- Associated Press - Wednesday, August 10, 2016

BEND, Ore. (AP) - The consultant who landed a $350,000 contract to audit the Oregon Department of Transportation before the state backed out over conflict of interest worries had something more elaborate in mind than an audit: He wanted to become director of the agency.

A four-page document John Craig sent to Oregon Transportation Commission Chairwoman Tammy Baney in January outlines Craig’s short- and long-term plans for ODOT and himself. Among them, replacing ODOT Director Matthew Garrett as head of the agency should he step down.

Craig sent the document five months before the Department of Administrative Services picked him to conduct the audit lawmakers say is crucial to the effort to generate money from drivers and invest it in Oregon’s roads, bridges and transit systems.

Government ethics experts say Craig stating his long-term personal goal before being picked to conduct what’s been set up as an independent and transparent audit looks dubious.

“For him to be conducting the audit under circumstances of desiring to become the director would I think be disqualifying and would raise serious conflict of interest issues,” said Andrew Stark, professor of management at the University of Toronto. “Generally when you conduct an audit you should have no interest at all, financial or otherwise, in the agency you’re auditing.”

Gov. Kate Brown called for a thorough review of ODOT in November ahead of the politically challenging work of writing and passing a bill that would likely send hundreds of millions of dollars through the agency for roads, bridges, transit and other infrastructure. She and the Oregon Transportation Commission set up a committee to oversee the work on the audit.

Craig’s outline to Baney provides deeper insight into what was viewed as a conflict of interest severe enough for transportation officials to pull Craig’s contract on the day the state was set to unveil him as the auditor, the second time the state pulled out of the ODOT auditing contract.

Craig is the former director of Nebraska’s transportation department. He spent six years overseeing a bridge replacement project that was funded through an Oregon transportation investment in 2003. He finished that work in 2015.

He hasn’t responded to The Bulletin’s requests for comment. Richard Mudge, who was listed as the No. 2 worker on Craig’s proposal, told The Bulletin on Friday the state asked the team not to talk with the media.

Craig outlined for Baney, who is also a Deschutes County commissioner, his past experience working in Oregon on a project with a $1.3 billion budget. He also gave her what he called a “good practices outline” for transportation departments, including creating a long-range transportation plan, more outsourcing and annual reporting.

He finished with what Baney saw as a statement of Craig’s interest in working in Oregon, offering a list of “potential roles for John Craig,” which included working on the management study as an adviser or member of the management team and becoming “Director of ODOT when (agency director) Matt Garrett steps down.”

Garrett, head of the agency since December 2005, is the longest-serving director since the State Highway Department became ODOT in 1969.

Baney released the document late Monday after a request for records from The Bulletin. She said she met Craig through her work as chairwoman of the transportation commission and Craig sought to set up a meeting that never occurred.

She said she didn’t read the full document until after the Department of Administrative Services picked Craig for the contract, and eventually asked that the state back away from Craig over the potential appearance that the audit wouldn’t be viewed as independent.

“For this particular management review, neutrality and independence is one of the top priorities,” Baney said. “I think for this particular body of work it absolutely does not meet the priority of an independent third-party review.”

Legislators involved say the ability to act on the recommendations from the eventual audit is vital for bipartisan buy-in by Republicans and Democrats, some of whom say they lack confidence in the agency’s current management.

“Yes it’s a necessary thing. We’ve got to do it,” said Rep. Cliff Bentz, R-Ontario, the House Republicans’ go-to legislator on transportation issues. Bentz also expressed optimism at the possibility of taking time to find a new, independent auditor and passing a major road funding bill during the legislative session next year.

“This (audit) is being done to make sure that what we have in the form of our transportation department is operating appropriately and efficiently and in a way that’s good for the state of Oregon,” Bentz added.

Questions linger over the process that led to Craig being selected as the ODOT auditor in late June.

The Bulletin reported this week one of three state employees who scored the applications for the contract noted concerns about Craig’s past deep involvement with the agency before he was awarded the contract anyway.

Craig’s $350,000 bid was also more than $100,000 more expensive than the second-place bidder, Public Works, a Pennsylvania-based firm that has reviewed the Port Authority of New York and New Jersey.

Public Works was selected in January to conduct the audit before the state backed out because the governor’s office and legislators thought the pool of applicants wasn’t large enough. Public Works was the only applicant at the time.

Amy Williams, a spokeswoman for the Department of Administrative Services, said in an email that Barry Pack, that agency’s chief administrative officer who was recently named acting director of the Oregon Lottery, chose Craig despite the potential conflict as noted by one of the evaluators.

Williams noted the evaluators still recommended Craig because of his extensive knowledge of departments of transportation, including Oregon’s.

Other ethics experts said that if a consultant makes it known he would like to run an agency, it would constitute a conflict of interest to choose that consultant to audit the agency.

“Public officials have a duty of loyalty, which means the common good has to come before any personal interest,” said Hana Callaghan, director of the government ethics program at Santa Clara University in California. “If somebody who has a contract with the government is motivated by personal gain as opposed to the public good, there’s a possibility that they might have breached that duty of loyalty.”

“It just strikes me as extraordinary that somebody would discuss employment prospects and at the same time offer their services as a ‘independent auditor,’” said Joe Cortright, a Portland economist and recent critic of ODOT.

Bryan Hockaday, one of the governor’s spokesmen, said the ODOT audit committee is leading the search for a path forward on the audit.

Reached by phone Friday, the committee’s chairwoman, Susan Morgan, who sits on the Oregon Transportation Commission, said she was traveling and couldn’t talk at the moment. She hasn’t responded to messages about Craig’s contract and a path forward. Other members of the committee said they weren’t aware of any future meetings.

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Information from: The Bulletin, https://www.bendbulletin.com

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