Md. transportation secretary says auditors knew of contract irregularities

Maryland Transportation Secretary Beverley K. Swaim-Staley told state lawmakers Tuesday that internal auditors knew about some irregularities in the awarding of contracts by the State Highway Administration but didn't raise an alarm.

The transportation chief went before the General Assembly's Joint Committee on Audits to respond to two reports this year that identified ethical lapses and violations of contracting rules in one of the largest agencies of state government. Swaim-Staley said she is moving aggressively to change a culture at the SHA that put getting work done above abiding by the state's procurement laws.

In an audit released in July and a follow-up report in December, the independent Office of Legislative Audits found a variety of improper practices in the highway agency's dealings with contractors. Among other things, the auditors found that SHA officials routinely extended contracts or moved money from one contract to the other without seeking the required approval of the Board of Public Works.

Swaim-Staley said there was no evidence that money had been diverted to anyone's personal use, but she did not minimize the seriousness of bureaucrats' evading fundamental state safeguards.

"The rules are in place for a reason," Swaim-Staley said. "The managers do not get to choose which rules they will follow and which they will ignore."

Most of Swaim-Staley's comments to the panel echoed previous statements. But her disclosure that internal auditors knew about some contracting problems — particularly that officials sought $16 million for new consulting contracts even though they had money for such work left over from a previous award — appeared to be new. In that case, the public works board was not informed about the remaining funds.

"Very clearly, the internal auditor at SHA for whatever reason did not spend significant or any amount of time on this particular issue," she said. She told lawmakers that the former head of SHA audits was no longer working at the agency.

Her testimony brought her face to face with Senate Minority Leader E.J. Pipkin, an audit committee member who called for her resignation last week over the problems at the SHA. On Tuesday, the Eastern Shore Republican grilled the secretary about what he called a "culture of corruption" at the agency and implied that she was at fault, but he did not use the occasion to explicitly demand her ouster.

The July audit found that a high-ranking highway official sought donations from state contractors for a charity golf tournament in which he had a financial stake. The audit also found that a former SHA official — who went to work for a contractor 12 days after retiring from the agency — worked on one contract both when he was at the agency and later when he was hired by the company. The audit's findings were referred to the state attorney general's office for criminal investigation.

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