Critics: DOT outsourcing plan ripe for conflicts of interest [CT Post]

March 23, 2015

Article as it appeared in the Connecticut Post

When his legacy is written, it could be as the transportation governor.

But before Gov. Dannel P. Malloy widens a single highway or replaces a bridge — the thrust of a $100 billion plan to fix Connecticut’s decaying infrastructure — his administration might loosen some of the contracting reforms that stemmed from the tarnished legacy of another governor, John G. Rowland.

The state Department of Transportation is asking the Legislature to remove several hurdles on the hiring of outside contractors and consultants to help it carry out the vast scope of projects envisioned in the governor’s plan.

The department contends that the changes, tucked into a 29-page transportation bill, will save taxpayers money and reduce project delays, and are recommended by the Federal Highway Administration.

There is growing concern among government watchdogs and state employee unions, however, that the Malloy policy shift will chip away at clean-contracting legislation that stemmed directly from Rowland’s resignation and imprisonment a decade ago for accepting gifts from state contractors.

“We’re always worried about rolling back anti-corruption initiatives,” said Tom Swan, executive director of the Connecticut Citizen Action Group. “Whether it be the recent announcement that (the University of Connecticut) may not fall under the Contracting Standards Board or the use of federal party accounts to circumvent the state ban on contractor (political contributions), this appears to fall in that continuum.”

Malloy’s office referred questions on the matter to state Transportation Commissioner James Redeker, who bristled at the mention of the former governor’s corruption.

“I see absolutely zero connection between any language (in the proposed bill) and anything like that,” Redeker told Hearst Connecticut Media. “We’ll stand (any of these contracts) up to the test of any scrutiny as we implement them.”

Redeker said the DOT is trying to strike a balance between doing projects in-house and farming out work. The agency has 868 engineers on its staff, up from 833 two years ago. Malloy’s current budget proposal would increase the number to 953 over the next two years. That would expand the DOT’s capacity to design projects in-house, but maybe not enough to meet the demands of Malloy’s ambitious transportation plans.

“You can’t just magically start an approach when you have no experience,” Redeker said.

Post-Rowland reforms

Conspicuously silent on the proposal is the state Contracting Standards Board, whose executive director, David Guay, said it would be inappropriate to comment because the panel hasn’t discussed it. It’s unclear whether the board, which next meets in April, even plans to take it up.

The board was created by lawmakers in 2009 in response to the Rowland scandal. Since then, if a state agency wanted to privatize services that could be performed in-house, it had to submit a cost-benefit analysis to the board for approval.

“I don’t think (the proposal) changes our board’s role,” said Julia Marquis, the state’s chief procurement officer, who is appointed by the board.

Critics say relaxing the contracting laws will yield a windfall for construction and engineering firms, some of which gave generously to the federal fundraising account of the Connecticut Democrats last year to support the successful re-election of Malloy.

“We pushed for some of those regulations to be put into place after (the Rowland) debacle,” said Ben Phillips, a spokesman for the Connecticut State Employees Association Local 2001. “Our concern is that it would give the commissioner and any future commissioners free rein to use any consultants and outside contractors.”

An ambitious plan

Malloy’s second-term transportation push calls for the widening of Interstates 95 and 84, sweeping improvements to the Metro-North Railroad and an overhaul of the state’s aging network of bridges. It sets a 30-year timetable.

For select projects, the legislation would authorize the DOT to bypass the lowest bidder for a contract if the agency determines the job will get done faster or better by another firm. The bill also allows the DOT to enter into “design-build” contracts, which package design and construction phases of a project together, rather than first settling on a design and then seeking competitive bids from builders. In addition, the bill would lift the restrictions on the number of consultants on the agency’s payroll.

It was the $56 million design-build contract for a new juvenile detention center in Middletown, awarded to the Tomasso Group of New Britain that became a focus of the 2005 federal case against Rowland. In all, the Tomasso Group was given three no-bid contracts worth $100 million. William Tomasso was later sentenced on bribery and tax charges in connection with home improvements company employees made to Rowland’s getaway cottage on Bantam Lake. M. Jodi Rell, who succeeded Rowland after his July 1, 2004 resignation, declared the detention center a boondoggle.

Testing the waters

In 2012, the General Assembly gave the DOT the go-ahead for a pilot program that would forgo traditional contracting methods and ramp up its use of consultants for two projects. The agency chose the $465 million replacement of the Walk Bridge, a failure-prone Metro-North crossing over the Norwalk River, and the $45 million rehabilitation of several bridges along the Route 8 and Route 25 connector in Bridgeport. The jury is still out on the success of the strategy as both projects are in their infancy.

Now, the DOT, which had as many as 5,000 employees 20 years ago and is now down to 3,200, wants to expand the program.

“We’re seeking broader capabilities,” Redeker said. “It lets us use them as appropriate until such time we think we can do these projects as a fully-managed DOT effort. If I don’t have the authority, we’ll never get there.”

With Malloy set to become chairman of the Democratic Governors Association next year — a position predicated on fundraising — some say the landscape is ripe for potential conflicts of interest.

Malloy’s critics drew parallels to a certain former head of the Republican Governors Association from Connecticut.

“That was actually one of the things that Rowland into such trouble,” said Jonathan Pelto, a former Democratic state representative from Storrs. “He was telling all of the contractors that they had to give to the RGA, in addition to all of his stuff.”

Dark potential

A frequent critic of Malloy who briefly ran for governor in 2014, Pelto said the conflicts are already there. He points to Federal Election Commission records that show employees and family members of a subcontractor of the New York-based engineering firm HAKS, gave $80,000 to the Connecticut Democrats last year around the same time that the company won a $8.6 million state contract to inspect overhead electrical wires on the New Haven Line of Metro-North.

A spokesman for the state Democratic Party declined to comment.

In 2005, state lawmakers banned state lobbyists and contractors from contributing directly to candidates for statewide office. But contractors and lobbyists are allowed to give up to $10,000 individually to the federal fundraising accounts of both state parties.

“Part of the problem is contracting out isn’t really corrupt itself, but it leads to corruption,” said John Olsen, a former Connecticut AFL-CIO president and former state Democratic chairman. “That’s always a worry about who are you contracting out to. Who did they contribute to? Who are they related to?”

State Sen. L. Scott Frantz, R-Greenwich, a Transportation Committee member, said more oversight of contracts will be needed as the DOT fulfills Malloy’s mandate.

“If the volume of work is so large, that’s where you really run the risk of having conflicts of interest,” Frantz said.

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