The North Texas Tollway Authority should adopt a “clear and transparent” policy for preventing conflict of interest within six months, 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 Alvarez & Marsal, a New York-based problem-solving corporation, was commissioned by the county judges of Tarrant, Denton, Dallas and Collin counties, who appoint eight of nine tollway 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 at a time when state lawmakers are calling for the tollway authority to be subject to sunset review, like most state agencies. The county judges oppose having the tollway authority placed under sunset review, and have vowed to do a better job policing it themselves.
They’ll be watching as tollway board members attempt 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 surfaced involving individual board members, as well as the tollway authority’s institutional relationship with a handful of firms that are paid tens of millions of dollars per year to perform 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 a year in tollway authority legal work. 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 there was no ethical conflict. Barr also had prior business relationships with lawyers who were hired this year to provide legal counsel for right-of-way purchasing on Chisholm Trail Parkway, a planned 28-mile toll road from Fort Worth to Cleburne.
Another board member, David Denison of Lewisville, disclosed that he was 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 also was cleared by the tollway authority’s legal counsel.
But the perception that the tollway authority is tainted by conflict of interest violations is “held widely,” Cox said. “A conflicts of interest and ethics policy is simply good government,” he said.
The report said the tollway authority had “perceived and potentially real conflicts of interest” with HNTB, an engineering firm that is currently 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 attempt 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 invoices are properly overseen, the report concluded.
The tollway authority also should seek to diversify its own nine-member board, the report concludes. The county judges of Tarrant, Denton, Dallas and Collin counties appoint eight members and the governor appoints the ninth member. Currently, Jane Willard of Celina, who was appointed by Collin County earlier this year, is the lone female on the board, and there are no African-Americans. Ethnicity has become an issue in recent months, when tollway staff disclosed that most of their contracts are awarded to firms governed by white males – although the report points out that the tollway authority 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 the contracts.“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.
There was good news in the report, too. The tollway authority has a terrific record of building and maintaining roads in a timely manner, and gets high satisfaction marks with programs such as cashless tolling and customer service.
But the many accomplishments of the North Texas Tollway Authority have been overshadowed by a litany of organizational problems, which 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. 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 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.”