By Megan Poinski, Megan@MarylandReporter.com
(December 14, 2011)—Transportation Secretary Beverley Swaim-Staley told legislators Tuesday that the culture at the procurement arm of the State Highway Administration dealing with construction inspection comes from an “unacceptable pattern of poor contract management and administration in the organization.”
Swaim-Staley was answering questions about a recent audit of the highway construction inspection services contracts, where auditors discovered long-standing problems of contracting processes being ignored.
All contracts and changes to them are supposed to be first approved by the Board of Public Works, chaired by the governor. Auditors found that contracts were routinely extended and changed, and funds moved to other projects, without board approval. Additionally, most projects did detail the scope of work, meaning there was no way that the department or the public could determine if the work was being done.
“This is a problem of sloppiness, and it built up over years, where people first stretched the rules, then started ignoring them,” Swaim-Staley said.
Two audits found problems
Two similar audits were done of the State Highway Administration. The first, released in July, implicated two former high-ranking officials of the State Highway Administration in violating ethics rules, failing to fully review contract bids, and shifting government funds among contracts without authorization. The Attorney General’s office criminal division is investigating further.
The second, a follow up on some suspicious behavior found in the first report, was released earlier this month. Swaim-Staley and Legislative Auditor Bruce Myers said there was no evidence found of wrongdoing, or that work was not completed.
Instead, they found deep, systemic problems with the contracting process.
Swaim-Staley said that there has been training going on across the entire State Highway Administration about ethics and how the procurement process is supposed to work. There are also surveys going out to different segments of the Department of Transportation to determine if the same kinds of procurement issues are going on elsewhere.
The State Highway Administration is also working to develop a process to justify all contract requests, and task orders to formally spell out work that needs to be done are now being issued to all contractors. Additionally, all of the contracts that were changed without Board of Public Works approval will be coming before the board for late approval.
New management at SHA
The top ranks of the State Highway Administration are now vacant, Swaim-Staley said. Several people who worked in the areas that audits found to be problematic are no longer employed by the state, she said.
“I thought it was very significant,” Swaim-Staley said. “If people were not going to be part of the solution, and were part of the problem, they may have a better career choice.”
The new head of the State Highway Administration, Melinda Peters, starts in her position this week, Swaim-Staley said. Peters, who oversaw the construction of the Intercounty Connector, will be able to select a team of key procurement professionals to work with her and make cultural changes from the top down.
Senate Republican Leader E.J. Pipkin said that the most recent contracting audit is one of the most blatant examples he has ever seen of a systematic way to ignore contracting law. He said that he was concerned that all of these problems were found after someone reported them to the Office of Legislative Audits’ fraud tip line.
With managers and supervisors not reporting that the procurement policies ignore contracting law, Pipkin wanted to know how Swaim-Staley might find future problems like this. (In a press release Friday, Pipkin had called for her resignation.)
Swaim-Staley said that the normal procurement process for construction inspection contracts could take an average of 21 months, so she can understand why people in the department may have been tempted to cut corners in procurement.
“We need to find the appropriate balance between following the rules and getting the work done,” she said.
At Tuesday’s hearing, committee members also discussed:
-- A report on the Department of Health and Mental Hygiene using the Social Security Administration’s master death file to ensure Medicare payments were not going to people who have died.
-- The audit of the Mental Hygiene Administration, which found that hundreds of thousands of dollars had been paid for people who were dead.