Conducted by the U.S. Transportation Department’s inspector general, the long-awaited review marked the latest and perhaps the most damning account of failings at the MWAA, which is overseeing construction of the Metrorail extension to Tysons Corner and Dulles International Airport.
From multimillion-dollar contracts that were not competitively bid to employees improperly hired as student interns to circumvent more-rigorous screening, the 50-page report depicts a corporate culture in which rules were routinely ignored.
“It’s worse than I thought,” said Rep. Frank R. Wolf (R-Va.), who with Rep. Tom Latham (R-Iowa), requested the audit. “I knew there were problems, and you could see there were problems, but I think it had really turned into a rat’s nest.’’
Until now, most of the outside criticism has focused on the authority’s board of directors. But the new report takes aim at the conduct of some senior staff members.
Jack Potter, who took over as president and chief executive of the authority one month after the inspector general’s investigation began in June 2011, said at a news conference Thursday that the new report and its 12 recommendations are a “blueprint” for fixing the authority.
Potter — along with the inspector general — noted that the authority has take steps toward correcting some of the shortcomings, including new travel and ethics rules and changes in the contracting process. But he said more work is necessary to restore public trust.
Potter said about 10 employees have been fired or disciplined for infractions cited in the report.
The MWAA board chairman, Michael Curto, said the criticisms have been unpleasant to hear but important. “We appreciate their interest and guidance, and we know they share our goal of making the airports authority a better organization,” Curto said.
Created by the Airports Act of 1986 and an interstate compact, the MWAA operates Dulles and Reagan National airports and the Dulles Toll Road. Problems at the authority are not new; a 2002 federal report, for example, cited many problems in contracting.
But the MWAA’s shortcomings have come under more scrutiny since the authority was charged with overseeing the extension of Metrorail to Tysons Corner and Dulles Airport.
The $5.6 billion Silver Line project is one of the largest infrastructure projects in the country, and its cost and scope have fueled tensions and led to jockeying for more political control over the authority.
Virginia Gov. Robert F. McDonnell (R), in particular, has been critical of the MWAA, whose board is made up of appointees from Virginia, the District, Maryland and the federal government. This year, McDonnell threatened to withhold a state contribution to the Silver Line project if the authority did not withdraw a labor-friendly contracting provision for the second phase of construction. More recently, McDonnell moved to oust a labor official from the MWAA board, faulting him for taking expensive overseas trips on authority business.
The new report does not allege criminal wrongdoing, although the FBI is conducting an investigation of the MWAA, which has a budget of nearly $2 billion and about 1,400 employees.
The MWAA is not covered by federal or state laws on contracting, ethics or transparency, although the Airports Act and the authority’s agreement with the federal government — from which it leases the airports — do impose some governance requirements.
But many of those rules were flouted by MWAA employees, according to the report. The report does not name individuals cited but includes their job titles.
U.S. Transportation Secretary Ray LaHood, a champion of the Silver Line, has been outspoken in his criticism of the MWAA.
“The public expects, and deserves, more from the public agency entrusted with managing the airports serving our nation’s capital and building the new Silver Line,” he said Thursday in a written statement.
The new report details incidents in which relatives of the vice president of human resources, Arl B. Williams, were hired to work in his department.
It also said proper criminal background checks were not done on new employees, and, as a result, employees with known criminal convictions worked at the authority “in sensitive and management positions for more than a year.”
The report also found abuses in the authority’s student intern program, which was used to put non-students on the payroll, bypassing standard hiring procedures.
Williams announced on Wednesday that he was resigning, effective Nov. 16. He did not respond to a request for comment on Thursday. Williams was not the only staff member auditors faulted.
The inspector general’s office also found that the authority’s vice president for information and telecommunications systems, George R. Ellis, and members of his staff accepted more than 25 free trips from a company with a major contract with the MWAA. Among the gifts accepted were tickets and accommodations to the 2009 Super Bowl, valued at almost $5,000. In total, members of Ellis’s department accepted 46 gifts with a total value of at least $12,000.
Ellis was terminated, according to the inspector general’s report. It is unclear whether the other employees were disciplined. Ellis did not respond to requests for comment. Recently, he had accepted a job as chief information officer for Albany, N.Y., but a spokesman said that after learning Thursday about the inspector general’s report, the city may reconsider its offer.
Investigators also found significant weaknesses in the way the MWAA awards and manages contracts — an issue highlighted in an interim report in May.
“MWAA Board members and senior officials set the tone for a lax internal control culture by engaging in questionable contracting practices,” the report says.
From 2009 to 2011, the MWAA awarded two-thirds of its contracts with less than full and open competition. Those included $6 million in sole-source contracts in which board approval was required but not secured — a violation of its lease agreement with the federal government.
In at least 17 instances, contracts were approved after the contractor had started work. In one example, the authority paid a contractor $572 an hour to attend a five-hour board meeting, during which the board voted to approve the selection of the contractor.