Saturday, December 29, 2007

From the Archives II: Inside MnDOT Jaunary 20, 2003

This series is one of several reasons I cannot support Elwyn Tinklenberg. Running on his Transportation record against Bachmann makes him too vulnerable. I'll continue to post the remainder of the series, but Tinklenberg's involvement needs to be discussed.

Star Tribune (Minneapolis, MN) January 20, 2003, Monday, Metro Edition

INSIDE MnDOT; Watchdogs or nitpickers? Two agencies fight it out; The Transportation and Administration departments have a history of feuding over the final say on outside contracts.

Dan Browning; Pat Doyle; Staff Writers

Second of three parts

On the bookcase next to Gerald Joyce's desk is a cat-litter scoop labeled "In Case of MnDOT."
Joyce is a contract regulator for the state Department of Administration. For more than a decade, he has reviewed efforts by the Minnesota Department of Transportation to hire consultants and expand contracts without seeking competitive bids. His patience ran out long ago.

"The dollar sign at MnDOT means 'only,' " he said. "It's only 20 million. Or it's only 10 million."
The Administration Department has final responsibility for most contracts between state departments and industry. Many MnDOT engineers view the Administration watchdogs as rule-bound nitpickers who don't understand the real-world measures needed to get roads, bridges and rail lines built.

In turn, Joyce and his colleagues have accused MnDOT of using improper tactics to evade their authority. But as the quarrel heated up during the Ventura administration, their commissioner gave much of that authority away.

By 2001, the strain of a $675 million light-rail project and a special $459 million road and bridge program pushed the departments to the breaking point. So David Fisher, then administration commissioner, and Elwyn Tinklenberg, then transportation commissioner, worked out their own solution to expedite contracts, which Fisher referred to in a document as the Big Fix.

Among other things, two MnDOT employees were given authority to bypass Administration regulators on most contracts, and a fast-track review process was begun.

At about the same time as those issues were being worked out, Tinklenberg agreed to contribute part of the money MnDOT collects from leasing space on radio towers along state highways to a new technology enterprise fund administered by Fisher.

Meanwhile, both agreed that their staffs wouldn't publicly criticize each other.

Tinklenberg, who stepped down in October, has declined recent requests to comment. Fisher, whose term ended in early January, flatly denied any connection between his decision to yield on contract issues and MnDOT's promised payments to the technology fund.

But Betsy Hayes, a lawyer in the Administration Department, said she worries that people might think there was an agreement to relax oversight in exchange for a promise of future funding.

"I think that it would be improper for us to try to get into the minds of what the two commissioners were contemplating, exactly," Hayes said recently. "But certainly one of the things that we try to do, or I try to do when I'm advising people, is to not create an appearance of improprieties. And I think that is a concern here with me."

Light-rail project was a source of tension

The Hiawatha Avenue light-rail transit project (LRT), a centerpiece of former Gov. Jesse Ventura's election campaign, was already barreling down the tracks when Tinklenberg became commissioner in January 1999. To fulfill the promises of his boss, he would need to get the line built, fast.

Within months of his appointment, he and his deputies were angling for less oversight.
In June 1999, Margo LaBau, Tinklenberg's chief of staff, wrote of the concern in an e-mail to Doug Weiszhaar, a prospective deputy commissioner. "We need some broader authority in letting contracts for professional services," she said, "especially as it relates to LRT and commuter rail."

Over at Administration, Fisher already had demanded to be notified in writing anytime one of his staff members was planning to reject a request from the legislative or executive branches. The department, he observed, had a reputation for being an impediment.

To Fisher's chagrin, it became known in his department as his "Just (don't) say no" policy.

In a recent interview, he explained: "Rather than have things just stop dead in their tracks and then . . . well up in the governor's office or the commissioner's office in a complaint, let's address it up front. Let's work with these guys and see if something can be done."

Nonetheless, Kent Allin, an assistant administration commissioner who oversaw the department's contract regulators, warned Fisher of possible trouble on the $3.2 million contract for preliminary design work on light rail. The Minneapolis engineering firm BRW Inc. (now owned by URS Corp. of San Francisco) had the contract; the New York firm Parsons Brinckerhoff Quade & Douglas was a subcontractor.

MnDOT wanted Administration to approve two large amendments that would change the nature of the original contract with BRW and increase its cost ceiling by nearly 75 percent. Such dramatic changes generally require competitive proposals to ensure that taxpayers get the best deal.

