[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

METROPOLITAN WASHINGTON AIRPORTS
AUTHORITY: A REVIEW OF THE DEPARTMENT
OF TRANSPORTATION INSPECTOR GENERAL'S
FINDINGS AND RECOMMENDATIONS

=======================================================================

(112-109)

HEARING

BEFORE THE

COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

SECOND SESSION

__________

NOVEMBER 16, 2012

__________

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COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

JOHN L. MICA, Florida, Chairman
DON YOUNG, Alaska NICK J. RAHALL II, West Virginia
THOMAS E. PETRI, Wisconsin PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina JERRY F. COSTELLO, Illinois
JOHN J. DUNCAN, Jr., Tennessee ELEANOR HOLMES NORTON, District of
FRANK A. LoBIONDO, New Jersey Columbia
GARY G. MILLER, California JERROLD NADLER, New York
TIMOTHY V. JOHNSON, Illinois CORRINE BROWN, Florida
SAM GRAVES, Missouri BOB FILNER, California
BILL SHUSTER, Pennsylvania EDDIE BERNICE JOHNSON, Texas
SHELLEY MOORE CAPITO, West Virginia ELIJAH E. CUMMINGS, Maryland
JEAN SCHMIDT, Ohio LEONARD L. BOSWELL, Iowa
CANDICE S. MILLER, Michigan TIM HOLDEN, Pennsylvania
DUNCAN HUNTER, California RICK LARSEN, Washington
ANDY HARRIS, Maryland MICHAEL E. CAPUANO, Massachusetts
ERIC A. ``RICK'' CRAWFORD, Arkansas TIMOTHY H. BISHOP, New York
JAIME HERRERA BEUTLER, Washington MICHAEL H. MICHAUD, Maine
RANDY HULTGREN, Illinois RUSS CARNAHAN, Missouri
LOU BARLETTA, Pennsylvania GRACE F. NAPOLITANO, California
CHIP CRAVAACK, Minnesota DANIEL LIPINSKI, Illinois
BLAKE FARENTHOLD, Texas MAZIE K. HIRONO, Hawaii
LARRY BUCSHON, Indiana JASON ALTMIRE, Pennsylvania
BILLY LONG, Missouri TIMOTHY J. WALZ, Minnesota
BOB GIBBS, Ohio HEATH SHULER, North Carolina
PATRICK MEEHAN, Pennsylvania STEVE COHEN, Tennessee
RICHARD L. HANNA, New York LAURA RICHARDSON, California
JEFFREY M. LANDRY, Louisiana ALBIO SIRES, New Jersey
STEVE SOUTHERLAND II, Florida DONNA F. EDWARDS, Maryland
JEFF DENHAM, California
JAMES LANKFORD, Oklahoma
REID J. RIBBLE, Wisconsin
CHARLES J. ``CHUCK'' FLEISCHMANN,
Tennessee
VACANCY
CONTENTS

Page

Summary of Subject Matter........................................ v

TESTIMONY
Panel 1

Hon. Gerald E. Connolly, a Representative in Congress from the
State of Virginia.............................................. 8

Panel 2

Hon. Ray LaHood, Secretary, U.S. Department of Transportation.... 12

Panel 3

Hon. Calvin L. Scovel III, Inspector General, U.S. Department of
Transportation................................................. 20
Hon. Michael A. Curto, Chairman, Board of Directors, Metropolitan
Washington Airports Authority, accompanied by Hon. Tom Davis,
Vice Chairman, Board of Directors, and John E. Potter,
President and Chief Executive Officer, Metropolitan Washington
Airports Authority............................................. 20

PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Hon. Eddie Bernice Johnson, of Texas............................. 43
Hon. Eleanor Holmes Norton, of the District of Columbia.......... 44
Hon. Chris Van Hollen, of Maryland............................... 46

PREPARED STATEMENTS SUBMITTED BY WITNESSES

Hon. Gerald E. Connolly.......................................... 47
Hon. Ray LaHood.................................................. 49
Hon. Calvin L. Scovel III........................................ 56
Hon. Michael A. Curto............................................ 63

SUBMISSIONS FOR THE RECORD

Hon. John L. Mica, a Representative in Congress from the State of
Florida, request to submit article ``Dulles Rail Board Ignored
Warnings of Nepotism,'' Liz Essley, Washington Examiner, Nov.
16, 2012, at 4................................................. 4
John E. Potter, President and Chief Executive Officer,
Metropolitan Washington Airports Authority, response to request
for information from Hon. John L. Mica for the employment
status of personnel of concern as identified by the U.S.
Department of Transportation Office of Inspector General
report, ``Audit Report: MWAA's Weak Policies and Procedures
Have Led to Questionable Procurement Practices, Mismanagement,
and a Lack of Overall Accountability''......................... 26
Hon. Ray LaHood, Secretary, U.S. Department of Transportation,
response to question from Hon. Thomas E. Petri, a
Representative in Congress from the State of Wisconsin,
regarding the status of the consolidation and realignment plan
for FAA facilities............................................. 55
Hon. Calvin L. Scovel III, Inspector General, U.S. Department of
Transportation, request to submit his office's report entitled,
``Audit Report: MWAA's Weak Policies and Procedures Have Led to
Questionable Procurement Practices, Mismanagement, and a Lack
of Overall Accountability,'' AV-2013-006 (Nov. 1, 2012)........ 68
Hon. Michael A. Curto, request to submit the Metropolitan
Washington Airports Authority's Board of Directors' response to
the reports issued by the U.S. Department of Transportation
Office of Inspector General and the joint letter of Aug. 4,
2012, from Hon. Ray LaHood, Governor Robert F. McDonnell of
Virginia, Governor Martin O'Malley of Maryland, and Mayor
Vincent C. Gray of the District of Columbia.................... 119

Enclosure A: Memorandum Suspending Use of Certain Categorical
Exceptions (Aug. 2012)..................................... 132
Enclosure B: Recommendations from Inspector General, Nov. 1,
2012, Final Report......................................... 134
Enclosure C: Code of Ethics for Members of Airports Authority
Board of Directors (Sept. 2012)............................ 140
Enclosure D: Code of Ethics for Employees of Airports
Authority (Sept. 2012)..................................... 156
Enclosure E: Draft Financial Disclosure Form for Airports
Authority Board of Directors (Oct. 2012)................... 174
Enclosure F: Airports Authority Travel Policy (Sept. 2012)... 181
Enclosure G: Airports Authority Bylaws (Oct. 2012)........... 204
Enclosure H: Airports Authority Freedom of Information Policy
(July 2012)................................................ 218
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METROPOLITAN WASHINGTON AIRPORTS
AUTHORITY: A REVIEW OF THE
DEPARTMENT OF TRANSPORTATION
INSPECTOR GENERAL'S
FINDINGS AND RECOMMENDATIONS

----------

FRIDAY, NOVEMBER 16, 2012

House of Representatives,
Committee on Transportation and Infrastructure,
Washington, DC.
The committee met, pursuant to call, at 9:05 a.m., in Room
2167, Rayburn House Office Building, Hon. John L. Mica
(Chairman of the committee) presiding.
Mr. Mica. Good morning. I would like to call this hearing
of the House Transportation and Infrastructure Committee to
order.
This morning we are conducting an oversight and
investigations hearing, and it is relating to the Metropolitan
Washington Airports Authority. And, in particular, we will be
discussing the results of a report by the inspector general
relating to some of the Authority's weak policies, procedures
that have led to questionable procurement practices,
mismanagement, and a lack of overall accountability, according
to the title of the report, which was issued November 1, 2012.
The order of business today will be opening statements by
Members, and then we have three panels. Mr. Connolly will be
part of our first panel; Mr. LaHood; the inspector general,
third, and the chairman of the Airports Authority Board. So,
with that, I will proceed. I have some opening comments, and
then we will recognize other Members and go forward.
Well, it is sort of a sad day, I think, for Metropolitan
Washington, also a sad day for advocates of improving and
expanding and conducting good transportation projects and
policies in the Nation's capital and surrounding area because
the inspector general has produced a report--I think some of
you have seen it. I just referred to the report. And this is an
audit report.
This was not requested by this committee. It was requested,
actually, by two Members of the House: one, Mr. Wolf, the
gentleman from Virginia, Frank Wolf, who has been a strong
advocate for transportation, also a leader in transportation
initiatives for northern Virginia and for the country; and then
Mr. Latham, who chairs an important appropriations subcommittee
that oversees transportation spending and funding issues in the
House of Representatives.
And it does, unfortunately--the report does, unfortunately,
highlight exactly what the title has portrayed, that there are
serious problems in our Nation's capital Airports Authority.
The Federal Government does have an important role. We own,
I believe, the properties, and we have the long-term leases, as
outlined by a law and various agreements for operation. The
Authority has more than the airports; it also is responsible
for control of the daily operation, maintenance of the Dulles
Toll Road and also another important project I worked on with a
number of the Members here. We finally made it a reality, but
that is the extension of the Metrorail to IAD. So it has an
important connection both to the Congress, which created,
again, its existence, and it also has multiple important
responsibilities.
This is not a criticism particularly by this committee. Our
staff and investigative personnel have conducted some review,
and, unfortunately, their findings mirror the findings of this
IG report. Let me just talk about some of the most disturbing
findings.
And, again, we want to uncover what has been going on. We
also want to look at how we can bring this to a halt. I know
Mr. Wolf has taken some steps to put provisions into some of
the, I think, appropriations legislation, and other corrective
measures are certainly warranted. But this is to see what went
wrong and then try to make certain that it is corrected and it
doesn't happen again. And, also, people need to be held
accountable.
Under the DOT IG review, first, some of the Airports
Authority contract award and procurement practices. They found
that, unfortunately, even though there is a requirement for all
contracts over $200,000 to be bid competitively, that always
didn't take place. Between January 2009 and 2011, June of 2011,
the Authority awarded 190 contracts that exceeded $200,000.
Only some 68 were actually awarded with full and open
competition. Five were sole-source awards with a combined value
of some $6 million.
Another nearly quarter of a billion dollars of contracts--
and I think there were 117 of those, the balance of the
contracts--were awarded using categorical exemptions. All of
this raises very strong concerns, again, for compliance with
open and fair and honest competition.
Let me just talk about the next point that the DOT IG's
review of the Airports Authority, compliance with the code of
ethics. And some of this has already been reported, but their
findings are that there were tickets to the 2009 Super Bowl,
valued at almost $5,000; 4 golf tournament trips; a trip to New
York City to attend a major baseball league game; 19 other
major sporting events; 3 concerts; a fishing trip; and a host
of other things that certainly are improper.
Unfortunately, the operation of the Airports Authority is
now becoming a poster child for some of the corrupt practices
that I think need to be brought to a halt and accounted for.
And that is, again, the purpose of this hearing.
And one of the other major points that the IG reviewed is
the hiring and compensation practices. They found out that the
Authority officials either circumvented or ignored
competitively going after candidates and having an open and
honest and fair process in order to place some of the
candidates they preferred into a position. Unfortunately, they
also have been accused of nepotism, both some from some of the
key personnel, including, I guess, the personnel HR director
has resigned, but also even board members.
And additional findings of the inspector general cited
awarding excessive salaries, unjustified hiring bonuses,
questionable cash awards, and ineligible benefits. So that is
not my findings; that is the findings of the inspector general.
We will hear from him in a minute.
Then I was reading an account this morning. There is a
report which I would like to see which is still in, I am told,
a draft form, but it was an anonymous employee survey. And they
gathered comments in 2010 of some of the extensive
mismanagement issues at the Authority.
But some of the comments that are in the report--which,
again, hasn't been released, I don't believe, or finalized.
This is what some of the employees said: Stop the corruption,
favoritism, discrimination; hiring advancement of unqualified
people, top management people; VPs having board members in
their pocket for favors; VPs violating laws, practices, and
lacking ethics and fairness.
Here is another comment: Nepotism and favoritism. Here is
another comment: It needs a severe culture change. Here is
another one: There is way too much nepotism; take my word for
it and independently look into it.
And the list goes on. I will make these part of the record.
[The information follows:]

