Hogan calls for new highway contract; Rahn recuses himself from process

Gov. Larry Hogan ordered his state transportation secretary Friday to seek a new contract to oversee the largest public-private highway project in the country saying a recent contract that was put on hold lacked public transparency.

Hogan, in his letter to Department of Transportation Secretary Pete K. Rahn, said questions about the “never-before-used process necessitates” a new contract. Hogan further ordered Rahn to work closely with the board as the new contract is bid.

But Rahn, in response to Hogan’s letter, said late Friday he would recuse himself from the procurement process.

Hogan’s letter comes two days after the governor put on hold a two-year, $69 million contract with HNTB, which employed Rahn before he joined the state.

Rahn used a new state law to legally abbreviate the standard competitive bid process. He also chaired presentations given by four consortia, including one led by HNTB, and he later sat in on decision meetings.

“Creating a more flexible and efficient procurement process to allow transformative projects like this to move forward in a timely manner is a shared goal of our administration, the previous administration, and the legislature,” Hogan wrote Friday. ““However, 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.”

Questions about the project, the waiver process and Rahn’s involvement arose after a review by The Daily Record.

Hogan backed Rahn last week and the secretary himself said he believed there was neither an actual conflict interest nor the appearance of one.

But late Friday, Rahn issued a statement acknowledging those earlier concerns raised in published articles.

“MDOT’s mission is to get these vital highway improvements in progress as quickly as possible to relieve commuters of Maryland’s notorious traffic congestion,” Rahn wrote. “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. In order 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.”

Comptroller Peter V.R. Franchot and Treasurer Nancy K. Kopp previously expressed concerns about the contract.

Franchot raised issues about the speed and transparency of the process, while Kopp expressed concerns about Rahn’s involvement with his former employer. Franchot and Kopp sit with Hogan on the Board of Public Works, which would approve any contract.

Rahn sought an advisory letter from the Maryland State Ethics Commission, saying he no longer had financial ties with the company, having sold all of his stock in 2015 when he was hired by Hogan.

Michael Lord, executive director of the commission, agreed that no violation of ethics laws was likely if there were no financial ties but warned of appearances of conflict and“whether the integrity of the agency will be affected in a negative way.”

HNTB was the leader of the winning bidder. The group was set to be formally awarded a contract that paid nearly $69 million over two years, with seven additional years at an undetermined cost, at Wednesday’s Board of Public Works meeting. But Hogan on Tuesday withdrew the request for the board to approve the contract when it became clear that it probably would not get the two votes needed to pass.

Hogan’s proposals for Interstate 495 and Interstate 270 would encompass approximately 75 miles of highway and potentially affect 500,000 people daily, according to the Department of Transportation.