Maryland Gov. Larry Hogan (R) has killed a controversial $68.5 million management contract that had been awarded to his transportation chief’s former employer and was threatening to undermine a multibillion-dollar plan to add toll lanes on the Capital Beltway and Interstate 270.
“I am not satisfied that our threshold for transparency has been met in this case,” Hogan wrote in a letter to Transportation Secretary Pete K. Rahn.
Rahn said he would not participate in the new procurement process.
Rahn had signed a waiver of the state’s traditional procurement practices and oversaw the selection of a group of firms that included HNTB Corp., a previous employer, and Parsons, which included a former top colleague of his when they both worked at the Missouri Department of Transportation.
Hogan and Rahn have put a premium on streamlining government bureaucracy as they pushed Hogan’s traffic-relief plan and other projects. But the process in this case was based on 10-page proposals, 90-minute presentations and 30 minutes of questions. It took just weeks to complete, not the more than 18 months officials say is typical.
Two of Maryland’s top oversight officials raised concerns about the contract in interviews this week, and it was pulled from the agenda of the Board of Public Works, which must approve such deals. Comptroller Peter Franchot (D) — a member of the board on which Hogan also sits — on Wednesday said that the public deserved “transparency and accountability” and questioned the contract.
The board’s third member, State Treasurer Nancy K. Kopp (D), objected to the “very abbreviated process” and said Rahn’s role gave “the appearance of a potential conflict of interest.”
A Hogan spokeswoman did not answer questions Wednesday about whether Hogan had any concerns about Rahn’s participation, or any regrets about his administration’s use of the truncated process. But in a letter to Rahn released late Friday, Hogan said “a focus on speed cannot and should not ever come at the expense of the full and complete transparency that the taxpayers of Maryland expect and deserve.”
“However unintentionally,” Hogan said, the Maryland Department of Transportation’s communications with the Board of Public Works and the public on this “never-before-used” procurement method “have lacked the clarity needed to ensure full faith in this process.”
Rahn, who was the nonvoting chairman of the eight-person selection committee, had sought an ethics ruling after Missouri-based HNTB, California-based engineering and construction firm Parsons and Maryland-based JMT were chosen as the general engineering consultants for the massive project.
The executive director of the State Ethics Commission offered his “informal view” that state ethics law did not prohibit Rahn from involvement because he no longer had any financial ties to HNTB. The official added that prohibitions on using a public position “for private gain or the private gain of another . . . must be strictly adhered to.”
Rahn on Monday strongly defended his participation, saying it was his responsibility as the state’s top transportation official to be integrally involved in what promises to be a transformational, $7.6 billion road construction project.
That stance changed Friday.
“While all of our actions during this process were consistent with state law, policies and procedures governing this type of procurement, I nevertheless should have been more aware that this complicated process would give rise to questions,” Rahn said in a statement. “To ensure complete public confidence going forward, I will not be involved in the new procurement process, which will be undertaken by the State Highway Administration.”
Hogan, in his letter, said the $68.5 million award was “simply for a consulting contract to get the ball rolling while the department meets with stakeholders, holds public hearings, and does its due diligence in preparation for the larger procurement” to construct the highway improvements.
But in its justification for using the speedy procurement method — which included waiving a requirement that “all documents relating to the award of a procurement contract are to be made available to the public” — the state had argued the contract was a vital tool to oversee the broader project.
The companies were to serve “as an extension” of the government itself, and would have helped the state establish policies and guidelines governing the entire undertaking, according to a project document. Maryland officials did not believe they have “enough information and experience” to even define the broad scope of services the companies would have been hired to perform, the state said, which is why they needed a waiver from usual procurement rules.
Transportation Department spokeswoman Erin Henson said a new procurement is meant to address the Board of Public Works’ questions “regarding this expedited and untested method of procurement.” She said the highway administration “will be conducting the procurement as quickly as possible to keep the Traffic Relief Plan moving forward.”