[GRAPHIC] [TIFF OMITTED] T6706.006

Mr. Mica. And I would also like to see that draft when it
is finalized and made part of the record.
So, again, we are here on a sad day when we have to conduct
this type of investigation and review and also look at, again,
the positive steps that can be taken to correct this.
So with those comments, again, I welcome our witnesses and
invite other Members for their opening comments. And I will
yield first to Ms. Norton.
Ms. Norton. Thank you, Mr. Chairman.
The Metropolitan Washington Airports Authority, which we
call MWAA, is a so-called independent public body, but it was
created by Congress, by an act of Congress called the
Metropolitan Washington Airports Act of 1986. That act
authorized a compact between the Commonwealth of Virginia and
the District of Columbia.
MWAA has 1,400 employees and leases the land and manages--
leases the land on which the 2 airports stand from the Federal
Government and manages Ronald Reagan National Airport and
Washington Dulles Airport. In addition to managing the
airports, MWAA has been given responsibility for the Dulles
Corridor Metrorail Project, with an estimated cost of $5.8
billion, including $977 million in Federal funds.
This hearing is timely and important in light of the
Department of Transportation inspector general's audit report
released just this month and the recent news stories almost
every other day about inappropriate spending by MWAA and
potential and actual conflicts of interest.
The IG report concluded--and here I am quoting--``MWAA's
contracting policies and practices are insufficient to ensure
compliance with the Airports Act and the lease agreement
between DOT and MWAA,'' end quote. And he went on to say, ``The
code of ethics and related MWAA policies and procedures in
place at the time of our audit lack the rigor needed to ensure
credibility and integrity of management and employee
decisions.''
Following the IG's report released in May, MWAA has taken
some action to improve its ethical standards by approving a new
travel policy, a new code of ethics for the board and for
employees. MWAA has also revised the board's bylaws and Freedom
of Information Act policies and has terminated contracts with
former board members. However, I believe more action is needed.
To address the contracting policies, which have perhaps
been the most troubling, yesterday I introduced H.R. 6592, for
which I am seeking cosponsors, that would require MWAA to
comply with the Federal Acquisition Regulations that set rules
that govern all aspects of the acquisition process for
virtually every Federal branch agency.
Given the continuing ownership of the airports by the
Federal Government, MWAA's creation by Congress, and the
significant Federal taxpayer dollars for which MWAA is
responsible, there is no reason why MWAA should use a different
standard from that for Federal agencies, particularly given the
shortcomings reported by the IG. It certainly would make no
sense for MWAA to attempt to reinvent a new set of procurement
procedures and ignore the long-tested Federal Acquisition
Regulations, which provide legal guidelines for every aspect of
procurement and that maximize fairness and transparency.
I am grateful to Secretary LaHood for his quick attention
to the IG's findings, appointing an accountability officer to
work with MWAA to strengthen its policies. In addition,
Secretary LaHood cosigned a letter with the Governors of
Virginia and Maryland and the mayor of the District of Columbia
highlighting their concern with the lack of accountability and
transparency and laying out specific necessary reforms.
My bill, along with steps that MWAA has already taken and
is continuing to take, should help MWAA regain its bearings. I
look forward to hearing from today's witnesses about what
reforms are necessary and how to ensure that MWAA is a good
steward of the valuable assets it controls.
And I thank you, Mr. Chairman.
Mr. Mica. Thank the gentlelady, and recognize the chair of
the Aviation Subcommittee, the gentleman from Wisconsin, Mr.
Petri.
Mr. Petri. Thank you very much, Mr. Chairman.
As your remarks indicated, this committee has, I think,
great confidence in General Scovel and the inspector general
process, and this hearing and his report illustrates the
importance of that to the good functioning of our Government.
It is sad but true that, sometimes, if people don't think they
are being watched, they do things that they shouldn't be doing.
And the inspector general is the watcher, and the report is the
result of that.
Now, what did he find? He found inappropriate sole-sourcing
contracts, accepting elaborate gifts from contractors, nepotism
and hiring irregularities, unjustified and costly bonuses, and
a variety of other unethical actions on the part of the board
and members of the staff of the Metropolitan Airports
Authority.
This hearing illustrates the seriousness with which this
committee and Congress takes not only the report but the
actions that it uncovered. And we hope and look forward to
hearing what remedial actions are being taken to make sure this
doesn't happen again.
And, with that, I thank the chairman for recognizing me and
yield back the balance of my time.
Mr. Mica. Thank you, and let me recognize Mr. Cummings
next, the gentleman from Maryland.
Mr. Cummings. Thank you very much, Mr. Chairman, for
convening today's hearing to examine the outrageous abuses of
the Metropolitan Washington Airports Authority, otherwise known
as MWAA.
These abuses are many and far-ranging and run counter to
the public mission of MWAA. Members of the board of directors
failed to live up to the high expectations placed on them by
the taxpayers of Maryland, Virginia, and the District of
Columbia. I, too, have contributed a portion of my taxes to
MWAA, so I come to this hearing both as a Member of Congress
and as a disappointed taxpayer. Just as I argued when we found
that banks receiving TARP funds were continuing lavish
spending, neither I nor any of my fellow taxpayers paid taxes
with the intention of funding MWAA's lavish travel, fine wines,
and trips to the Super Bowl.
On many occasions, MWAA's board members violated the trust
put in them by the taxpayers by pouring money into
noncompetitive contracts, hiring family members, and taking
gifts that would make Jack Abramoff blush. As such, as MWAA
board members enjoyed their travel accounts, concerts, and golf
tournaments, I am sure that the citizens of the DC metro area
would particularly appreciate more functional airports, such as
a Silver Line project, free of massive spending overruns.
I call upon MWAA today to continue to revise all of their
internal practices, especially the code of ethics. Further, I
urge MWAA to incorporate the recommendations made by the
inspector general's report, as there are clearly shortfalls in
the current standards of conduct. I look forward to hearing
from today's panelists about what has been done and will
continue to be done to correct these problems.
The sort of abuses that have occurred must stop and must
stop immediately. Engaging in these practices is completely
unacceptable, and in other circumstances they would be
criminal. MWAA must swiftly recover from these missteps and
work to regain the public's trust, while making its sole
mission that of being a responsible steward of some of this
region's most essential transportation and infrastructure.
With that, I am hopeful that today's testimony will yield
not only explanations but include concrete steps for remedying
these significant issues.
And with that, Mr. Chairman, I yield back.
Mr. Mica. Thank the gentleman.
Do other Members seek recognition?
Ms. Richardson, the gentlelady from California?
Ms. Richardson. Yes, thank you, Mr. Chairman, and our
ranking member for calling this hearing today to review MWAA's
efforts to evade problems brought to light by the Department of
Transportation's inspector general.
As customary, it is always beneficial to have the
participation of our Secretary, Ray LaHood, who is well-versed
with the workings of this committee and the body as a whole.
Today our purpose is to consider the inspector general's
findings, which are limited to just a few years but
unfortunately paints a troubling picture of what might have
occurred since 1987.
After reviewing the report, it is clear that reform is
needed at MWAA. According to the report, and over the years,
there has been a blatant disregard for competitive bidding
practices by awarding contracts to former board members,
initiating work before the contract was awarded, awarding sole-
source contracts without properly vetting bidders, and
continually creating loopholes to bids in an effort to sidestep
regulations on bids valued at over $200,000.
Now, I will say as a Member of Congress, my legislative
career has been devoted to, particularly on this committee, to
make sure that all companies--small business, minority,
veterans, various businesses--would have an opportunity to
compete. So by reading this report, it is particularly
disturbing because it gets at the heart of what many of us have
worked to do to make sure that all companies, particularly
American companies, have an opportunity to do business and have
gainful employment and hire others in this country.
I understand that MWAA has since amended some of these
policies since the IG's report, including revisions to its
contracting manual. However, I would hope that all of the
inspector general's recommendations would be incorporated in
their policies.
Going forward, I believe that Congress should take action
to require any authority's board and employees that use
taxpayer dollars to comply with either State or Federal
transparency and procurement regulations before entering in a
lease with DOT. A perfect example of this is the board of
directors at the Dallas-Fort Worth International Airport. That
board is required to follow the Texas State law and guidelines
related to governance, transparency, and procurement. Failure
to comply can lead to punishment by imprisonment or fines.
I applaud both Congressman Wolf and Congressman Latham in
their efforts to shine light on this troubling revelation. I
want to also again thank our witnesses, including our colleague
who is here with us today, for being with us and affording us
the opportunity to improve upon the situation, which is what
all hearings should be about.
Thank you very much. I yield back.
Mr. Mica. Thank the gentlelady.
Do other Members seek recognition?
If not, then we will turn to our first panel. And we have a
single Member testifying or asking to comment today, and that
is Gerry Connolly, who represents the 11th Congressional
District, takes in a good portion of the area that is served by
these transportation agencies.
So, welcome. And you are recognized.