But Fisher told his staff that he wanted to get the contract "on the ground ASAP." Noting that Tinklenberg had personally asked him to approve the amendments, he ordered it done.
In an e-mail to his staff, Allin described the situation as a mess: "Supplement #1 is for $900K.

The work has been largely completed without the amendment ever being executed. That's a clear violation of state law and something we try hard to avoid."

Allin told his staff that "given the massive water already over the dam," they would need to document the facts leading up to the situation so the department could justify signing the amendment.

Administration also agreed to expedite the second amendment, worth $1.5 million, though it considered the work beyond the scope of the original contract.

Ask the watchdogs why it's important to have an independent review of MnDOT's contracting procedures, and they point to a time in 1999 when they stopped the department from sidestepping a pending competitive bidding process to give a $32 million light-rail management contract directly to Parsons Brinckerhoff.

The agency initially advertised for proposals, but before the responses were due, MnDOT officials privately had asked Parsons Brinckerhoff to submit a proposal for what what was initially estimated to be a $20 million job.

Allin said that Fisher already had given his tentative approval, but that his staff raised red flags.
"This is a $20,000,000, highly visible project that is very susceptible to law suits," regulators wrote. "The advertising process should be followed!"

Fisher ultimately sided with his staff and told MnDOT to seek bids. But MnDOT said it needed a transit expert right away to help meet a funding deadline. Fisher said that's why he agreed to let MnDOT add a third amendment to the BRW contract, for $1.1 million, allowing an employee of subcontractor Parsons Brinckerhoff to serve as interim project manager while bids were sought.
Parsons Brinckerhoff bid on the project and won, sparking allegations of a conflict of interest.

Federal authorities said the process appeared tainted, and they ordered the state to redo it.

MnDOT scaled back the job, which was won by O'Brien Kreitzberg (now owned by URS) with a bid of $15.4 million. Parsons Brinckerhoff didn't submit a new bid.

The battle goes to the Legislature

Despite Fisher's accommodations, MnDOT concluded that his regulators had become too much of an irritant.

"I don't know who the problem here is but it is shaping up to look like Admin is going to give us a problem on everything with LRT," LaBau e-mailed a colleague. Another MnDOT manager wrote, "We cannot meet aggressive schedules if we continue to encounter this kind of delay on a relatively easy straight forward contract."

Bruce Biser, assistant director of management operations for MnDOT, said in an interview that his agency's engineers look at state contracting laws and Administration's oversight as nettlesome paperwork, while the watchdogs at Administration "see themselves as . . . the altruistic steward of the taxpayers."

"If our engineer guys had their way," Biser said, "Admin would be out of our hair forever, legislatively."

In late 2000, with the next legislative session on the horizon, MnDOT pressed for greater autonomy. The agency supported proposals that would let it select consultants without competitive bidding on contracts worth as much as $50,000 (lifting a $5,000 limit) and would loosen other requirements on contracts worth as much as $100,000.

Joyce joined Heather Pickett, an attorney who had worked at MnDOT for four years before she joined Administration, in opposing the proposals. In a memo to their bosses, they said that if the ideas were approved, the same contractors would be chosen over and over.

"We have seen this in practice, so it's not just a theory," they said. "The small contractor will be lost in the shuffle."

They said the biggest losers would be firms owned by minority members and women. Two 1999 audits of MnDOT's contracts had found underrepresentation of such firms. The problem was worst with respect to contracts below $75,000, for which agency personnel have greater discretion in choosing a contractor. The audit found what it called "active discrimination rather than passive discrimination" on those contracts.

Joyce and Pickett also argued that selecting contractors without competition can lead to higher prices. They noted that Joyce had once saved the state $70,000 by forcing his own department to drop a no-bid approach.

"We think DOT has forgotten the value of a dollar," Pickett wrote. "Ultimately, DOT has given us no reason to trust that it will use the new levels wisely and fairly."

But the Associated General Contractors, a trade group, pushed a bill to wrest the department free from Administration scrutiny, insisting it would speed the contracting process. State Sen. Mark Ourada, a Republican from Buffalo who works for a paving contractor, agreed to spearhead the legislation. It passed, but other legislation later reinstated Administration's authority over MnDOT.

With their relationship fraying, Administration and MnDOT began making lists of their gripes.
MnDOT said Administration rejected too many no-bid contracts, demanded too many explanations for amending contracts and wasn't willing to allow reasonable risks on high-priority projects. MnDOT accused regulators of making arbitrary and inconsistent decisions on matters they didn't understand.

In response, Allin asked Pickett for a list of MnDOT problems. She produced 23 pages of them that were later condensed to two pages and dubbed "DOT Horror Stories."

