A consulting contract given to Metro’s general counsel in January — on the same day she resigned from the agency — was abruptly terminated Thursday, hours after questions were raised about whether the deal violated a Metro prohibition on hiring former employees within a year of their leaving.
On Jan. 23, Metro’s general counsel, Kathryn Pett, resigned only to be rehired that day as a consultant to the board. In a letter sent Wednesday to Mortimer L. Downey, chairman of Metro’s board, Maryland Transportation Secretary Pete K. Rahn demanded that Metro explain its decision.
Rahn, who only recently learned of the deal, said the contract “brought to light a litany of very concerning procurement irregularities.”
Metro officials refused to release a copy of Pett’s contract, payment terms or a description of the work she was paid for, both after a formal records request was made last month by The Washington Post and in several interview requests Thursday.
But Metro’s procurement office abruptly terminated the agreement Thursday through an e-mail to Pett.
In a telephone interview from Utah, where she lives, Pett confirmed that her contract had been canceled by e-mail.
Pett and Downey said the contract had been fully vetted and was permitted under a provision in the board’s ethics policy that allows the agency to hire former employees who possess a unique skill.
Downey said he decided to cancel the contract rather than face continued questions from new board members who disagreed with the decision.
“Rather than argue this forever, my view is we move on,” he said Thursday.
Rahn, upon hearing the decision, described it as “a good first step in restoring confidence in [Metro’s] financial controls.”
The flare-up over Pett’s contract comes amid a host of operational failures and financial problems at the agency.
Metro faces a federal hearing June 23 and 24 over a smoke incident in a tunnel near L’Enfant Plaza in January that led to one passenger’s death and injured more than 80. In addition, the agency has been under strict federal financial controls because of concerns about its management of grants and procurement procedures. The controls have caused cash-flow problems for the agency.
And a search for a new general manager ground to a halt as officials from Maryland, Virginia and the District debated what kind of leadership the agency needed, with some favoring a financial turnaround specialist and others a traditional transit executive.
Pett said she was helping remedy those problems while general counsel and was continuing to work on federal compliance as a consultant.
Those “are some very important issues that still have to be addressed. I would say that is the more interesting story,” she said. Pett said the contract was pulled under a clause that allowed “termination for convenience.”
As a consultant, Pett reported to Downey, she said. In 2014, she earned $202,000 as general counsel, Metro records show. Metro filled her staff slot with an acting general counsel.
Pett, 57, would not discuss or disclose the consulting contract or how much she has been paid. She said she resigned to move home to Utah to tend to family issues.
Before she received the consulting contract, Pett said, Downey and Metro’s acting general manager, Jack Requa, reviewed the arrangement.
Pett said Metro’s code of ethics “permits these [contracts] at the request of the general manager, which is what happened here.” The agency initially suggested she remain on staff but, given her need to be in Utah, Pett said, Requa suggested a consulting contract with the board would be more feasible. Pett said issues surrounding her contract “were completely reviewed and vetted by the board both on the code of ethics and procurement issue and found to be appropriately procured.”
Downey initially declined comment on the matter Thursday except to say Pett’s contract had been terminated “some time ago”; he said he could not recall when. He referred all questions to Metro’s public affairs department. Metro spokesman Dan Stessel said that Requa was aware of the agreement but did not have a role in approving it because it was a board decision.
Stessel also said the agency’s ethics policy permits it to rehire or contract directly with a former employee “whose services are required to perform a specific or unique scope of work, including work formerly performed by the employee.”
That provision seems to contradict language that Rahn cited in his letter to Downey.
At least two board members who were involved with the negotiations with Pett expressed surprise that the contract was terminated.
Former board member James Dyke, who was chairman of the Governance Committee, said Pett played a critical role at a time when the authority was dealing with such issues as a scathing federal review that found serious shortcomings in its handling of billions of dollars in federal grant money.
Dyke said Pett’s work on the issues were a key reason why, when she announced her decision to leave, he and other board members felt it was important to retain her expertise.
“We did not want to lose this institutional knowledge,” Dyke said.
Tom Downs, who was board chairman then, said all board members were a part of the discussion.
“The board agreed unanimously that this was what we should do to protect the authority’s interest,” he said referring to the closed-session meeting at which the agreement was approved. “I don’t believe there was any dissent at the end of that session.”
But the board’s membership has changed. Downs and Dyke have left. There are new members representing the District and Maryland who have brought new opinions on the myriad issues facing Metro.
In his letter, Rahn noted that the consulting contract was with “Kathryn Pett, PLLC.” A corporation by that name was approved Jan. 2, 2015, at a South Ogden, Utah, address with Pett as the corporate organizer, Utah state records show. The address appears to be a home, according to mapping images.
Metro’s ability to manage its finances has been questioned by Rahn and other state and local officials, as well as federal authorities. Metro officials say they have tightened financial management and overhauled procurement procedures.
Rahn endorsed those reforms and wrote in his letter to Downey, “I was therefore surprised to learn” of Pett’s consulting contract.
The conflict, as Rahn described it in his letter, stems from a provision of the contract that says no member or employee of the transit authority shall have any direct or indirect interest “in this contract or the proceeds of the contract” while at Metro or for “one year thereafter.”
Rahn told Downey that Pett “clearly has a direct interest” in the contract and its proceeds and “clearly” breaches the one-year ban on revolving-door hires.
“If there are extenuating circumstances” that explain the breaches, “I would welcome the explanation,” Rahn wrote. If not, he asked Metro to terminate the agreement and recover any money already paid Pett under the deal.