TESTIMONY OF THE HONORABLE GERALD E. CONNOLLY, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF VIRGINIA

Mr. Connolly. Thank you, Mr. Chairman.
And before I begin my testimony, I just want to thank you
personally. When I was chairman of Fairfax County, before I
came here to Congress, you were a good friend in helping us
work through problems on the Silver Line project rail to
Dulles. You and your predecessor, Mr. Oberstar, worked in a
bipartisan way to help us save that project, understanding what
a critical investment that is not only for our region but for
the National Capital. And I thank you for your leadership and
your help on that project because it is going forward. It looks
good. I know Secretary LaHood has been a friend to the project,
as well. And it means a lot to this region.
Again, thank you, Chairman Mica and Ranking Member Eleanor
Holmes Norton and members of the committee, for holding this
very important oversight hearing on the findings and
recommendations contained in the Department of Transportation
Office of Inspector General audit report of the Metropolitan
Washington Airports Authority, known as MWAA, its management
policies and processes.
I appreciate the opportunity to testify on something that
is so important to my constituents in the 11th District of
Virginia and, indeed, throughout this region. I commend the
leadership of Congressmen Wolf and Latham in requesting that IG
Scovel initiate an audit of MWAA operations.
I also applaud Secretary LaHood's proactive leadership and
his commitment not only to overseeing but, more importantly,
actively assisting MWAA in implementing those needed reforms.
Appointing an accountability officer, for example, was an
important first step toward transforming the Authority. And the
Secretary has my full support in regard to DOT's effort to
amend its current lease with MWAA to enhance accountability,
transparency, and internal controls.
We must not forget that as a self-funded, independent
organization employing approximately 1,400 employees, MWAA is
far more than its board of directors and senior leadership. The
poor performance of some political appointees and senior
managers ought not to tarnish the excellent work performed by
the Authority's career staff members over many years, who have
admirably kept the Dulles Corridor Metrorail Project on track,
to be completed on time and mostly within budget, and in their
day-to-day work to ensure orderly operation of the airports and
management of the Dulles Toll Road as well as other projects.
One would never guess from recent headlines that during its
25 years of existence the Airports Authority has actually
established a successful, scandal-free track record of
financing and overseeing major enhancements and renovations to
both National and Dulles Airports.
That being said, I have cosponsored with my colleague,
Congressman Wolf, legislation that would streamline and
restructure the governance of MWAA and give Virginia the
majority of seats. I have long said it is inappropriate to
afford Maryland and the District of Columbia disproportionate
influence over facilities wholly located within the
Commonwealth of Virginia and that primarily affect Virginia
residents.
Any logic behind the current structure collapsed, it seems
to me, when MWAA took over responsibility for operating the
Dulles Toll Road and constructing Dulles rail. Plain and
simple, Virginians want Virginians primarily responsible for
setting local toll rates.
By reducing the number of members from 17 to 9 and
staggering the terms so no Governor has a disproportionate
influence over the composition of that board, our bipartisan
legislation can create greater accountability, especially to
the folks in Virginia, and restore some public confidence in
MWAA. To take that a step further, I would even support
starting with an entire slate of new members.
Now, with respect to the IG report, one cannot defend the
indefensible. In reviewing the interim and final DOT OIG audit
report, ``indefensible'' is one of the milder terms one could
apply to some of the management deficiencies and ethical
practices exhibited by MWAA's board and senior leadership.
Unfortunately, in this instance, one can judge the book by its
cover, as the report's title, ``MWAA's Weak Policies and
Procedures Have Led to Questionable Procurement Practices,
Mismanagement, and a Lack of Overall Accountability,''
accurately captures the Authority's shaky management practices.
Stories of extravagant travel, unjustified hiring bonuses,
questionable cash awards, and widespread nepotism already have
grabbed headlines as a result of OIG's investigation.
While some of the criticism focused on actions of certain
board members, the final audit report demonstrates clearly that
the depth of management and ethical failures extend far beyond
any one person. The fact of the matter is the bar for
professional and ethical conduct needs to be raised
considerably for all current and future board members and
senior managers of MWAA.
The finding from OIG that I found most troubling involved
serious management deficiencies, particularly MWAA's
noncompliance with requirements in the Airports Act, its lease
agreement with DOT, and commonsense contracting practices. From
initiating work before awarding a contract, issuing sole-source
contracts without adequate justification, providing favored
bidders with nonpublic information to bestow an unfair
competitive advantage, MWAA's acquisition practices and
procedures could serve as a case study in how not to administer
procurement policy.
In addition, MWAA's failure to meet its own contracting
manual requirements when utilizing categorical exceptions was
an inexcusable restriction of fair and open competition. The
Authority's decision to delegate procurement authority to
employees outside of its procurement and contracts department,
subsequently losing track of which personnel they had granted
this authority, while simultaneously failing to hold employees
to delegated limits, is emblematic of MWAA's lack of internal
controls and disregard for sound management principles.
Fortunately, MWAA has demonstrated it now understands the
gravity of this situation and is taking steps, however tardy,
to ensure that the final chapter of this embarrassing period
for the Authority may yet be one of redemption. The decisive
actions initiated by the board and senior leadership, including
the arrival of new board members and the replacement of some
senior managers, are an encouraging indication that MWAA is
committed to restoring its reputation and, more importantly,
public confidence in the operation.
Developing a new travel policy, increasing transparency
through new ethics policies, and instituting strong internal
controls for procurement are essential corrective actions in
order to eliminate nepotism and favoritism while ensuring that
MWAA is always in compliance with the Airports Act and its
lease agreement with DOT.
As the committee is aware, MWAA Board Chairman Michael
Curto sent a letter to Secretary LaHood and Governors McDonnell
and O'Malley and Mayor Gray of the city earlier this week
detailing actions the Authority already has taken or plans to
take in response to the OIG's 12 broad corrective actions and
30 specific sub-recommendations. I appreciate the candor and
resolve from Chairman Curto and MWAA leadership to work swiftly
with regional partners to address those shortcomings.
It is difficult, Mr. Chairman, to overstate the importance
of MWAA to our region's transportation network and prospects
for economic growth. It is absolutely essential that our
region's congressional delegation, DOT, and MWAA continue to
work together to fully address every single DOT OIG
recommendation. Given the diffuse accountability embedded in
the current governance of MWAA, restoring the public confidence
will be an arduous but absolutely necessary part of this
process.
In closing, I want to again express my gratitude to you,
Mr. Chairman, and Ranking Member Eleanor Holmes Norton for
providing me the opportunity to testify before the committee.
And I look forward to working with you as we proceed in the
future.
Mr. Mica. Well, we thank you for your testimony, your
participation, and your recommendations.
And I don't see any--Ms. Norton, did you have a question?
Ms. Norton. Yes, I do have a question for Mr. Connolly.
I certainly agree with his analysis of the issues and the
defects in the present regulations, such as they are, at MWAA.
I regret the part of his testimony which veers off into an
entirely regional matter that has been settled, I thought, by a
compromise--a compromise that the District of Columbia only
reluctantly accepted.
The 1986 legislation was enacted in order to regulate
traffic between Reagan National and Dulles Airport. Dulles was
receiving virtually none or too little of the air traffic.
Reagan, which was already overcrowded, was receiving much more
of the traffic. Since the airport compact was enacted in 1986,
there are three airports in this region, and they have divided
up the traffic in a very rational way--the airport in Maryland,
the airport here in the District, and Dulles Airport. Although,
Mr. Chairman, you are aware that every time the FAA bill comes
up, there are Members who want more and more of the traffic in
the District of Columbia.
The reason that the two airports are regulated and the
reason that the District of Columbia is in this at all is
because Reagan National Airport receives much--and that is
located in Virginia, not, I believe, in Mr. Connolly's
district--but that receives traffic that is, in fact, coming to
Washington and, therefore, is a preferred airport by much of
the traffic. The Federal Government owns the land and wanted to
make sure that the traffic was more evenly divided.
Now, Mr. Wolf has had two attempts. The one that everyone
has signed on to gives Virginia twice as--gives Virginia the
same number--excuse me--the same number as the number of
members on the Authority from Maryland and the District of
Columbia combined. The other legislation would give Virginia
essentially all of the authority, and the other members would
have no say because they would so outnumber Maryland and the
District of Columbia.
If compromise is to be the way of the lame duck and the way
of the 113th Congress, I certainly hope we won't open that
issue, which was reluctantly settled to the favor of Virginia
and which I think has no place in this hearing today.
And I thank you, Mr. Chairman.
Mr. Mica. You wanted to respond, Mr. Connolly?
Mr. Connolly. Yeah, thank you, Mr. Chairman. And I
certainly appreciate Delegate Norton's point of view. I
respectfully disagree. I think it has everything to do with
today's hearing.
I think, clearly, the practices of this governing body, of
MWAA, have shown serious flaws with the governance structure.
And I would simply say, if we are talking about control over
one's own destiny, which I support, I certainly support voting
rights for the District of Columbia. I don't think Congress
ought to be making management decisions for the city's budget
or other aspects of its governance.
Delegate Norton has overlooked the fact that there are
also, in addition to the Maryland and DC appointees on the
board, 3 Federal appointees, so that, as a matter of fact, 10
of the 17 members are not Virginians or not appointed by
Virginia. And they are making decisions about toll rates.
What has changed since 1986 is that the Airports
Authority--which, by the way, carved out BWI. So the third
regional airport is not part of the purview of MWAA,
interestingly. But now we are not just managing airports, we
are building the largest transit extension in America and
managing it, and we are controlling the toll road entirely
within Virginia. And the underlying fee is a Virginia property,
not a Federal property.
And so that is what has changed. And I respectfully think
we ought to consider changing that governing structure so that
Virginians have more of a say now in things that profoundly
affect my commuters and my citizens on the toll road, which is
financing a large part of the extension of rail.
Mr. Mica. OK. Ms. Norton had asked a question. Just a
clarification. So your recommendation, did I hear it right, was
to dismiss all of the current board members?
Mr. Connolly. The legislation does not address that, Mr.
Chairman. What I said was, if we are going to start with a
clean slate, we--if this legislation were to become law----
Mr. Mica. Oh, totally clean. Not, like, any of the more
recent members. The other thing----
Mr. Connolly. Our legislation is silent with respect to
that.
Mr. Mica. OK. There are--well, let's see. We have expanded
the membership; now they want to contract the membership and
limit some of the membership, according to some of the
proposals. All that fight has to go forward. We are not going
to settle that here today. But I will be interested in your
opinion on that as we move forward. I will also take Ms.
Norton's into consideration and the other Members'.
With that, we will let you go. Thank you for your
participation, again, your recommendations and your testimony.
And we will welcome Secretary LaHood.
Mike, if you can get his little--OK, here we go.
I want to take this opportunity to welcome our Department
of Transportation Secretary and former colleague, the former
gentleman from Illinois, still the gentleman from Illinois but
now from DOT, Secretary of Transportation LaHood.
Welcome, and you are recognized.

