Curt W. Olson
COlson@TexasBudgetSource.com

The North Texas Tollway Authority board of directors has 90 days to make progress on 81 recommendations laid out in a new performance review.

The report by New York City based Alvarez & Marsal (A&M) came at the request of county judges in Collin, Dallas, Denton, and Tarrant counties.

The release of the damaging report to the NTTA was preceded by the abrupt departure of Allen Clemson late last week. The NTTA has had several executive directors in the past few years. The report focuses on gaps in transparency, which is focused on conflicts of interest, and governance, procurement, and finances.

Tarrant County Judge B. Glen Whitley said he believes this report will correct the turnover of executive directors by restructuring NTTA’s governance of NTTA.

“I felt they (Alvarez & Marsal) did a thorough review. … They came back with what I think is a solid list of recommendations,” Whitley said.

Representatives of A&M conducted multiple interviews of employees and officials overseeing the board.

Whitley said the county judges have charged NTTA’s board with moving forward promptly to take action to improve the tollway authority. While key items should be in place soon, the recommendations will be adopted over the next year.

“The report was reassuring and challenging. I am sure the board and the staff will rise to the occasion. NTTA will expeditiously begin a thorough review and evaluation of the recommendations and then develop a work plan with sustainable and cost-effective solutions. Our ultimate goal is to ensure the authority is operating in the most efficient and effective manner now and in the future,” said NTTA Board Chairman Kenneth Barr in a prepared statement.

Following the report’s release in North Texas Tuesday, the NTTA accepted Clemson’s resignation and named NTTA Assistant Executive Director of Project Delivery Gerry Carrigan as interim executive director.

Ironically, Carrigan has ties to the engineering firm HNTB, which has close ties to the NTTA — with conflicts of interest atop A&M’s list of recommendations.

Conflicts of interest

Transparency is lacking at NTTA as the agency has a web of connections with engineering firms, law firms, and other businesses. The Fort Worth Star-Telegram reported the conflicts of interest at length in this story on October 16.

http://www.star-telegram.com/2011/10/16/3447646/tollway-authoritys-way-o...

“The perception of conflicts of interest is widely held, and while our review did not find proven malfeasance or impropriety, (but) the appearance of conflicts creates public and internal distrust.” A&M’s report stated.

“NTTA does not have a separate and distinct policy or procedures in place for conflicts of interest, in contrast to the majority of similar organizations,” the report also stated.

A&M recommends the following actions:

• Define conflicts of interest.
• Specify persons who will be covered by the policy.
• Require regular disclosure of information related to conflicts of interest.
• Specify procedures for handling potential or actual conflicts when they arise.
• Designate an Ethics Officer to oversee management of the process. This is commonly the in-house General Counsel.

“There is nothing wrong with the NTTA that can’t be fixed — assuming that the board and senior management are willing to commit themselves to making the necessary reforms and seeing them through,” said A&M Managing Director Ron Orsini in a press release on the report. “In fact, improvements are underway that give us reason to be optimistic that, with some guidance and support, NTTA can move to an improved governance model fairly quickly.”

“Entities like the NTTA need the public to believe they are operating in an honest, ethical, efficient and effective manner,” Orsini continued. “While our assessment didn’t uncover illegality or corruption, it did find the type of governance lapses that undermine public confidence.”

A&M outlined more than a dozen ideas for improving governance of an agency that has appointed several executive directors in recent years.

Recommended initiatives include:
• Finalize recommended organization structure.
• Have General Counsel deliver an evaluation of new Legal Services protocols and propose any suggested changes.
• Develop job description for Deputy Executive Director and begin national search.
• Institute enhanced oversight mechanisms and accountability for major consultants
• Re-establish board committees for Finance & Audit, Special Projects (SPOC), and Administration.

Because HNTB and other firms have a close relationship with NTTA, the procurement process with major consultants drew attention. The heart of this issue surfaced in the interviews with board members and staff.

According to the A&M report, some NTTA board members:
• Did not trust staff’s procurement process.
• Did not provide sufficient upfront guidance on RFQs, selection process, and
scoring criteria.
• Lacked sufficient knowledge regarding the NTTA procurement policy and
procedures and consultant transition plan.
• Discussed procurements with involved consultants before Board final approval.

And the A&M report showed that some staff:
• On evaluation teams lacked necessary expertise for the procurement.
• Did not thoroughly investigate credentials of all proposers.

Some of the ideas to change the procurement process include:

• Providing strict clarification of permissible consultant, staff, and board communications with clear understanding of the beginning and the end of procurement period.
• Eliminating Executive Committee observers in the evaluation process to allow for sufficient discussion.
• Reassessing bid evaluation committee composition based on pertinent knowledge and/or skills.
• Strengthening due diligence around vendor background and credentials.
• Refusing to announce competitive procurement winners prior to Board approval.

Follow through critical

"Where the rubber meets the road is in the implementation," Dallas County Judge Clay Jenkins told the Star-Telegram. "Without implementation, it's just another book on the shelf."

Meanwhile, one Texas legislator believes the NTTA should come under Sunset Committee review in the legislature.

State Rep. Rafael Anchia, D-Dallas, has expressed support for bringing the NTTA under the Sunset Committee review in the Texas Legislature.

State Rep. Linda Harper Brown disagrees.

"I value the importance of reviewing NTTA operations. A thorough and independent review of NTTA's financial, operating and administrative functions has just concluded, making a Sunset Commission review of NTTA duplicative," she said in an e-mail response.

Both are members of the Sunset Review Commission.