Firms in highway audit deny improprieties

The Maryland engineering companies that auditors referred to in a scathing report on the State Highway Administration last week denied any knowledge Thursday of improprieties in the way they were awarded contracts and insisted their dealings with the agency have been aboveboard.

Meanwhile, the state acknowledged there may be a slowdown in the award of highway work as it vets contracts now in the pipeline in the wake of the report released by the Department of Legislative Audits.

The audit, like most such reports, did not name individuals or companies. But it highlighted two $16 million construction management contracts that were awarded in late 2008 under circumstances that, it said, "circumvented certain established independent bid evaluation processes."

A review of state Board of Public Works documents shows the lead companies in the partnerships that received the only two awards that matched the audit's description were Johnson, Mirmiran & Thompson of Sparks and Rummel, Klepper & Kahl of Baltimore. JMT's partner was Alpha Corp. of Dulles, Va. RKK bid as part of a joint venture with KCI Technologies of Sparks.

The lead companies, as well as KCI, are among the best-known and most influential consulting engineering firms in Maryland — well-known for their close ties to the State Highway Administration and for their employment of many former agency employees.

For the past three years, the three companies each have done roughly $8 million to $14 million in business with the state annually, the vast majority of it with the highway agency, according to state records.

Officials at the Maryland firms acknowledged having received the contracts mentioned in the audit but denied knowing anything about flaws in the way the business was awarded. A message left at Alpha, the Virginia firm, was not returned.

The chief operating officer of JMT, John A. Moeller, acknowledged that an employee of his firm was the unnamed person auditors said began work at JMT 12 days after retiring from the SHA. But Moeller said the auditors erred in reporting that the employee had been involved in the procurement process for one of the contracts while working at the highway agency.

The audit was released last Friday, a day after the agency's administrator, Neil J. Pedersen, retired after eight years on the job. Deputy Secretary of Transportation Darrell B. Mobley took over as acting administrator and has been given the task of investigating the auditors' findings.

Jack Cahalan, a spokesman for the SHA's parent, the Maryland Department of Transportation, said there might be "some slowdown" in the agency's awards of business as Mobley reviews all pending contracts — not just those on which JMT and RKK have been bidders.

"The goal is to keep the pipeline open and flowing but do it in a way that abides by all the rules," Cahalan said.

In their report, the auditors laid out a series of lapses on the part of top SHA managers, including the alleged solicitation by a top agency official of SHA contractors for sponsorship of a golf tournament in which he had a financial stake and irregularities in the procurement process for the two $16 million contracts.

The auditors' finding about the selection process is especially important because it goes to the heart of Maryland's procurement system, which relies on agency officials to make unbiased evaluations of the technical merits of bidders' contract proposals and qualifications.

According to the report, the SHA's procurements and contracts office failed to perform a complete evaluation of the competing proposals for the two contracts because it wanted to make the awards quickly.

The auditors said a full evaluation could have made a difference in the ultimate decision on which companies got the five-year, $16 million contracts for construction management and inspection services in the Washington suburbs.

Daniel Wallace, a partner in RKK, acknowledged his company was involved in one of the $16 million contracts referred to in the audit. He said he was not aware of anything improper in the award of the contract received by the joint venture his firm led.

Terry Niemeyer, chief executive of KCI, concurred.

"We're totally out of how they do that," Niemeyer said.

JMT's Moeller said he knew of nothing wrong with the selection process, and he criticized the auditors' finding that the JMT employee had been involved with his company's contract on both ends — both in the procurement process when he was still an SHA official and as a JMT employee after its award.

"We don't think the audit has been completely fair," Moeller said. "We don't believe our employee was ever involved in the award of that contract."

Moeller said he believed auditors had based their conclusion about the employee's involvement in the procurement on a mistaken identification of a signature.

Former state employees are generally forbidden to work on a contract in which they were involved while on their agency's payroll for the term of the contract, according to auditors.

Moeller acknowledged that his company was the one mentioned in the audit as having 35 former SHA employees on its payroll as of September. But he said that number was exaggerated because of information his firm mistakenly supplied to the state.

The JMT executive dismissed concerns that have been raised about a "revolving door" between the highway agency and its consulting engineers.

"We've hired many ex-state employees when they retired. This isn't a revolving door. This is an exit," he said. "Nobody goes back."