TESTIMONY OF THE HONORABLE RAY LAHOOD, SECRETARY, U.S.
DEPARTMENT OF TRANSPORTATION

Secretary LaHood. Thank you, Mr. Chairman and the members
of the committee, for the opportunity to appear before the
committee today to address management issues at the
Metropolitan Washington Airports Authority and to share with
you steps we have taken to help get the organization back on
track.
At DOT, we care deeply about the long-term success of MWAA.
I was deeply concerned to learn about the lack of
accountability, transparency, and sound judgment by the MWAA
board in its activities. The public expects and deserves more
from a public agency entrusted with managing the airports
serving the Nation's capital and also building the Silver Line.
The DOT inspector general's report laid out very serious
and troubling examples of the Authority's operation, but the
reports also may provide a clear and concrete road map for DOT
and MWAA itself to bring management practices up to the highest
levels.
At the DOT, we took immediate action to help MWAA address
these problems and made concrete changes that will preserve
these fundamental reforms. This summer, I appointed Kimberly
Moore as a Federal accountability officer. And I want to give
your colleague, Frank Wolf, a lot of credit for this. Frank and
I worked together on this. This was his idea. And Kim Moore has
done a great job in a very short period of time. She has worked
with MWAA to improve ethics, procurement, and governance
policies.
I also brought together the Governors of Maryland and
Virginia, along with the mayor of the District of Columbia, to
ensure a united front in addressing these issues. In fact, we
sent a letter to Chairman Curto and the MWAA board of directors
in August laying out both our concerns and necessary reforms to
reform transparency.
And if you wouldn't mind, Mr. Chairman, just
parenthetically, I just want to list the eight items that were
in the letter and tell you where we are at.
Number one, overhaul financial procurement and HR policies.
That is underway.
Terminate all existing contracts with former board members
and former employees. That is done.
Terminate all employment relationships with former board
members. That is done.
Adopt post-employment restrictions for board members and
employees that meet Federal standards. That is done.
Strengthen ethics code. Completed.
Tighten travel procedures. Completed.
Implement transparency programs. And the board is, at their
last meeting, is pretty well complete on that.
Strengthen oversight of the Dulles rail project, which is
using a lot of taxpayer dollars. That is ongoing with our
Federal Transit Administration stakeholders and MWAA.
So I am delighted that, out of the eight items, many of
them are complete. And I think that goes to the leadership of
Mr. Curto and the CEO and president of MWAA.
Since I appointed Ms. Moore as Federal accountability
officer, MWAA has implemented new travel policies and ethics
policies for MWAA's board and staff, terminated improper
contracts and employment relationships, and undertaken to
enhance the transparency of MWAA's board. Further improvements
are currently underway.
MWAA's success is important to all of us. We have made
progress, but we can always do better. DOT looks forward to
working with you, this committee, the Congress, our friends
that represent this area in Congress, and we will keep all
parties advised.
I thank you for holding this hearing and inviting me to
participate.
Mr. Mica. Thank you for your testimony.
And we will just ask a couple of questions here.
You cited some of the things that have been done to correct
the situation. And I guess you have Kim Moore, who has been
charged with some of that responsibility on oversight----
Secretary LaHood. May I introduce her? She is here, Mr.
Chairman. If she could just stand----
Mr. Mica. That is great. Good. Well, welcome. An important
responsibility.
And we appreciate you; Mr. Wolf for his work and efforts to
launch some of this; Mr. Latham; and Ms. Moore's efforts to get
this under control.
Now, I think the board terms, are they 6 years? And I don't
know how many members have been on how long. Do you know the
sort of----
Secretary LaHood. No, but maybe Mr. Curto can answer that
when he is up here. I don't know specifically.
Mr. Mica. Well, my point here is, I thought I heard Mr.
Connolly say maybe we need to clean house and start over. What
is your opinion there?
Secretary LaHood. Well, we----
Mr. Mica. Is that board salvageable?
Secretary LaHood. We have, out of the 17 members, I think
11 now--11 or 12 are new members. And the President has just
nominated and are pending right now in the Senate two
additional members that are Presidential. And we are hoping
that there will be one other one.
Really, I think in terms of cleaning house on the board, it
has pretty well been taken care of because almost all the
members are new members.
Mr. Mica. So you think some of the culture that created
this situation has been eliminated?
Secretary LaHood. Yes, I do.
Mr. Mica. OK. OK. Well, that is important. And then you
have cited the steps that you have taken.
Mr. Connolly actually made a pretty good case of making
this more of a Virginia-centered Authority as opposed to the
Presidential appointments in Maryland and the rest, DC. What is
your opinion there?
Secretary LaHood. Well, look, I am not going to--I think it
is up to the board and the Congress and the people that
represent the airport authorities to decide if they think there
is a better approach to the organization of the board. I don't
think the DOT Secretary should be deciding what the composition
of the board is, how many members it should be. You know, that
was done by people who have a lot more jurisdiction over it,
and I am going to leave it to others to decide that.
There are a lot of new board members on there. There is a
lot of fresh blood. They have a new CEO and president, and I
think he has done a good job.
Mr. Mica. Well, what has taken place--and I commend also--
the inspector general has done an excellent job. He always
does. And we will hear from him in a minute.
Secretary LaHood. I agree with that.
Mr. Mica. Again, sort of a sad--well, it is a very sad
chapter, particularly in our Nation's capital, to have this----
Secretary LaHood. I agree with that.
Mr. Mica. So we hope we can--as Mr. Connolly also said, we
have to restore public faith and trust in this important
responsibility.
Ms. Norton?
Ms. Norton. Mr. Chairman, I do not want to convert this
into a discussion of what is essentially a regional issue. But
I do want to say for the record that what Mr. Connolly proposes
is essentially a takeover of the Airports Authority by the
State of Virginia. That has profound implications for the rest
of the region. And I hope we don't get into those kinds of
matters when this is a hearing about a matter on which
everybody is in agreement.
Now, Mr. Secretary, I would like to ask your view. I
indicated in my opening statement that I had introduced a bill
yesterday that would apply, the Federal Acquisition
Regulations, to MWAA. I did that after looking at the
regulations and seeing that they were tested; essentially,
sometimes an agency will make small modifications. I also
introduced it because I see that MWAA has been trying to
reinvent the wheel. And I couldn't for the life of me
understand if, considering that this is Federal land,
considering that it is leased from the Federal Government,
considering the amount of Federal funds involved, why the
Federal Acquisition Regulations already there shouldn't simply
apply and just get this over with.
Do you see any reason why the Federal Acquisition
Regulations, which are applied to virtually every Federal
agency, shouldn't apply to MWAA, as well?
Secretary LaHood. Well, first of all, I would like to look
at your legislation, Delegate Norton, and I would like to work
with you on it. And before I say something very definitive
about the procurement, I would really like to talk to our legal
team about it.
But, look, we are going to work with you on this, as we
have on all of these matters. You are obviously very
enlightened about these things. And having served here with
you, I know the importance of having good Federal procurement.
So let's work together on it and see if we can figure out a
better path.
Ms. Norton. Well, I certainly appreciate that approach. I
am trying to go to efficiency in Government.
Secretary LaHood. Yes.
Ms. Norton. There is a lot of, I think, justified and
justifiable criticism about Government regulations. And the
notion of going all over all of this plowed ground seems to me
a colossal waste of time and energy. And I very much appreciate
you are willing to consider the legislation.
Secretary LaHood. We will do it. We will do it.
Ms. Norton. Thank you, Mr. Chairman--or Madam Chairman.
Mrs. Schmidt. [presiding.] Thank you.
And now I will yield myself such time as needed for some
questions.
Nice to see you, sir.
Secretary LaHood. Thank you.
Mrs. Schmidt. I have a couple of questions.
MWAA, I get why it was formed. I would like some more
clarification on why BWI was left out of the loop, since it is
in a competitive region with Dulles to get back and forth to.
And is there an advantage or a disadvantage for Federal funds
to be in the MWAA loop, or is it a wash?
Secretary LaHood. I am going to--I think it would be better
for me to let Mr. Curto and the Airports Authority answer the
question. To be honest with you, I don't know the answer to
your question about why BWI was left out. I probably should,
but I don't. But I think it is better, when I don't know the
answer, to say I don't know and let other people who do know
answer it.
Mrs. Schmidt. Fair enough.
The second part is the toll road. I mean, maybe Dulles and
Reagan have a little Federal control because it is Federal
property. That might be the catch, I don't know. But the toll
road is definitely Virginia property. Why is MWAA having any
jurisdiction over the toll road?
Secretary LaHood. Well, look, part of what MWAA is doing is
they are the grantee for the construction of the Silver Line,
which will deliver people from around the region to Dulles
Airport. And we have jurisdiction over the funding for the
