The Maryland Department of Transportation has put new measures in place to ensure that all five of its agencies are taking correct steps to modify contracts with approval from the Board of Public Works, the powerful board consisting of the governor, state comptroller and treasurer.
The department has also implemented a revised contract justification process, which requires agencies to provide more documentation when they seek contract authorization approval from the board.
An audit report released last Tuesday found the State Highway Administration sidestepped the board by authorizing modifications and extensions to architectural and engineering contracts without the board’s proper approval. There was a similar finding in a November 2011 special audit on the administration.
An audit report released last Wednesday found that the Maryland Aviation Administration, another agency in MDOT, also used unspent contract authorizations for projects that were authorized after the contract’s expiration date.
MDOT brings hundreds of contracts to the board for retroactive approval.
“The secretary has made clear that that this is unacceptable and there is a process that will be in place and it will be followed and it will be followed to the letter,” Department of Transportation Communications Director Jack Cahalan said. “In recognition of that fact that this is not the way that the department is going to do business, we have literally gone back to the Board of Public Works and taken each one of these contracts back to BPW for approval.”
Since June 2011, the department has been in the process of receiving retroactive board approval for contract modifications. The remainder of these contracts will go to the board for approval this month, Cahalan said.
“They said in that audit report that they would bring [the contracts], and they, in fact, did bring those ones,” said the board’s secretary, Sheila McDonald. “I have every reason to believe that both of those agencies are going to follow through on what they say they are going to do.”
SHA spokesperson Valerie Burnette Edgar said the administration was not purposefully avoiding the Board of Public Works’ approval process as required by state procurement regulations. She said there was confusion about when a contract modification needed to go before the board.
“Some of the issues were if they had money left in the contract but the time was up, they needed to go back to the Board of Public Works,” Edgar said. “There was a misunderstanding that they could do this at lower level to extend the time on the contracts. Whatever the issue may be, time or geographic, they have to go back and get approvals to modify the framework of the contract.”
“They scrubbed basically all the contracts and went through hundreds and hundreds of contracts. That’s been happening all throughout 2012,” Edgar said.
Audits for both the SHA and the MAA also found that the agencies were not providing enough justification to the board for the maximum amount for contract rewards. The SHA also used unexpended funds from contracts to fund projects that were outside of the scope of the individual contracts.
Edgar said the department put in place a new procurement justification process for all of its agencies to follow and the SHA is abiding by that. The process has been in place for all of 2012, but wasn’t reflected in the most recent audit, Edgar said. The process calls for better justification of why the agencies are asking for the specific contract award amount when they submit contracts for approval.
“MDOT has implemented a revised justification process for MDOT agency use when requesting authorization to procure new A&E contracts,” states the MAA audit response. “This process considers, among other things, existing contract authority, expected Capital Program levels and past rates of contract usage.”
Comptroller Peter Franchot’s communications director, Joe Shapiro, said the comptroller is satisfied by the corrective actions by the transportation department and its agencies.
“[Franchot] does believe that there has been progress and does believe that they will continue to work to fix it and thinks they are going in the right direction,” Shapiro said. “He is obviously a strong advocate for strong oversight and is always concerned when there is a perception of the board being sidestepped. He continues to be an advocate for tough board oversight.”