Gov. Larry Hogan has directed his transportation chief to scrap a contract to launch a massive state highway project and restart the bidding process after an ethical concern arose in the initial effort.
The $68.5 million contract would have paid a consortium of companies to oversee Hogan's $7.6 billion plan to relieve traffic congestion on major highways in the Baltimore-Washington corridor. But a firm with ties to Transportation Secretary Peter K. Rahn was among the winning bidders after he signed a waiver of the state's traditional procurement process to award the contract.
Rahn was employed by the company leading the consortium, Kansas City-based HNTB Corp., as a senior executive immediately before he joined the Hogan administration.
Hogan's letter to Rahn, publicly released Friday evening, said "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. … I am not satisfied that our threshold for transparency has been met in this case."
Amelia Chasse, a spokeswoman for Hogan, said the governor continues to have confidence in Rahn, who "is one of the nation's foremost transportation policy experts."
Rahn immediately responded to the governor's letter that he would recuse himself from the next round and turn over the process to state highway officials.
The Maryland Department of Transportation's "mission is to get these vital highway improvements in progress as quickly as possible to relieve commuters of Maryland's notorious traffic congestion," he said in a statement. "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."
The HNTB-led consortium was selected in an expedited process that took less than a month after Rahn decided to use the waiver under a system approved by the General Assembly last year as an alternative way to bid public-private partnership contracts. It allows the state to forgo traditional procurement when efficiency and the stakes of the project demand it.
The Board of Public Works delayed a vote on the contract Wednesday when Rahn's personal tie to the recommended winner came to light.
Board members include the governor, a Republican, and two Democrats, Comptroller Peter Franchot and Treasurer Nancy K. Kopp.
Kopp had raised concerns during the board meeting about how quickly the process of choosing companies occurred, as well as Rahn's "appearance of conflict." She said Friday that she was pleased with the governor's decision to start over and doesn't believe it will substantially add to the time it takes to start the project.
"I believe that this is the appropriate move and I appreciate the governor taking that action," she said. "In the long scheme of things, I don't think this should delay the project significantly and it's better to do things right."
Kopp also said she thought it was appropriate that Rahn is stepping away from the selection process and expressed faith in the professionals at the State Highway Administration.
Joseph Shapiro, a spokesman for Franchot, said, "Comptroller Franchot supports transparency and accountability at all levels and in all areas of government."
Last September, Hogan proposed using a public-private partnership to add 75 miles of toll lanes to Interstate 270 and the entire stretch of the I-495 Capital Beltway in Maryland.
Maryland transportation officials determined they lacked the resources to move quickly on bidding and awarding contracts to design, engineer and build the $7.6 billion project, so they decided to hire a consortium of consulting companies to oversee that work. The contract with the HNTB-led consortium would have been worth $68.5 million to start and could have been extended and grown in value over 10 years.