Silver Line, and we have worked very closely with MWAA and
others on that. Part of what we have under consideration now is
the TIFIA loan proposal, which will influence the toll road.
And so these things are all sort of tied together as a result
of the involvement with the Silver Line project.
Mrs. Schmidt. I understand the importance of the Silver
Line project getting to Dulles. Had MWAA not been involved,
would it still have occurred, the Silver Line? I mean, could it
have occurred with Virginia working with the Department of
Transportation on it without MWAA oversight?
Secretary LaHood. Well, look, this project is a project
that is a part of the whole Metro system, and the decision was
made to have MWAA be the grantee, so to speak, because the line
was going to end up at Dulles Airport.
So could there have been another grantee? You know, I would
have to go back and look at the debate that took place and how
all of that happened.
Mrs. Schmidt. My final question: The toll road is solely in
Virginia?
Secretary LaHood. Yes, the toll road is solely in Virginia.
Mrs. Schmidt. And MWAA decides what the rate of the toll
will be?
Secretary LaHood. Well, look, it is in cooperation with the
Commonwealth also.
Mrs. Schmidt. OK. Thank you so much.
Secretary LaHood. Thank you.
Mrs. Schmidt. I am surprised by all of this. Thank you.
Ms. Richardson, do you have any questions?
Mr. Cravaack?
Mr. Cravaack. Thanks, Madam Chair.
Thanks, Secretary, for being here.
Secretary LaHood. Good morning.
Mr. Cravaack. Morning. Just a couple questions.
It sounds like you already have a proactive approach in how
to correct the problem.
Secretary LaHood. We have taken a very proactive approach.
Mr. Cravaack. Yeah, it seems like you have. You gave me a
laundry list, and that actually shot down some of my questions.
You might not have the answer to this, and the inspector
general may have it, but what, in your opinion, was the most
egregious findings that you found?
Secretary LaHood. Well, the way that this came to my
attention is when I read an article in a local publication
about a contract that was given to a former board member where
this board member was going to be paid for an extended period
of time as a consultant. And when I read the article, I
couldn't believe it.
Mr. Cravaack. Yeah.
Secretary LaHood. And that is when--to me, that was the tip
of the iceberg.
Mr. Cravaack. Yeah.
Secretary LaHood. And then we started drilling down, and we
came up with these eight items that were included in the letter
from the two Governors and the mayor of Washington, DC.
Mr. Cravaack. Yeah. Well, like I said, you have already
answered my questions in your opening testimony, so thanks for
drilling it down.
Secretary LaHood. Thank you.
Mr. Cravaack. I appreciate it.
And I will yield back. Thank you.
Mrs. Schmidt. Thank you.
Mrs. Johnson, do you have any questions?
Ms. Johnson of Texas. No.
Mrs. Schmidt. Mrs. Edwards?
Ms. Edwards. Thank you, Madam Chair.
We will just actually go down the loop.
Mr. Secretary, it is good to see you.
I do want to just go back to this question of the
governance structure for the Authority. Because, I mean, in
your view, in terms of the amount of resources that we put both
into the lease agreements and the activities going at Dulles
and at National Airport and, in addition, the Federal resources
going in to the Silver Line Metro system, doesn't that justify
some more oversight at the Federal level than we have in a lot
of other regions that don't share in quite the same
relationship with the Federal Government?
Secretary LaHood. Well, look, when it comes to the Silver
Line, we have a lot of jurisdiction. Our FTA Administrator and
the FTA has already done one audit to make sure that the phase-
one money was spent correctly. There will be another audit done
early next year to make sure that what has continued is being
done correctly. That is the way that we would operate with any
transit program where we give them money.
The uniqueness of this is that the construction of the
Silver Line is being done by the Airports Authority. But our
jurisdiction over the Silver Line is quite significant and is
significant the way we do it with every other project that we
do like this. We pay a lot of attention, there is a lot of
oversight, and we do a lot of audits. We make sure the money is
spent correctly. We make sure the contracts are let correctly.
And so, you know, the whole idea of the governance of MWAA
I think is better left for debate with the next panel, the
chairman and the CEO and the president, you know, to get their
take on it. I don't really want to get involved in that. I
don't know if that is really my responsibility. I don't want to
be telling every airport authority around the country how many
members they should have and who should be serving on their
boards. That is not our role.
Ms. Edwards. Thank you, Mr. Secretary.
And just one final question. The first phase of the project
was done under a project labor agreement, but that is not true,
then, for the second phase, but largely it is the same number
and the same workers.
What was the role of the FTA in its oversight around the
development of a project labor agreement in the first phase?
Secretary LaHood. Well, once the contract was let, then it
is between the people who get the contract and the FTA and
others to--well, between the contractor and MWAA to work out
the project labor agreement.
I assume that is going to happen in phase two. I think once
the contract is let for phase two, people will sit around a
table and figure out the PLA.
Ms. Edwards. There have been some suggestions, both in the
media and otherwise, speculating about the existence of the
project labor agreement and moving into phase two as having
something to do with all of this mess, apart from the other
ethical issues, the mess surrounding departures of board
members and the reconfiguration of the board.
Do you know anything about that?
Secretary LaHood. I really don't. Yeah. I really don't.
Look, phase one has worked pretty well. It really has. I
think phase two will work equally well. Because I think when
you talk to these folks that are now in charge of MWAA, a new
CEO and president, a relatively new chairman, they get it. We
have a former Member of Congress who is the vice chairman of
the board who is here today; he gets it. These people get it.
They do. They know this has to be done correctly. They also
know that a lot of people have an eye on them, not just all of
you, but those of us at DOT and others.
So I am confident this is going to be done correctly. They
have pending before us a TIFIA loan. I mean, look, we are not
going to give them a TIFIA loan if they are not doing things
correctly. They know that.
Ms. Edwards. All right. Thank you.
And I yield.
Mrs. Schmidt. Thank you.
Mr. Coble?
Mr. Coble. Thank you, Madam Chairman.
Mr. Secretary, good to have you back on the Hill.
Secretary LaHood. Thank you.
Mr. Coble. I was going to ask you, Mr. Secretary, what
DOT's next steps are in regard to MWAA, and you have touched on
that briefly. Go into it in a little more detail, if you will.
Secretary LaHood. Well, we put together a letter, signed by
myself and the Governor of Virginia, the Governor of Maryland,
and the mayor of DC, where we outlined eight items that they
needed to correct quickly. And they have completed the majority
of those. They still have more to go.
We have our accountability officer, Kim Moore, assigned by
me to work with the MWAA board. She has done a great job, and
they have been very cooperative.
And the other thing that I would say is that I have a lot
of confidence in the new CEO and president, also in Mr. Curto,
who you are going to hear from, but, as important, in Mr.
Davis, a former Member of this body. They get it now. They know
that things need to change.
And they also know that if they are going to get phase two
funded, if they are going to get a TIFIA loan from DOT, things
have to be done correctly.
And I believe they are on the right track.
Mr. Coble. Well, personally I think you served a good
watchdog role over there, Mr. Secretary. Good to have you back
on the Hill.
Secretary LaHood. Thank you.
Mr. Coble. I yield back, Madam Chairman.
Mrs. Schmidt. Thank you.
Are there any other questions?
Secretary LaHood. Thank you very much.
Mrs. Schmidt. Thank you.
I am sorry, Mr. Petri has--I am sorry, Mr. Petri.
Secretary LaHood. Almost.
Mrs. Schmidt. Not quite.
Mr. Petri. This is slightly unrelated, but I just wanted to
get on the record that when we passed the FAA reauthorization,
it had a provision in it asking the FAA to engage in something
similar to what we think of as the Army or the base-closing
process, to look at underutilized FAA air-traffic-control
facilities around the country, and work with the labor
representatives and with others to come up with this.
We know these deadlines are sometimes difficult to meet,
but this was supposed to be submitted in June, and now we are 6
months later, and if we don't bring it to the people's
attention, it will end up probably continuing to drift into
oblivion. So would it be--could you comment on that, or can
this be given some attention?
Secretary LaHood. I think what I will do, Mr. Petri, is
consult with Michael Huerta, the Acting Administrator of the
FAA, and, for the record, I will get you an answer.
Mr. Petri. Thank you, because it is not huge numbers of
dollars, but it is--it would save money, and we are looking for
efficient operation, safe operation of the Government in every
respect, and if we neglect these things, they pile up. So----
Secretary LaHood. I agree.
Mr. Petri. Thank you.
Mrs. Schmidt. Thank you.
Any other questions?
Thank you very much for your time.
Secretary LaHood. Thank you very much. All right. I got
them warmed up for you. Good luck.
Mrs. Schmidt. Welcome, gentlemen. We are joined by the
Honorable Calvin L. Scovel, inspector general, U.S. Department
of Transportation; the Honorable Michael A. Curto, chairman of
the Airports Authority Board, Metropolitan Washington Airports
Authority. We are also here with the Honorable Tom Davis, from
Virginia; and Mr. Potter, the president and chief executive
officer of the Metropolitan Washington Airports Authority.
Welcome, gentlemen.
We will begin with the Honorable Scovel.

