The second story of the January 20th Inside MnDOT series.
Star Tribune (Minneapolis, MN) January 20, 2003, Monday, Metro Edition
INSIDE MnDOT; Allegations about MnDOT were kept quiet; Lawyer had drawn up document on contracting practices
Dan Browning; Pat Doyle; Staff Writers
Top officials responsible for overseeing state contracts and access to public records tried to keep some allegations against the Minnesota Department of Transportation from public view.
After the federal government criticized a light-rail contract in early 2000, the state Department of Administration commissioned a review of MnDOT's consulting contracts. Don Lewis, a lawyer in the Minneapolis firm of Halleland Lewis Nilan Sipkins & Johnson, produced a summary report and a list of 45 allegations from MnDOT and Administration employees. They included:
- Poor contract management that led to statute violations.
- Excessive use of contracts issued without competition or justification.
- Allowing contracts to grow beyond their original scope.
- Improper influence by contractors.
- Contractor overcharges.
- Failure to meet hiring goals for firms owned by women and minority members.
Kent Allin, who oversees the Administration division that reviews state contracts, released a copy of the allegations last spring when the Star Tribune asked for it under the state public-records law.
Allin said one of his bosses, Deputy Commissioner Kirsten Cecil, chewed him out for that. "She was upset with me because she believed they had all been destroyed," he said.
Cecil, whose department has a unit that interprets state law involving the public's access to government records, said she did not tell anyone to destroy any documents. She said she believed that the allegations should not have been released, citing attorney-client privilege, and that Lewis should have retained the list. Lewis said Cecil did return several copies of the paperwork.
Contract disputes prompted outside review
Administration decided to hire Lewis after the Federal Transit Administration warned that a $32 million light-rail contract had been awarded to a company with a potential conflict of interest.
Even before the review was initiated, the Administration Department was in a difficult spot. Minnesota law required it to oversee government contracts. But MnDOT wanted exemptions from such scrutiny, and it was accusing Administration of slowing down important projects, such as light rail, over minor technical shortcomings in its contracts.
"Meanwhile, my staff was telling me that MnDOT is a bad actor, they're bullies, they're arrogant, they're pushing the envelope," said David Fisher, administration commissioner at the time. "In fact, they were saying things like there's illegality going on."
Fisher met with Elwyn Tinklenberg (then transportation commissioner) and members of the governor's staff. MnDOT agreed to pay for an outside review. Fisher said he picked Lewis because he knew and trusted him. He wrote in an internal memo that he expected Lewis to "establish the integrity of the contracting process." But Allin balked at Fisher's choice of words.
"It could be read to suggest that we are looking to exonerate the 2 departments," he cautioned in an e-mail, referring to Administration and MnDOT. "The results also suggest that the investigator will fix the problems." Lewis agreed with Allin.
Fisher rewrote his memo to say reviewers should identify concerns and make recommendations.
Meanwhile, the Administration Department kept the investigation quiet. It killed a news release it had prepared to announce the review. Lewis' $55,000 contract required him only to issue an oral report, leaving Administration the option of a written report.
Allin warned Fisher not to mislead the public.
"I believe it would be a terrible mistake to tell the press that everything is hunky-dory with the LRT contracts and not disclose that we have a pending investigation of DOT contracting," he wrote. "The Gov's office may be trying to save light rail. That's a fine goal, but not at the expense of your and my personal reputations for integrity which will be seriously damaged when that fact comes to light."
List of allegations dropped from revised report
Lewis' firm collected the allegations in spring 2000 during interviews with a handful of MnDOT employees and Administration Department contract regulators. The attorney briefed top Administration officials about his preliminary findings that April.
According to notes from that meeting, Lewis did not find any "major integrity" issues, such as kickbacks or financial conflicts of interest. But he told the Star Tribune recently that MnDOT's shortcomings called for more scrutiny by the state.
"There were clearly issues of compliance with state law," he said.
Lewis summarized the allegations and distributed a document itemizing the details. Fisher said he asked Lewis to write a report that could be shared with MnDOT.
Despite what he learned, Fisher concluded that MnDOT could clean its own house. When he received Lewis' final written report in June 2000, he asked for revisions emphasizing Lewis' conclusion that there was no need for further independent investigation and that there were no apparent conflicts of interest.
When Fisher received the revised copy in July 2000, it emphasized that problems could be fixed through better management at MnDOT and did not require "major legislative or structural change."
A year after Lewis first briefed Administration about his findings, Allin sent Fisher a note discussing an independent audit that had been commissioned by the FTA. The audit, which had concluded five months earlier, found many deficiencies similar to those identified by Lewis. Among them: no record of competition on small purchases, failing to justify the selection of some vendors, shortcomings in procurement advertisements, working beyond the contract scope and failing to evaluate whether prices were reasonable.
Allin said that at a Nov. 9 meeting, "MnDOT was instructed to correct its deficiencies within 90 days. To date [April 11, 2001], that has not occurred."
Meanwhile, Administration failed to file a copy of the Lewis report with the Legislative Reference Library, as required by law, until this year.
After a Star Tribune reporter cited the law, Administration filed the revised report, without the list of allegations.
Lewis said that the list was an internal document and that he did not consider it to be part of his final report. But he submitted it to Administration at the department's request.
"There's no question it would be a useful document in terms of understanding a report," he said, "because it sort of fleshes out the issues."
Laura Bishop, assistant administration commissioner, later said that the failure to file a copy of the report for more than two years was an oversight.
Records show that Administration officials had considered claiming attorney-client privilege to keep Lewis' work confidential but decided to release the documents after Betsy Hayes, a department lawyer, argued that Lewis had been hired as a consultant, so no such privilege existed.
"I am sorry if my analysis of these documents has caused you further problems," Hayes wrote in a memo to her boss. "But, I've never known of . . . reports and audits of this nature, paid for with public dollars, [to be] something we would withhold from public scrutiny."
Memo:
"I believe it would be a terrible mistake to tell the press that everything is hunky-dory with the LRT contracts and not disclose that we have a pending investigation of DOT contracting. ... The Gov's office may be trying to save light rail. That's a fine goal, but not at the expense of your and my personal reputations for integrity which will be seriously damaged when that fact comes to light."
Kent Allin, then assistant commission of administration, to his supervisor, Administration Commissioner David Fisher, in 2000.
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