Audit: NTTA "must quickly change its cozy relationship with engineering firm HNTB"
By Gordon Dickson
Fort Worth Star-Telegram
The North Texas Tollway Authority should adopt a "clear and transparent" policy within six months to prevent conflicts of interest and must quickly change its cozy relationship with engineering firm HNTB, an outside audit unveiled Tuesday recommended.
"The perception of conflicts of interest is widely held, and while our review did not find proven malfeasance or impropriety, the appearance of conflicts creates public and internal distrust," John Cox, a senior director with Alvarez & Marsal, told tollway board members during a two-hour briefing on the report Tuesday.
The report by New York-based Alvarez & Marsal was commissioned by the county judges of Tarrant, Denton, Dallas and Collin counties, who appoint most of the authority board members. It was based on a review of documents, an employee survey, and interviews with 50 current and former tollway officials -- and it comes as state lawmakers are calling for the tollway authority to be subject to sunset review, like most state agencies. The judges oppose having the tollway authority placed under sunset review and have vowed to police it better. They will watch as board members try to implement many of the recommendations in phases during the next year.
"Where the rubber meets the road is in the implementation," Dallas County Judge Clay Jenkins said. "Without implementation, it's just another book on the shelf."
The recommendations come after several potential conflicts involving individual board members surfaced, as well as the tollway authority's institutional relationship with a few firms that are paid tens of millions of dollars per year for engineering, legal and other services.
Board Chairman Kenneth Barr of Fort Worth disclosed that his brother is a lawyer with Locke Lord, a firm that does about $6.9 million of work a year for the authority. Barr said he consulted with the tollway authority's legal counsel, also a Locke Lord attorney, before accepting a board position in 2008 to ensure that there was no ethical conflict.
Barr also had prior business relationships with lawyers who were hired this year to provide legal counsel for buying rights of way for Chisholm Trail Parkway, a 28-mile toll road that will run from Fort Worth to Cleburne.
Another board member, David Denison of Lewisville, disclosed that he is a former consultant and investor with a real estate firm that bought 625 acres for development near the Chisholm Trail Parkway project, although he had no direct connection to that specific investment. He was also cleared by the tollway authority's legal counsel. But the perception that the tollway authority is tainted by conflicts of interest is "held widely," Cox said, calling a policy on conflicts of interest and ethics "simply good government."
The report said the authority has "perceived and potentially real conflicts of interest" with HNTB, an engineering firm under contract for about $15 million a year in tollway work. When asked later what that meant, Alvarez & Marsal Managing Director Ron Orsini said the audit has uncovered a situation in which one HNTB consultant was approved to pay an invoice for another HNTB consultant -- all with the tollway authority's blessing.
The report didn't try to catalog how often the arrangement existed or how long the practice had been in place, Orsini said.
Although the tollway authority should keep its "lean" business model and continue to rely on outside firms for most professional services, steps must be taken to ensure that invoices are properly overseen, the report concluded.
The tollway authority also should seek to diversify its nine-member board, the report concludes. The county judges appoint eight members and the governor appoints the ninth. Jane Willard of Celina, who was appointed by Collin County this year, is the lone woman on the board, and there are no African-Americans.
Ethnicity has become an issue in recent months, when tollway staff disclosed that most of its contracts are awarded to firms governed by white men -- although the report points out that the agency is making progress in diversifying its contractors.
But the report also found that tollway staff publicly discussed winners of procurement contracts before the board had voted to approve them.
"Some board members did not trust the staff's procurement process. It's not clear when a procurement officially ends," said Eric Noack, Alvarez & Marsal vice president.
The report has good news, too. The authority has a terrific record of building and maintaining roads in a timely manner, and it gets high satisfaction marks for programs such as cashless tolling and customer service.
But its many accomplishments have been overshadowed by a litany of organizational problems that have "contributed to frustration, poor morale and distrust," the report concludes.
Some staff and board members don't understand or agree with the tollway authority's priorities, and communication among board members and executive staff is weak, the report said. Last week, Executive Director Allen Clemson resigned in anticipation that he would be fired after the report was released.
When Clemson was hired in 2009, he was the fifth chief executive in five years.
"There is nothing wrong with the NTTA that can't be fixed," Orsini told the board. But he added: "Entities like the NTTA need the public to believe they are operating in an honest, ethical, efficient and effective manner."
Tollway board members offered few comments after the presentation Tuesday, saying they needed time to digest it.
But Barr, who has been chairman for about a month, said he believes that the board can make the necessary changes.
"I find it reassuring and challenging at the same time," he said. "I think we'll find some of these things are easy to implement, some will take some time and, in some cases, we may find there's a different strategy."
Gordon Dickson, 817-390-7796
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