The MWAA Contracting Scandal

by James A. Bacon

Thanks to the Inspector General’s report, we know that the Metropolitan Washington Airports Authority (MWAA) has played fast and loose with expense accounts and hiring practices.  Super Bowl tickets. Junkets to Europe. Relatives on the payroll. Sweetheart deals with former board members. It’s an ugly picture… but it’s not the real story.

The heart of the MWAA scandal is the breakdown in procurement and contracting policy. That’s where the big money is. That’s where potentially tens of millions of dollars  have been squandered at the expense of those who fly in and out of Dulles and Ronald Reagan airports and those who will be wind up paying higher tolls to underwrite the cost of extending Metrorail to Dulles.

The IG’s report contains damning detail after damning detail. Herewith are some of the highlights…

MWAA has frequently missed opportunities to maximize competition for contracts over $200,000, as it is required to do under its own Contracting Manual. Between 2009 and 2011, the authority awarded 190 such contracts. Only 68 were awarded openly. Five were sole-source awards. The other 117, amounting to $225 million in business, used categorical exceptions to limit competition.

MWAA employees have not always obtained Board approval for high-value contracts. Extrapolating from their findings, the auditors project that MWAA spent $83.6 million on contracts without Board approval — 14% of all contracts awarded between January 2009 and June 2011, the time period studied.

Because of poor planning, MWAA has extended existing contracts rather than award new ones on a competitive basis, missing yet more opportunities to obtain competition and better prices. Even when soliciting competitive bids, MWAA board members sometimes divulged non-public information that gave particular bidders an edge. “One MWAA Board member … disclosed in an email to a potential contractor another contractor’s pricing.”

MWAA lacks basic controls to ensure that contract policies are followed. The authority frequently allowed work on contracts to begin prior to the award dates — before the contracting officer completed and signed the contract documents. In some instances, work began before the contracting officer even knew of the contract.

So, what has been the result of all this sloppiness?

In one example, states the IG report, “the expansion and renovation of the Dulles Airport main terminal, an $8 million contract awarded in 1989, ballooned to $147 million. From 2003 to 2011, MWAA issued 10 contract modifications at a cost of $36 million to add design and construction management services for integrating the Transportation Security Administration’s (TSA) luggage screening equipment and the airport’s baggage handling system.”

Another example:  “Over the past 8 years, MWAA awarded more than 80 percent of work under three groups of multiple-award contracts to a single contractor. … However, the contractor’s rates were often higher than the other multiple-award contractor’s rates” — between 28% and 234% higher in one particular 2012 contract.

A third example: In another set of contracts, one of five participating firms received more than 38% of the work. As it happened, a former MWAA board member was an owner of the firm. That, says the IG report with considerable under-statement, “could create the appearance of favoritism.”

Bacon’s bottom line: Once the MWAA board has reformed itself — as it seems to be doing — the next job is to reform procurement and contracting. Heads should roll. Especially critical, new board members appointed by Governor Bob McDonnell should keep an eagle eye on every step in the process for selecting a contractor for the $2.7 billion Phase 2 of the Rail-to-Dulles project.