Pickett calculated that in 2000, MnDOT sought to hire 41 percent of its consultants without requiring them to bid for the work. "Requests must be carefully reviewed because the approval of the request may cause political backlash or a lawsuit," she said.

Allin, in a recent interview, said that he never circulated the list outside of his department but that he wanted it in case he needed it in the fight with MnDOT.

Fisher, Tinklenberg and the 'Big Fix'

On Feb. 15, 2001, Fisher visited Tinklenberg in his office to discuss contracting issues. It was just the two of them, Fisher later told his staff in an e-mail. Fisher said Tinklenberg asked whether certain MnDOT officials could sign consulting contracts without going through Administration, "to move some things that are 'hot' currently."

At about the same time, Fisher, a technology buff who had been vice president of and general counsel to a telecommunications firm, was pushing a bill to establish a fund that would pay for statewide computer integration and related activities. He wanted MnDOT to contribute a fifth of the revenue it receives from leasing unused space on radio towers along highways.

Fisher sent Allin a handwritten note saying Administration should consider advancing MnDOT's contracts when "both the Governor and Legislature are pressing hard for MnDOT to move speedily with road/bridge work. This pertains specifically and solely to the $500 million appropriated in the 2000-2001 session."

Allin said he interpreted that as a directive "to go easier on MnDOT."

Fisher said he wasn't suggesting a free ride. "I wanted to make sure we removed doubt about Admin being a roadblock," he said. "It did not say treat them differently in terms of compromising principles."

In April, records show, Fisher agreed to fast-track MnDOT's consulting contracts and to give two MnDOT employees authority to sign most of them on his behalf.

Tinklenberg agreed to give 20 percent of the tower lease money to Fisher's fledgling technology fund and to help him with other technology projects when possible, the records show.

Finally, the two commissioners agreed to "assure that no agency representative criticizes the other agency to any non-agency party."

In an interview, Fisher said the fact that the issues were listed in the same document does not mean one was traded for the other.

"I can tell you . . . there is no context or connection," he said. "They are just a collection of issues."

A watchdog gets fired, but later is reinstated

Fisher fired Allin after the Star Tribune reported last March that Allin and his staff had written memos strongly critical of MnDOT contracting practices. Allin got a lawyer and was quickly reinstated as director of the contract-oversight division, although he was stripped of the title of assistant commissioner. He said he was barred from speaking publicly about his department without approval.

Seven of his colleagues complained in a September letter to a Star Tribune reporter that Allin had been sidelined. "We wish more elected and appointed officials showed his commitment to the state's best interest," they wrote.

Administration eventually allowed Allin to speak with a reporter, with a superior present. He said he hopes to have his authority reinstated under the administration of Gov. Tim Pawlenty, who took office this month. (Early this month, Allin dropped possible legal claims against the state in exchange for $150,000 and a statement from Fisher to his colleagues describing him as a valued public servant.)

Tinklenberg resigned in October without contributing to Fisher's fund.

In an undated memo to himself, Fisher concluded that Administration was not an obstacle to MnDOT's contracts but that the agency wouldn't be happy unless it was autonomous, which has largely been accomplished.

Fisher's "delegations of authority" permitting MnDOT to sign most of its own consulting contracts expired with his term on Jan. 6. Fisher's replacement, Brian Lamb, recently reinstated them to keep things running smoothly, Allin said. But he added that Lamb wanted assurances that he could reconsider.

Said Allin: "I think this department should take a tougher position with respect to MnDOT. When I was terminated, I was told one reason was for not following the policy of appeasement of MnDOT.

"And I can understand the pressures to move DOT's agenda, which I think is important, but I think there has to be public accountability for MnDOT contracts, and we've let that go . . . through the delegations and through the eagerness to make MnDOT happy at any cost."

Lamb said in a recent interview that he didn't have enough information to say what he will do. But philosophically, and especially in light of the projected budget shortfall, Lamb said he was open to letting other agencies pick up some of Administration's tasks, such as supervising contract procedures.

Any such moves would require "a fair amount of care and attention," he said, adding that he would have to feel comfortable that "the state and the taxpayers are held in . . . the forefront of any decisions."

Lt. Gov. Carol Molnau, who has been named to serve a dual role by leading MnDOT, said she expects that Administration will oversee her department's contracts through random audits, a process Fisher started.

"So our job then is to make sure that every contract is done appropriately," Molnau said, "because we have no idea which contracts they'll be looking at."

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