KPMG intends to charge more than it bid or to substitute an individual to perform work at a higher hourly rate classification is mere speculation\u201d \u2014 and then put the authority on notice that its contract managers must make sure \u201cno more than that classification rate is paid.\u201d Across seven task orders CBS reviewed, the authority assigned more than 9,000 hours to managers and senior associates, and KPMG billed thousands of them at the $425 associate rate, roughly $2 million more over four months. The bid listed managers at $36.05 an hour in years three and four; the signed contract lists $453.20, and DGS says it has received no amendment. One year in, KPMG had billed nearly half the $24 million. All this on a project that, per CBS\u2019s earlier reporting, has spent more than $15 billion over nearly three decades and still hasn\u2019t laid a mile of high-speed track.<\/p>\n\n\n\n

Now the defense, and it is a remarkable one. KPMG did not deny the findings. A spokesperson said its December 2024 bid \u201cdetailed the people who would work on the engagement, their job classifications aligned to the state\u2019s definitions, and the associated billing rate for each person\u201d \u2014 in other words, the authority knew. KPMG also said it is \u201cinvestigating the facts and circumstances related to the proposal process and contract\u201d and that any violations by its personnel \u201cwill be addressed appropriately.\u201d The authority, answering the protest at the time, argued KPMG employees\u2019 actual job titles didn\u2019t have to match the state\u2019s contract classifications. DGS says its review covers procedural compliance and that it lacks authority, once a contract is signed, to oversee the rates an agency actually pays. After the inspector general\u2019s travel investigation, the authority announced it would rebid the KPMG contract early. And after CBS published, the authority\u2019s board chair said he would ask the inspector general for an independent review of the contract, the billing and the authority\u2019s own oversight. The authority\u2019s executives did not answer CBS\u2019s questions; its public relations team instead demanded a correction, saying the program has \u201cadvanced significantly, turning the corner from planning to implementation, consistent with global best practices.\u201d CBS declined.<\/p>\n\n\n\n

Buck says he once bid the Hendersons $35 to mow and then charged $425 for \u201cassociate-level edging,\u201d and Deb made him give it back. He would like it noted that nobody made KPMG. I love them. They are seasoning.<\/p>\n\n\n\n

\u201cMere speculation\u201d is the alibi. The $35 is the story. Sit with it until it confesses. A bid is supposed to be the one moment in the whole arrangement when the firm has to tell the truth about price, because someone else is standing there offering a different truth. Here the truth was a rate for positions with no one on the staffing list, a referee who called the obvious a guess, and an agency that was warned in writing and paid anyway. This is what consulting sells the state: its own competence, back, by the hour, at a markup, in a font nicer than the state can afford. And this is what the state sells the consultants: a counterparty that will not read the invoice. Both parties are the help. One signs the task order. One bills the associate. Neither lays track. I am not asking for a nobler agency or a humbler firm; I have met both and they bill the same. I am asking why the people who will never ride this train are the only ones in the deal who paid list price. The cardigan stays. Fill the notebook. Then ask, out loud, what your state is paying thirty-five dollars for that costs four hundred and twenty-five.<\/p>\n\n\n\n

Sources:<\/strong><\/p>\n\n\n\n