Cracking down at SHA

Our view: Transportation officials seem to be taking seriously the need for culture change after a scathing audit, but more needs to be done

August 30, 2011

When state auditors released a report in July revealing serious conflicts of interest between State Highway Administration officials and the contractors who compete for transportation contracts, as well as instances of the agency playing fast and loose with procurement law, Gov. Martin O'Malley and others seemed intent on pinning the blame on two bad apples who had left state government rather than acknowledging a systemic problem. But those two employees — who were not named in the audit or by transportation department officials due to confidentiality rules — did not act in isolation, and it is heartening to learn that Transportation Secretary Beverly K. Swaim-Staley and the interim head of the highway administration, Darrell B. Mobley, recognize the need for broader change.

The pair told The Sun's Michael Dresser that significant personnel changes are in the works at the SHA, particularly in the office that handles procurement and contracts, and that they are seeking to reverse a culture in the agency that discouraged whistle-blowing. Still, state legislators need to take a close look at the SHA audit and the agency's response to determine whether broader changes are needed to eliminate the revolving door between industry and government that appears to be at the heart of some of the agency's problems.

The most scandalous findings in the audit dealt with the appearance of self-dealing by top managers in the department. The audit found that one procurement manager had solicited funds for a golf tournament in which he had a financial stake from two companies that did business with the agency, and then expedited contracts for them. Another manager took a job with a construction management firm 12 days after retiring; his new employer happened to have received a $16 million contract he had helped arrange while still working for the state. In other cases, state officials asked construction companies to move money from one contract to another to conceal overspending from Board of Public Works oversight. That, too, reflects an overly cozy relationship between government and industry, even if it doesn't directly profit any public officials.

More troubling were auditors' reports that they were stonewalled by some SHA employees in their investigation — a rarity; nearly all state audits praise the agencies in question for their cooperation — and that some of the agency's workers had been ordered by their bosses to restrict any communication outside "proper channels." That's a recipe for insularity and a warning to would-be whistle-blowers to keep quiet.

To their credit, Mr. Mobley and Ms. Swaim-Staley have taken steps to change that culture. Mr. Mobley sent out a memo this summer emphasizing employees' rights to bring complaints to top managers — even the transportation secretary or governor — without fear of retaliation.

That's good, but it doesn't address the deeper problem revealed by the problems at SHA, and that is the revolving door between government and private industry. Maryland has a mandatory "cooling-off" period before legislators can turn around and lobby their former colleagues, but no such restriction exists for rank-and-file employees. And the regulations governing workers' conduct before and after they leave state employ are ineffective.

State ethics laws bar state workers from participating in matters affecting a company with which they are in active negotiations for employment, but that rule is easily evaded and hard to enforce. And once state employees enter the private sector, they can't participate in bidding on state projects they had a direct hand in developing. But they are free to, effectively, lobby their old colleagues on other matters.

The phenomenon of procurement officers going to work for state contractors, and regulators getting jobs from those they once policed, isn't unique to the State Highway Administration (though its nearly $1 billion annual budget makes it particularly ripe for this sort of thing). It's not unique to Maryland, either, but affects government at all levels.

Nonetheless, as state legislators review the highway administration audit this fall, they should consider the bigger picture. It isn't always bad to have some flow back and forth of personnel between the public and private sectors. The government can sometimes benefit from the expertise of those who used to work in the industries it regulates, just as much as the industries can benefit from the insight of those who used to work for the government. There is no easy solution, but without clearer rules, cases like these will be inevitable, and we will too often be left to question whether we are getting honest service in return for our tax dollars.

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