Hogan’s P3 pause
Ethics questions aren’t the only reasons Maryland should take more time to consider a contract to oversee the Hogan administration’s massive highway project
Our view:
We’re glad Gov. Larry Hogan heeded Treasurer Nancy K. Kopp’s concerns about the selection of the lead firm on a contract to oversee his massive highway building plan in the Washington suburbs. The questions she and others raised about Transportation Secretary Pete Rahn’s role in a procurement that selected his previous employer demanded more scrutiny, and they aren’t the only or even necessarily the most important reasons to slow this project down. The public-private partnership Mr. Hogan is pursuing to add new toll lanes to the Capital Beltway and I-270 is unprecedented in scale for Maryland — the administration claims it would be the biggest P3 in North America — and we will be dealing with the consequences for generations. This should not be a rush job, even for this initial, $68.5 million contract to oversee part of the project. Mr. Hogan was right to direct Mr. Rahn to start over with a new procurement.
Before Mr. Rahn joined the Hogan administration, he worked as a senior executive for HNTB Corp. of Kansas City, a major consulting and construction management firm that has worked on road, bridge, transit, stadium and other projects worldwide. This year, Mr. Rahn approved an expedited process to select a consortium to oversee the Maryland highway P3, shortening to a month a procurement that under normal rules could take up to two years. The group headed by HNTB came in second in the state’s evaluation of four that submitted letters of interest, but it moved up to first after a presentation to an eight-member group that Mr. Rahn chaired. Mr. Rahn had dinner the night before with a friend from HNTB, but he did not vote on the matter. After the fact, Mr. Rahn asked the state Ethics Commission about whether his involvement had been proper and was told that it was acceptable so long as he does not have a financial stake in the company, which the Hogan administration says he does not. On Friday, Governor Hogan said in a letter that the department’s efforts “lacked the clarity needed to ensure full faith in this process.”
Even absent questions about potential conflicts of interest, that would have been the right call. The expedited procurement is legal under a law passed last year to allow more flexibility in P3s where the nature of the project demands it. The waiver Mr. Rahn approved says the speed is necessary as part of Maryalnd’s effort to convince Amazon to locate its second headquarters in Montgomery County, which is among 20 finalists for what is considered the largest economic development prize in recent memory. Transportation infrastructure was a major part of Amazon’s request for proposals, and much of the governor’s highway plan would help to reduce commute times around the prospective HQ2 site.
Maybe Montgomery County will get HQ2. Maybe not. But under the terms of the waiver, the HNTB-led group would have been in place for the duration of the highway project no matter what. It warrants a bit more consideration. Better to show Maryland Transportation Secretary Pete Rahn has faced questions about his handling of a prospective state contract with his previous employer. Amazon (not to mention Maryland’s taxpayers) that wedothings right, not just fast.
There’s one other item of note in all this. The Daily Record’s Bryan P. Sears reported Wednesday that Mr. Rahn had failed to disclose his ownership and sale of HNTB stock in his state financial disclosure forms. When he came to state government he sold his shares, but a DOT spokeswoman said he misunderstood the disclosure forms and did not realize that he needed to report the past ownership or the transaction. He has pledged to file amended forms correcting that and another error that made it look like he worked for the state and HNTB at the same time.
To be clear, this does not appear to be a big deal. He owned all of 28 shares. He paid about $4,200 for them and sold them at a loss for about half that, according to the DOT. This all took place three years ago.
We mention it, though, because The Sun reported in November that Baltimore County Superintendent Verletta White failed to disclose a few thousand dollars in income she earned over several years for appearing at educational technology conferences sponsored by ERDI, a company with which the school district has not done business (though the district does do business with some firms that attended the same conferences). Ms. White has said she misunderstood what the form required. She has filed amended disclosures and agreed not to take on paid consulting work. At the time, Mr. Hogan called her conduct “outrageous,” and he later used it to support his calls for new school district accountability legislation. He said in January that she needed to “answer some pointed questions.”
This week, a Hogan spokesman said the governor has full confidence in Mr. Rahn.