TESTIMONY OF HON. CALVIN L. SCOVEL III, INSPECTOR GENERAL, U.S.
DEPARTMENT OF TRANSPORTATION; HON. MICHAEL A. CURTO, CHAIRMAN,
BOARD OF DIRECTORS, METROPOLITAN WASHINGTON AIRPORTS AUTHORITY,
ACCOMPANIED BY HON. TOM DAVIS, VICE CHAIRMAN, BOARD OF
DIRECTORS, AND JOHN E. POTTER, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, METROPOLITAN WASHINGTON AIRPORTS AUTHORITY

Mr. Scovel. Madam Chairwoman, Ranking Member Edwards,
members of the committee, thank you for inviting me here today
to discuss MWAA's governance. Before I begin, I ask consent to
include in the record a copy of our recently issued MWAA
report.
Mrs. Schmidt. So moved.
Mr. Scovel. Thank you.
Over the past several months, we have reported a number of
deficiencies in MWAA's internal policies and procedures related
to contracting, travel, hiring, and transparency. MWAA is
taking positive steps to correct these deficiencies, including
strengthening several of its policies and terminating contracts
with former board members. Further, in exercising the full
extent of its authority, the Department has appointed a Federal
accountability officer to monitor reform efforts, and is
pursuing an amendment to the current lease with MWAA to ensure
greater oversight and enforcement.
While these are very positive steps, further actions are
needed to ensure fiduciary and ethical responsibility and
accountability to Congress, stakeholders and the public.
First, MWAA needs management controls that will protect
Federal assets and provide reasonable assurance of sound
governance. A lack of such controls has allowed violations of
applicable laws and agreements and even MWAA's own policies to
go unchecked. Ultimately, MWAA's culture became one that
tolerated questionable contracting practices, including
awarding two-thirds of its contracts noncompetitively, adding
out-of-scope work to existing contracts without proper
justification, and initiating work before contract award. MWAA
also released nonpublic contract information that gave
potential contractors an unfair advantage in competition. These
weaknesses were exacerbated by a lack of measures to ensure
employees with delegated procurement authority do not violate
the terms of their delegation or make improper purchases.
Second, MWAA's code of ethics needs to ensure the integrity
of decisions made by MWAA's board of directors and employees.
MWAA's code of ethics and related policies and procedures have
been insufficient to detect violations of antinepotism and gift
provisions and to identify potential conflicts of interest. For
example, employees regularly accepted inappropriate gifts from
an MWAA contractor, including Super Bowl tickets, travel, and
accommodations worth almost $5,000. Cursory reviews of
financial disclosure statements and the lack of recurring
ethics training have provided little assurance that employees
were fully aware of MWAA's ethics requirements.
Third, MWAA's hiring and compensation policies and
practices need to ensure sufficient oversight and
accountability. Senior officials have placed candidates into
new or existing positions without job descriptions,
competition, or completed background checks. We found that
employees with criminal convictions worked at the Authority in
sensitive and management positions for more than a year. In
addition, MWAA managers awarded excessive salaries,
questionable cash awards, and ineligible benefits. In one case
MWAA created a new position for a former board member that
included an annual salary of $180,000 for unspecified job
duties before terminating that position.
Finally, MWAA needs to expand its use of open committee
meetings and continue to limit its use of executive sessions.
This would further promote transparency, ensure accountability,
and keep Congress, the public, and other stakeholders informed
of its major decisions. MWAA has begun to take action to
address our concerns. Notably MWAA has approved new codes of
ethics for its employees and board, suspended the use of
categorical exceptions for professional services, terminated
contracts with former board members, approved a new travel
policy, revised the board's bylaws and freedom of information
policy, and enhanced screening for nepotism.
While these efforts, coupled with the Department's planned
actions, can help improve MWAA's accountability, significant
attention will be required to ensure that new contracting,
travel, ethics, and disclosure policies instill public
confidence. The key will be implementation and enforcement.
Mr. Chairman, this concludes my prepared statement. I would
be happy to an any questions that you or other members of the
committee may have.
Mr. Mica. [presiding.] Thank you.
And I think we are going to go ahead and hear all of the
other witnesses. So we will turn next to the chair of the
board, Mr. Michael Curto, and you are welcome and recognized.
Mr. Curto. Good morning, Mr. Chairman and members of the
committee, and thank you for the opportunity to discuss the
Metropolitan Washington Airports Authority's response to the
audit by the Department of Transportation's inspector general.
I am Michael Curto, chairman of the Airports Authority board of
directors, and with me today is the vice chairman of the
Authority's board, Congressman Tom Davis, as well as our
president and CEO, Jack Potter.
This audit began 16 months ago, shortly after I joined the
board, and shortly before Mr. Potter joined the Authority. In
May of this year, the inspector general issued an interim
report which raised a number of issues that we have been
working to address. The final report issued November 1st raised
additional issues and provided a number of recommendations.
Mr. Chairman, I wish to be clear. The Airports Authority
intends to address every issue raised in these reports, act on
every recommendation, and fix every problem identified, and to
do so in a manner that ensures they will not recur. It is my
hope and the Authority's goal that through these actions we
will restore the confidence and trust of our many friends and
partners. I am confident we will succeed.
Today our board of directors is a very different body than
the board of only a year ago, and soon it will be even more so
due largely to legislation sponsored by Congressman Wolf. By
early next year only 2 directors on our 17-member board will
have served more than 2 years. Importantly, many of these
directors will have joined us after the IG's interim report was
issued. They are aware of our challenges and are committed to
fixing the problems.
Our new leadership also is reflected in our new president
and CEO. Mr. Potter brings a no-nonsense, get-it-done-right
management style to the Authority. Working with him closely
since becoming chairman in January, I am confident in his
ability to lead the staff in successfully meeting these
challenges.
As the IG's final report acknowledges, we already have made
good progress. We have adopted new policies and revised others,
we have made our operations and governance more open, we have
improved our internal controls and oversight, and we are
strengthening our procurement process with other initiatives
underway.
Our purpose in all of these actions is to bring greater
transparency, accountability, and unmistakable integrity to all
areas of the Authority. Our efforts have benefited greatly from
the counsel and guidance provided by the Federal accountability
officer appointed earlier this year by Secretary LaHood.
I would like to briefly recap some of our actions. We have
revised the Authority's bylaws to increase transparency,
including the posting of materials for board meetings to our
Web site. We have revised our freedom of information policy to
improve transparency, and have designated a freedom of
information officer. We have approved a new travel policy with
detailed procedures and clear guidelines for expenses. We have
approved new codes of ethics for employees and directors with
requirements for annual training. We have named an ethics
officer to provide oversight, and we have conducted more than
20 training sessions on the new codes for board members and
employees.
We have terminated all noncompeted contracts and employment
relationships with former board members. We are revising our
contracting manual to reflect best practices and optimize
competition. We are revising our human resources programs to
assure best practices in compensation and hiring. And we have
created an internal control group to enforce policies and
assure accountability. Finally, we have assigned special
management teams across the Authority to address and formally
respond to each recommendation in the inspector general's
audit.
We are submitting for the record a report we presented this
week to Secretary LaHood. You heard Secretary LaHood mention
the response to his letter. The response also goes to Governors
McDonnell and O'Malley, and Mayor Gray. It describes in detail
our actions to address the recommendations of the IG and the
concerns these officials expressed this past August.
I believe we are on the right track. I recognize the
movement along this track will require hard work, and at times
may be slow and encounter difficulties, but I am confident we
will achieve steady and significant progress to strengthen the
Airports Authority and rebuild the public trust and confidence.
Mr. Chairman, we would be pleased to answer any questions.
Mr. Mica. Thank you.
And I see you are accompanied by John Potter, who is the
president and chief executive officer. Did you have any
testimony there?
And then the vice chair of the board, Mr. Davis. Mr. Davis
is well known to this committee, and our former colleague, and
I guess were you made vice chair to investigate vice on the----
Mr. Davis. I think the IG has done a good job of that.
Mr. Mica. All right. Welcome back, Mr. Davis, a good friend
and former colleague. And I am sure they are very fortunate to
have your service on the board.
Well, we will start with some questions, if I might.
So, the investigation started how long ago, Mr. Scovel?
Mr. Scovel. Mr. Chairman, in the spring of 2011, we were
asked by Mr. Wolf and Mr. Latham to undertake an inquiry of
MWAA's governance, transparency, and accountability.
Mr. Mica. And I see you submitted it November 1st. And now,
did your--since you submitted it November 1st, you watched some
of the changes and implementation of some of your
recommendations, or they were aware of your recommendations
along the way? How do you feel about what they have done, and
how much further is there to go?
Mr. Scovel. Mr. Chairman, at Mr. Wolf's request
specifically, on May 15th, we conducted a briefing on our
findings as of that date for the benefit of the Department, for
MWAA itself, and for the local stakeholders in northern
Virginia who are most interested. We had previously briefed the
Department as well as MWAA leadership on what we were about to
say to the local stakeholders specifically. But at that point,
starting in the middle of May, we saw tremendous effort on the
part of MWAA and especially on the part of the Department to
get their arms around all of the problems that we had
identified in the findings.
Mr. Mica. So most of what you heard today you feel
confident is correct, that they have taken positive steps to
implement.
The second part of my question, is there a lot more to go?
Can you comment on that based on what you know of their actions
to date?
Mr. Scovel. Generally, Mr. Chairman, I can say that they
have taken numerous positive steps at MWAA, and we are
tremendously gratified by the attention and energy from the
Department, through the accountability officer and through the
negotiations to modify the lease arrangement with MWAA for
running the airport facilities. Those are all positive steps in
the right direction.
However, I have to note that I wear the title of ``hired
skeptic'' that a member of this committee bestowed on me
several years ago. I wear that title most proudly. And until we
have seen a record of execution and data to substantiate,
especially in the contracting area, that the improvements that
are now on paper have actually been carried out over a period
of time, I have to reserve judgment.
Mr. Mica. I think we need to work with Mr. Wolf and others
to make certain--and Mr. Latham--to make certain that, again,
what we have heard today is not just on paper and part of it
implemented, but all implemented.
There were some pretty serious charges and some findings
of--I termed it corruption when you are taking gifts, when you
are--well, we had a whole host of illegal activities, in my
opinion. I am not sure, I don't know whether they fall under
Virginia law where they were committed, or Federal law. But do
you--will you have criminal referrals, or are you turning any
of this over to any other authorities so that people who
violated the law will be held accountable?
Mr. Scovel. Mr. Chairman, to be clear, what we reported on
November 1st was the result of an audit. There are
investigations, criminal investigations, underway. Agents from
my office are participating under the leadership of the FBI.
Those are independent matters. I am not cleared to speak at
this point----
Mr. Mica. OK. I don't want to get into that.
Mr. Scovel [continuing]. On what is developing along those
lines.
Mr. Mica. But, again, there are authorities, and it
appears, too, there might be violations of State or other
jurisdictional laws. Are you cooperating with any other
authorities or making referrals, or are they reviewing this
information?
Mr. Scovel. An assistant United States attorney is----
Mr. Mica. Primary.
Mr. Scovel [continuing]. Is spearheading the investigation
conducted by my office and the FBI. I leave it to his good
judgment on whatever authorities he may need to coordinate
with.
Mr. Mica. I guess you put personalities on a board, and
sometimes you are going to have some weak regulations and some
weak structure, but people perform well, and then in other
instances people perform poorly and violate both the intent or
actually the law and the spirit of the law.
You heard, I think, Mr. Curto describe the changeover in
the board members who were primary. Now, there are personnel
also in place that actually participated. Some of the
accusations were against the board members, some were against
personnel. Now, Mr. Curto, you said there is only two left of
the old members, is that----
Mr. Curto. That is correct, Mr. Chairman. As of the new
year, there will be only two board members that have served
more than 2 years.
Mr. Mica. Well, I don't want to get into a public forum
about the two remaining board members. I will discuss that with
Mr. Wolf and others.
Of the personnel, the employed personnel, what changes have
been made there? I mean, the board members go through a
confirmation process or appointment process. Personnel are
hired and fired. Can someone tell me who has been hired and
fired and held accountable as far as employees? I guess the big
offender here was the HR director, and he resigned; is that
correct?
Mr. Potter. That is correct.
Mr. Mica. OK. Who wants to tell me? Mr. Potter, tell us the
status of the bad players.
Mr. Potter. Well, I will tell you this, that we have----
Mr. Mica. Pull that up. It is a little hard to hear you.
Mr. Potter. We have three vacancies that we are currently
filling, the vice president of IT, the vice president of HR,
and the manager of procurement. The three areas that they
managed were highlighted in this report, and they are no longer
with us.
Mr. Mica. IG, is that sufficient to cover the personnel
malfeasance that you saw?
Mr. Scovel. Mr. Mica, I don't believe it is my role to
execute--to make those management decisions or to execute them;
however, I will note----
Mr. Mica. Your investigation uncovered wrongdoing both by
board members and employees, and if there are still bad players
on the board, we can address that. If there are still bad
players employed, some steps need to be taken. And you
certainly must attribute some of the wrongdoing to some
individuals who were in the employ. You said three people are--
--
Mr. Potter. Well, if I could just add to that. We have been
briefed by the IG this week in terms of identification of some
of the players who played roles in some of this activity. When
we went through that laundry list, several of the people that
were identified are either no longer with us or in the process
of being no longer with us. And, again, personnel management--
--
Mr. Mica. Can you advise the committee as to the progress
of the process of, they are no longer with us----
Mr. Potter. Right.
Mr. Mica [continuing]. And provide us with a list? We are
going to leave--we will leave the record open the next 3 weeks
to give them enough time. Is that fine, Ms. Norton?
Ms. Norton. Yes.
Mr. Mica. Without objection.
[The information follows:]

