Speedy selection of Maryland transportation secretary's former firm raises questions

Monday , April 16, 2018 - 10:00 PM

Michael Laris

(c) 2018, The Washington Post.

Senior Maryland transportation officials used an expedited and unusual process to choose a company to oversee a planned multibillion-dollar project to rebuild part of the Capital Beltway and Interstate 270, in what the state says will be the biggest such “public-private partnership” in the country.

The group selected for the project includes Kansas City-based HNTB Corp., Transportation Secretary Pete Rahn’s former employer, as one of three prime contractors. Another partner in the winning venture, Parsons, includes a former senior colleague of Rahn’s from his days as head of the Missouri Department of Transportation. The speed in which the winner was selected, along with the winning group’s ties to Rahn, has led some to question the propriety of the process.

“You don’t get more politically wired than that,” said one person familiar with the process, who would speak about the confidential proceedings only on the condition of anonymity. “The evaluation panel members are going to be influenced by the presence of the CEO of the organization if they’re directly involved in the process,” they said, calling it “an inherently biased circumstance.”

Competition for the $68.5 million dollar engineering and management contract, which has options that could extend it to 10 years, relied on 10-page proposals, 90-minute presentations and 30 minutes of questions, according to project documents. Rahn signed a waiver of the state’s traditional procurement practices, including of a requirement that detailed materials be made available to the public. He was chairman of the eight-member selection committee but did not have a vote. HNTB placed second among four bidders in its written proposal, according to the state.

Rahn said in an interview that he has a responsibility to be closely involved “in the selection of the team that’s going to deliver the largest contract in the history of Maryland,” a reference to Gov. Larry Hogan’s multibillion-dollar transportation plan.

Hogan’s $9 billion plan would widen three of the state’s most congested highways - the Capital Beltway (Interstate 495), I-270 and the Baltimore-Washington Parkway. The projects would add four toll lanes each to Maryland’s portion of I-495 and to I-270 from the Beltway to Frederick. It would also widen the Baltimore-Washington Parkway by four toll lanes after taking over ownership from the federal government. The Baltimore-Washington Parkway portion of the project is not included in the management contract.

Rahn said an ethics official cleared his participation after the fact.

The state Board of Public Works, which consists of Hogan, R, state Treasurer Nancy Kopp, D, and Comptroller Peter Franchot, D, will decide Wednesday whether to endorse the selection of HNTB.

The winning firms, known collectively as the “general engineering consultant,” would act as something of a shadow government for the Maryland Department of Transportation, which says its plan to hire firms to build, finance and maintain toll lanes is too big and complex to govern itself.

The state “cannot completely define the scope of work” for the firms because it has never done such a complex project on such a quick schedule, it said in a March waiver of procurement rules signed by Rahn. State officials said the Washington suburbs’ already horrendous traffic is slated to quickly worsen, necessitating swift government action. And they say they must partner with the private sector to impose tolls because the state doesn’t have the money to make the improvements.

“Another critical factor in getting the approval as quickly as possible is Maryland’s role in Amazon’s Search for a Second Headquarters Location,” the document says. (Amazon.com founder Jeff Bezos owns The Washington Post.)

Applicants were given 10-day deadlines to submit “Letters of Interest,” and the selection was made within weeks. Such general engineering consultant contracts usually take 18 months to two years, Rahn said. “Time is absolutely of the essence in undertaking this process,” he said.

Rahn said he attended three of the interviews but was unable to attend the fourth because he was ill. The interviews offered a crucial opportunity for teams to prove they understood what the state wanted. HNTB performed so exceptionally in the presentation and interview that it beat out another joint venture that had the highest-ranked written proposal, according to state officials.

Rahn said he had dinner with a friend at HNTB but paid for his own meal, and that was merely one of a barrage of similar meetings following the announcement of the project. A Maryland Department of Transportation spokesman said Rahn also met with members of each of the three other teams in December, January and February.

On April 4, after the selection was made, Rahn sought an ethics review of his involvement in the process. The next day, Michael Lord, executive director of the State Ethics Commission, offered Rahn his “informal view” that restrictions in an ethics law “do not prohibit your participation in matters involving your former employer, HNTB, as long as you have no financial interest in the entity and you are no longer employed by them.”

Rahn stated in his request for the ethics office opinion that after Hogan appointed him secretary, “I severed all financial connections with HNTB. My contract was terminated, I moved my 401(k) to an independent bank, and I initiated the sale of my stock in the employee owned company.”

Lord did caution that Maryland public ethics law prohibits officials from using their position for “private gain or the private gain of another,” and said such “prestige of office” restrictions “must be strictly adhered to.”

In cases “where an appearance of a conflict of interest remains,” even when an official abides by the ethics law, the agency or official “must make the determination of whether the integrity of the agency will be affected in a negative way.”

Rahn said he did not seek to have his former Missouri government colleague and current transportation executive, David Nichols, join the effort to compete for the Maryland contract.

Still, Rahn said, “I am glad Dave is a part of it, because he’s really good.” Rahn added that “Parsons is going to be bringing in a lot of people, as is HNTB.”

Nichols did not respond to a request for comment. Representatives of the four teams that competed for the work either declined to comment or did not respond to calls seeking comment.

The winning group consists of a team including HNTB, Parsons and Maryland-based JMT. Rahn said it also includes 23 subcontractors, 20 of which are minority or small-business enterprises. A spokesman for the state transportation agency said it could not provide the names of the firms until the winning team is approved by the Board of Public Works, but they will be released after that occurs.

Despite his waiving a requirement that “all documents relating to the award of a procurement contract are to be made available to the public,” Rahn said those documents would indeed be made public because it is crucial to maintain transparency and public support for the project. “That contract and all the associated information is going to be posted and made available,” Rahn said.

Rahn said the waiver he signed “was worded very broadly to fit within the language of what’s permitted.” The state’s goal in using an “alternative procurement . . . was to get through this very quickly.

“However, we will follow all of the steps to maintain the credibility of the project,” as well as his own credibility, he said. “I have a reputation for being above board and following rules and not having questions about my integrity. I intend to keep that.”

Rahn said ethics officials have made clear to him that “there’s no intent in the ethics laws, and it doesn’t make rational business sense to say you can never do business with a former employer. If that were the case, this department couldn’t do business with 90 percent of the businesses out there. It’s not a rational approach.”

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