Maryland Transportation Secretary Pete K. Rahn had a private dinner with an executive of his former employer and advised him to “think big” on the company’s proposal for a multi-year, multimillion-dollar project that state officials were to award weeks later.
The February dinner between Rahn and the executive for the company, HNTB of Kansas City, Missouri, occurred in the weeks before the transportation department held briefings and made its decision on a nearly $69 million contract to oversee a proposed $7.6 billion widening of Interstate 270 and Interstate 495.
The meal also occurred weeks before Rahn personally sought an ethics ruling on his participation in the awarding of that contract – a request Rahn made weeks after transportation officials awarded the job to HNTB.
Rahn and state transportation officials had waived their normal procurement rules in an effort to accelerate the awarding of the contract. The winning proposal – subject to approval from the Board of Public Works on Wednesday – is a three-company consortium headed by HNTB that beat out three other proposals.
Rahn, in an interview, disclosed the meal with David Downs, a friend and former colleague when the secretary worked for HNTB before joining the administration of Gov. Larry Hogan. He said an opinion from the Maryland State Ethics Commission two weeks ago vindicated his involvement, and he dismissed concerns about appearances of a conflict of interest.
“I believe my actions speak to appearances as well as actual conflicts,” Rahn said. “I believe the actions that I’ve taken demonstrate there was not a conflict. If there is not an actual conflict how do you have the appearance of a conflict?”
In describing the meal with Downs, whom Rahn described as a friend, the secretary said he paid for his own meal and did not discuss the project with Downs.
“All I told them is ‘you gotta think big,’ and I told everyone that,” Rahn said.
A spokeswoman for Rahn, in follow-up comments, said Rahn did not expense his meal and “he has said to everyone he meets at conferences and events – bring innovation, bring great ideas.”
The spokeswoman added that the secretary met with the other three consortiums in his office between mid-December and early February.
“This was a dinner and not about (the public-private partnership),” the spokeswoman said of the meeting with Downs.
“I’ve done everything I can to ensure there is a bright line between me and not only HNTB but everybody involved,” said Rahn.
Rahn spoke about his involvement following a story published by The Daily Record that disclosed that the Board of Public Works is scheduled Wednesday to approve a $69 million contract with a consortium led by HNTB to oversee the proposed highway projects.
“As secretary, I’m not going to excuse myself from the largest public-private project undertaken in history,” Rahn said. He acknowledged that chairing a procurement is unusual for a department secretary and would have required him to excuse himself from deciding a protest had one been filed.
Rahn said there have been no protests from unsuccessful bidders and that the deadline for any challenges has passed.
Rahn, who was named transportation secretary by Hogan in March 2015, served as a senior vice president for HNTB from 2010 until the time he joined the Maryland Department of Transportation.
In the interview, Rahn said he holds no stock in HNTB and has no financial ties to the company. The secretary said it’s unreasonable to exclude officials or companies from projects because of past relationships.
“It only makes sense that when someone hires someone from the outside, you want them to bring their knowledge with them,” Rahn said. “I used that knowledge to make sure we got the ‘A’ team and not the ‘C’ team. We got the ‘A’ team.”
Four groups ultimately competed and made presentations to the department.
Rahn acknowledged chairing the meetings and participated in discussions over the award but didn’t have a vote. The secretary said his involvement was unusual but necessary given the “size and scope” of the project and the urgency of the projects.
In documents provided to the Board of Public Works last week, the department wrote that HNTB’s presentation “was exceptional — demonstrating a complete understanding of MDOT’s objectives and best addressing the criteria used to score” the technical presentation and interview.
“Combined, they represented to MDOT the best qualified team to undertake such a monumental program,” the department wrote.
The initial two-year contract — which does not include proposals to widen the Baltimore-Washington Parkway — calls for two renewal periods totaling an additional seven years at an as-yet-to-be negotiated cost.
Hogan announced the expansions in September as part of a larger $9 billion highway congestion relief proposal.
The I-495 and I-270 legs of the plan would encompass approximately 75 miles of highway and potentially affect 500,000 people daily, according to the Department of Transportation.
Expansion of the Capital Beltway would occur between the American Legion Bridge and the Woodrow Wilson Bridge. The state would add four lanes on I-270 between the Capital Beltway and Frederick, Hogan said.
State officials have said they want to accelerate the project, and Rahn on March 6 waived the more formal procurement process for what he described as an alternative that would get the project started as much as two years faster.
A chronology of events shows that the department set a deadline of March 2 for letters of interest from teams competing for the project. Four teams, including a three-company consortium led by HNTB, were invited to participate in in-person briefings of about two hours each on March 13 and 14.
On March 15, transportation officials decided on the HNTB consortium.
Rahn sought an opinion from the Maryland State Ethics Commission on April 4, the same day the contract recommendation was scheduled to go before the Board of Public Works. In the interview, Rahn said he heard it might be raised as an issue. The contract was removed from the board’s schedule, but Rahn said the removal had nothing to do with his seeking ethics advice, which he said vindicated him.
“I did not believe there was a conflict to begin with,” Rahn said. “I have absolutely no financial relationship with HNTB.”
But the letter from the ethics commission urges Rahn to consider appearances of conflicts of interest and “whether the integrity of the agency will be affected in a negative way.” The letter goes on to say that such reviews are outside the purview of the ethics commission and must be handled by an individual agency.
A public ethics watchdog group said that while there is no direct conflict, Rahn’s involvement, coupled with the use of an alternative procurement process and his seeking ethics advice after the fact, could lead the public to question the integrity of the award.
Damon Effingham, acting director of Common Cause Maryland, questioned Rahn’s assertions that there was no appearance of a conflict because there was no actual conflict.
“That’s not how an appearance of a conflict works,” Effingham said, “Certainly with a project of this size, when someone waives the more typical process, appearances may be impacted. You have to consider how the public will perceive it.”