[GRAPHIC] [TIFF OMITTED] T6706.007

Mr. Mica. And if you could provide us--again, the purpose
of this is to hold people accountable----
Mr. Potter. Right.
Mr. Mica [continuing]. Make certain it doesn't happen
again, and then to see that the recommendations of the
inspector general are carried through, and, again, that we
restore trust, as the gentleman from Virginia Mr. Connolly said
is so important in this process. So again, we want people held
accountable. We want the board to act, and clean up the mess
and, again, the failure that is so embarrassing here.
Mr. Scovel. Mr. Mica, if I may, Mr. Potter, to his credit,
has reached out to my office requesting specific information
that we obtained from the Authority pertaining to misconduct
and the names of individuals that we believe may have been
responsible for it. My staff met with Mr. Potter and his chief
operating officer yesterday, and we have begun that process to
make all of that information available to them for their
management decisions.
Mr. Mica. Well, again, we have begun that. He said they are
in process. We want it to continue and be complete, holding
people accountable. Otherwise, you know, this becomes a kabuki
dance, and we are not going to put up with that.
Mr. Potter. Thank you, Mr. Chairman, for recognizing the
sensitivity of some of these personnel, and we will deal
offline with you. Thank you.
Mr. Mica. And even if it is by position, I don't care about
the names, but if people have violated a trust, and the
inspector general has helped identify them, and we also have
Ms. Moore and others who are working on implementing some of
the changes, you don't want the same cast of characters or
violators in positions of trust. And we are going to clean
house on the board and with employees and restore the
confidence.
Mr. Davis.
Mr. Davis. Mr. Chairman, let me just say, I think the
board, as Chairman Curto noted, is substantially reconstituted
at this time. We welcome the oversight, the input from the IG's
office and the Secretary's office. We are determined to clean
house, let the chips fall where they may.
Mr. Mica. Well, again, you can give us an interim report,
and, you know, we will--in the new session I will ask that we
follow through, because you want the right things done.
Ms. Norton.
Ms. Norton. Mr. Chairman, I will yield to my colleague from
Maryland, and I will have questions after her.
Mr. Mica. Thank you.
Ms. Edwards. Thank you, Mr. Chairman, and thank you to the
ranking member.
Mr. Scovel, I really--I appreciate the job that the IG
does. I think it is important to look at what you did so that
you don't do it again. And thanks for highlighting that. And so
in that--in that realm I want to ask you a couple of questions
about the contracting and hiring processes or apparatus at the
Authority.
Contracts that were made with board members, those have all
been terminated?
Mr. Scovel. My understanding--and I would ask for some help
from Mr. Curto and Mr. Potter on this--is that those contracts
have been terminated, or they will not be renewed.
Ms. Edwards. And are there still children, grandchildren,
contracts with spouses' law firms; are those things still in
place?
Mr. Scovel. That I don't know.
Ms. Edwards. Mr. Curto?
Mr. Curto. No. I believe the contracts, all contracts with
former board members and former employees have been terminated.
With respect to relatives of employees or board members, I will
let Mr. Potter address that specific question.
Mr. Potter. We are looking at all hiring that has been done
in the past 5 years to determine how people got on board. But I
will tell you this: We are going to be very fair about the
process. If we have relatives of employees who competed open
and fairly for jobs, and if the panels were fair, we are going
to continue to employ some people. There is nothing wrong with
having a relative work as long as they got there in an
appropriate way.
Ms. Edwards. Well, I mean, I don't know that I agree with
that, frankly. I mean, I think it depends on whose authority
they report to, what their employment responsibilities are.
That is why at lots of different agencies and in the private
sector there are prohibitions around those hirings. I mean,
there are a lot of jobs out there, and people may have to find
other things to do.
The contract that was with the law firm of the board
member, is that board member still on the board?
Mr. Curto. Yes. That board member is me.
Ms. Edwards. So it is your wife is the--works at the law
firm that has the contract with the Authority?
Mr. Curto. No. The circumstances relating to that were as
follows: The Authority requested an opinion of counsel from a
law firm. I was not chairman at the time, I was not on the
legal committee at the time, and the general counsel for the
Authority made the decision to retain the law firm. My wife at
the time was an employee of that law firm. She wasn't an
attorney. She wasn't a partner in the law firm. She had no
direct or indirect financial interest in the law firm.
Ms. Edwards. Can I just ask, was that also competed, or was
that just a sole-source contract?
Mr. Curto. It was a decision by the general counsel, and it
was a sole-source contract.
Ms. Edwards. Mr. Scovel, is there a problem with that?
Mr. Scovel. If I may have a moment.
Ms. Edwards. I know I only have a moment and 37 seconds.
Mrs. Schmidt. [presiding.] I am going to yield you more
time because I am interested in this question.
Ms. Edwards. Thank you.
Mr. Davis. If I could add, this was one of those
situations, and I wasn't in the loop in the decisionmaking on
this, but you needed a law firm very quickly to get a very
quick answer. So in a case like that, the general counsel just
goes out to a series of firms, and I guess that was the
decision that was made.
Mr. Curto. Congresswoman, the determination that was made
was that although it wasn't an actual conflict of interest, it
certainly was an appearance of a conflict of interest. And at
the time when the interim report was issued in May, I
immediately made a statement recognizing, stepping back, that
prospectively any actions I take would be to avoid even the
slightest appearance of a conflict of interest.
Ms. Edwards. Thank you.
Mr. Scovel.
Mr. Scovel. Ms. Edwards, if I may, these are the facts as
determined by my audit team. As you well remember, on November
17, 2011, Congress passed H.R. 2112, which amended the Airports
Act to add additional seats to the board of directors and
provided for the removal of directors for cause.
The board apparently was concerned about the impact of that
legislation on the board, and on November 18, 2011, members of
the board instructed the general counsel to obtain a legal
opinion on that legislation. When the general counsel asked
members of the board for possible candidate firms, a board
member, Mr. Curto, not yet chairman, but still a member of the
board, suggested a firm where his spouse serves as the director
of administration. The general counsel then contacted that
firm, and arranged for that firm to begin drafting an opinion
on the legislation. It was a sole-source contract, and it was
executed without the immediate knowledge or involvement of the
procurement and contract department of the Authority.
Ms. Edwards. Thank you, Mr. Scovel.
You know, I would just note that particularly in this
region, there is a lawyer on every corner, and so it is not--
and with lots of different expertise in and around this city.
And so it does strike me that whether for appearances purposes
or for actual conflicts of interest, it sure would make sense
to find another lawyer. And if you need some help, I am sure
there are plenty of people who can do that.
Let me just--one last thing. How many children and
grandchildren of board members are still employed by the
Authority?
Mr. Potter. Well, we do not have an exact count. We are
going through a process.
Ms. Edwards. Is it more than one?
Mr. Potter. Yes, it is more than one.
Ms. Edwards. More than two?
Mr. Potter. I don't have an exact count. We are going
through the process right now of having all of our employees
fill out a form that identifies relatives either within the
Authority or on the board. And that process is currently
underway, and once that process is complete, we will be able to
know.
Ms. Edwards. Mr. Scovel, in your view does it present a
problem to have close relatives who are relatives of board
members as employees of the Authority?
Mr. Scovel. Clearly, it does. And I would like to point
out, Ms. Edwards, that for a long time the code of ethics that
applied to employees, to the staff of the Authority, prohibited
nepotism, yet the code of ethics, until recently revised, that
applied to the board of directors was silent on nepotism. And
it was through that gap that decisions to suggest, if you will,
or to recommend, or even to insist that friends and family
members be hired within the Authority, those recommendations or
suggestions were made by board members.
Ms. Edwards. And have those recommendations been
implemented in policy at the Authority?
Mr. Scovel. My understanding is that the policy has been
changed, or rather that the code of ethics that now applies to
board members with respect to nepotism has been brought into
conformance with what applied to employees as well. It is one
of the recent positive changes I would certainly like to
endorse and commend the board for taking.
Ms. Edwards. Madam Chairwoman, if I could ask just one last
question.
Mrs. Schmidt. Go ahead.
Ms. Edwards. Thank you very much, and I appreciate it.
With respect to the contract with the board member that is
now apparently terminated, I take it, how did that come about?
Who asked whom to authorize the contract, and who approved it?
Mr. Scovel. If I may have a moment, and then I will direct
you as well to Mr. Potter, because both Mr. Curto and Mr.
Potter engaged in, shall I say, missteps or misjudgments in
their service on the Authority. They have been very candid in
their discussions with me and my staff about those events, and
I take it in a very positive manner that they are both here
today and are available to answer all of your questions on
these.
However, as we understand the facts, as my audit team
understands the facts, with respect to Mr. Potter's decision
regarding the former board member, it was not specifically a
contract matter, but rather it was an employment matter, and it
ran like this: Mr. Potter determined that he needed a new
position with a certain person in mind, and that would be the
former board member, but he did not follow standard processes
to create or fill that position. This was an advisory position
for a board member to occupy immediately upon departure from
the board. It did not have a specific job description, but it
did have a paycheck, $180,000 per year, beginning 1 day after
that board member left the board.
There may indeed have been a legitimate and compelling
business need to secure the services of that former board
member, but the process to create and fill the position was
unsatisfactory. And this is the case that is highlighted in our
issued report as an instance where senior officials
circumvented established hiring positions both for current
positions and also for new positions, to the detriment, most
certainly, of the credibility and integrity of the Authority,
and perhaps with a very harsh effect on the morale of all of
the rest of the staff, who knew that this was going on.
Ms. Edwards. Mr. Curto, did--was that contract to the board
member let under your leadership?
Mr. Curto. Yes. Mr. Potter did employ that former board
member this past year while I was chair.
Ms. Edwards. And was there a conversation or other that
ensued with other board members with respect to this, or was
that just a decision between you and Mr. Potter?
Mr. Curto. It was a decision made by Mr. Potter, and he
conferred with me.
Ms. Edwards. Did anyone else on your board ask you to
engage in this contract with this former board member?
Mr. Curto. No.
Ms. Edwards. Did the former board member ask you to engage
her in a contract?
Mr. Curto. No.
Ms. Edwards. And so you and Mr. Potter made the decision
independent of anything or anyone else to let a contract with
the former board member?
Mr. Curto. It was principally Mr. Potter's decision, yes.
Ms. Edwards. So you didn't sign off on it or anything, but
it was under your leadership that it happened?
Mr. Curto. Yes, it was during my tenure as chair, yes.
Ms. Edwards. And so the other board members and staff who
were engaged in behavior that was highlighted as egregious in
the inspector general's report, are all of them still working
at the Authority?
Mr. Curto. I believe Mr. Potter addressed some of that
inquiry earlier. He highlighted three senior-level positions; I
believe the vice president for IT, human resources, and as well
as a retirement in the procurement area. And then below the
vice president level, there are a number of positions that he
referenced earlier in response to an earlier question.
Ms. Edwards. That are open----
Mr. Curto. That are----
Ms. Edwards [continuing]. Or pending.
Mr. Curto. Some are no longer with the Authority, and
others won't be with the Authority.
Ms. Edwards. But on the board, the board members who--who
were in place over this period of this kind of behavior that
is--you know, a lot of which is unethical, who knows what other
labels we would attach to it, how many of those board members
remain?
Mr. Curto. Well, as I related earlier, the board, beginning
in this January, will principally be a newly constituted board.
There will be, I think, approximately two board members that
will have been on the board for more than 2 years. One of them
was recently reappointed by Governor McDonnell. Another is Vice
Chairman Davis, who will have been on approximately about 2
years. Everyone else will have had a tenure of less than 2
years, some as few as weeks, as of January.
Ms. Edwards. Just as a matter for your consideration, do
you think it is appropriate to remain on the board and Mr.
Potter to remain as CEO while under your tenure these actions
took place?
Mr. Curto. I would hope so. I think that the body of the
report, most of the findings and conclusions of the inspector
general's report occurred prior to my time on the board and
certainly prior to my tenure as chair. The misstep that I made
with respect to the matter you referenced regarding the
retention of the law firm, as I indicated, it was certainly an
appearance of a conflict. It wasn't----
Ms. Edwards. Well, the retention of the law firm at, I
think, $100,000 and the contract with the former board member
of $180,000, the travel, and other missteps of who knows how
many thousands of dollars, it is not just a simple matter, and
with that I yield.
Thank you, Madam Chairwoman.
Mrs. Schmidt. Thank you, and I am going to be generous with
everybody, but I am going to yield to myself such time as I
need.
Mr. Curto, I want to follow up on some questions that Ms.
Edwards brought up. Regarding the employment of your wife's--
the law firm that your wife worked in in an administrative
capacity, didn't have clients, wasn't going to lead to a better
paycheck for her, did you tell the board that she was employed
there when that contract was let?
Mr. Curto. In my financial disclosure I made it clear that
my wife worked at that law firm. That is part of the normal
financial disclosures. And when discussing it with the general
counsel, I did.
Mrs. Schmidt. You did?
Mr. Curto. Yes.
Mrs. Schmidt. And the general counsel didn't have a problem
with it?
Mr. Curto. I am not sure it was brought to his attention at
the very outset, but I think once I helped facilitate the
outreach, I then did tell them. I think it was underway at that
time.
Mrs. Schmidt. I am confused. I mean, so you put it in a
financial disclosure. Most people don't read it. I have served
on many boards in my time, and somebody makes a suggestion of a
law firm, and one of the things that we always ask was, do you
have any familiarity with it other than you know that it is a
law firm? And they might say, well, I have used so-and-so as
counsel in my past, but, you know, I don't have any family
members working there. So on the boards that I have served on
in the past, we always brought that out into the open. That
kind of a discussion was not made?
Mr. Curto. That discussion took place after they had been
retained.
Mrs. Schmidt. After they had been retained, OK. So not at
the beginning. OK.
Mr. Scovel?
Mr. Scovel. Madam Chairwoman, just to add to that, and I
think it may have just been clarified, but my audit team was
informed by the general counsel that he was not aware at the
time that he contacted the law firm and arranged for them to
provide the requested legal opinion that Mr. Curto's spouse
worked for that firm.
Mrs. Schmidt. OK. The other troubling aspect that I have is
a former board member that is brought back at a substantial
salary, $180,000--that is actually more than what a Member of
Congress makes, so it is a pretty substantial salary--was
brought back without any vetting, and a special position was
created for this individual, am I correct, or that position
wasn't there before? Mr. Potter?
Mr. Potter. That is correct.
Mrs. Schmidt. Why did we need that position, and was there
any other reason why this--was it a lady?
Mr. Potter. It is a lady.
The reason we needed the position was we have a significant
challenge out at Dulles Airport. The challenge is that we have
very high cost per enplanement rates, largely driven by the
fact that there has been a major capital investment of over $4
billion in recent years with an expanded international arrivals
building, an underground rail to take you from the terminal out
to the concourses, as well as other improvements, including the
doubling of the size of the terminal. As a result of the
capital investments coming to bear in terms of cost to the
airlines, we have had to increase the cost per enplanements out
at Dulles significantly, and it is affecting the competitive
position of that airport.
So when I got on board, I was looking to try and figure out
how we could take advantage of the biggest asset we have at
Dulles, and that is our land. And what I have come across is
the fact that it is a very complicated community. There was a
need for somebody that really understood the community, how
developers work, how we interrelated between ourselves as a
Federal leaseholder and the counties, because development on
airport property obviously affects the counties, and there was
a need to integrate our actions with the economic development
communities in Fairfax, Loudoun, as well as the Commonwealth.
And so I thought that the person that I hired was uniquely
positioned to do that and would be able to ramp up very quickly
an effort to do that. And I will tell you that in the course of
the months that she performed that service, I got to meet and
understand that community in a very rapid way.
Now, in hindsight, as I have told the press and have
readily admitted, my judgment was not good in terms of the
hiring of that person. But given the situation, I wanted to
move quickly to try and do the best I could to generate
additional sources of revenue, nonaviation sources of revenue,
for Dulles Airport. But I readily admit, and I was very candid
with the IG when they came to speak to me about my motivation.
That was my motivation, pure and simple. That board member had
advised others on the board that she was leaving, and I thought
that it was a service that could be performed.
Mrs. Schmidt. Let me ask you, she was leaving. Was it to
take another job, or what--she was leaving the board, and then
suddenly you hired her to do a service outside of a board
member, and you created this position. And I am understanding
that you needed somebody to cobble things together. There was
no vetting. She got $180,000 there. How long did she work, and
what was the reason for leaving the board that she would have
time on her hands and then suddenly use up that time doing this
job? I am confused.
Mr. Potter. Well, she was leaving the board, as she stated,
because between her board duties, the fact that she had been
running a company, and she was dealing with some health issues,
she needed to concentrate her efforts on doing one job, and one
job alone. She was seeking to close down her business and work
a 40-hour week versus an 80-hour week.
Mrs. Schmidt. So she left the board because she had some
health issues. She had a job. Does she own her own company?
Mr. Potter. She did at the time.
Mrs. Schmidt. She did at the time. And so she closed the
company down and got a $180,000 job, and how long did she work
at that job?
Mr. Potter. Well, she ended up working for about 6 months.
I don't know the exact time. I can give you that.
Mrs. Schmidt. And then why did she leave?
Mr. Potter. Because the fact that one of the requirements
in the letter that we received from the Governors and the
Secretary of Transportation and the mayor were to end all
contracts with former board members. In discussions, followup
discussions, with the Secretary's staff, it was made clear to
me that the expectation was we end those contracts under
whatever terms they were, and put them in our past and look
forward.
So we complied with that, and we did as we were instructed.
We ended all of those contracts with the sole purpose of
putting them behind us, starting a new day, and reconstituting
whatever works were required from those contracts.
So I have to tell you, when it comes to those contracts, we
had people who were doing a good service--and I am not talking
about this individual in general--but we had contracts with
former board members who were actually, prior to my time,
recruited by my predecessors to help us do work. For example,
we had a few folks who were helping us with lobbying efforts in
Richmond. I can tell you the contracts that they had were under
$50,000, and you would be hard pressed to replicate that in the
private sector, and----
Mrs. Schmidt. An arm's length for a long time and then
suddenly----
Mr. Potter. But we did not use any consideration. We
recognized that the image of the institution is hurt by the
fact that we have these contracts. We put them to an end, and
the reason that they were problematic was not the work that was
being done, it was the way they were established without
competition. So we put them to bed, and we are going to
recompete for those services that we continue to need. And I am
going to recruit for somebody to perform the services that I
just described because they are very much needed by the
Authority.
Mrs. Schmidt. OK. I am going to do two more questions, and
then I will turn it over to the gentle delegate from this
District. And I am going to be very liberal with everybody for
time since we have gone off the map, but I think this is a very
provocative discussion, and I think you will all agree.
Mr. Scovel, do you have anything to add to the discussion
about the employment of this individual?
Mr. Scovel. No, I don't. What my audit team has determined
is what I have already related for the committee's
consideration. And we have found no evidence to suggest that
Mr. Potter's decision to employ her and for the reasons that he
just outlined were anything other than what he has spoken to
this morning.
Mrs. Schmidt. Do you think that the salary of $180,000 was
a fair salary?
Mr. Scovel. Not for me to judge. I, frankly, don't know
everything that she was supposed to be doing. We were looking
strictly at the process by which she was hired and the apparent
circumvention of established hiring processes for creating the
position and then filling it.
Mrs. Schmidt. Finally, Mr. Wolf and Mr. Connolly have a
bill that would shrink the board, and change the dynamics and
direction of MWAA. How do all of you feel about that? What is
your position insight on their bill?
Mr. Davis. Can I start? Part of the frustration is if this
were just the airports, it worked pretty well. Where this thing
got complicated is the Airports Authority undertook the
responsibility of building the rail project out to Loudoun
County--actually two stops past the airport. It was at that
point this got very complicated. It is not a normal skill set.
Members from other regions started coming in and putting bells
and whistles on the contracting, and it became very, very
divisive. We got into a political food fight is the best way to
put it. The Secretary got involved, and now, I think, we are
going to bring the first phase of the rail project in on time
under the amended budget.
But it got complicated. Virginia, I think, has felt that
this rail system is the largest rail project in the State. They
really felt they needed to have the input and be able to decide
how it should be built and where the stations should be
located. Having members from outside Virginia making decisions
that, in Virginia's judgment, were costing money and not being
cost-effective, I think caused a lot of the problems. And so I
think the legislation comes from that.
When it comes to the airports, you know, I think the system
worked pretty well for a long time, outside of some of the
cronyism that developed.
And I just would add, I think Jack Potter is the best thing
that has happened to this Authority. He was Postmaster General
before this. He has come in. He has had to manage a difficult
board with some of the decisions. But as Mike has said now, he
will have basically a brand-new board with a brand-new
direction.
We have nothing to cover up. It is open kimono. Whatever
the IG says, we want to do the right thing. We serve without
compensation. I didn't ask for this board. Originally when I
was appointed, they said 12 meetings. We had 38 meetings my
first year. It takes a lot of time away, and we do this for the
public good.
So we are doing everything we can. We found, I think, the
best CEO. He has had to answer to a board that has just very
recently turned over. And we are, I think, behind him at this
point in the tough decisions he has to make.
Mrs. Schmidt. Thank you for your input, and I share--my
concern is most of this is--all of this is going on in
Virginia, and yet you have to listen to folks outside the
district, and while they are good-hearted--they have goodwill,
I know, as a local person, and we had zoning issues. Everything
comes to home. And you had somebody outside--we had a township
situation where we owned the zoning, but the county wanted to
put its input in, and we, quite frankly, didn't really care
much about what the county said because it was all local.
So I can understand your frustrations with other areas
talking about where the line should go and where a stop should
go when it is in your backyard and not theirs.
Mr. Davis. I think the board, the new board, is pretty much
in sync is my impression. There were some very controversial
decisions about station placements, PLAs, and construction in a
right-to-work State. But I think at this point the board is
moving in a positive direction, and I think the chairman has
done a good job of uniting it. Some of the decisions made in
the past were made with former board members who had a
different cultural view of the way the place ought to operate.
I feel very good about the direction or I wouldn't stay on this
board. I have got other things to do with my time.
Mrs. Schmidt. Thank you so much for your time.
Ms. Norton.
Ms. Norton. Well, I appreciate, Mr. Davis, that you
indicated that there is a new start and a new, let us say,
regime, and that is why I regret that with Members sitting on
this rostrum, who have very little information about the 1986
Airport Act, deciding this is all a Virginia matter. Just let
me say for the record, nobody could be more sympathetic with
the notion of wanting what happens in one district not to be
interfered with by people in another district, and no one
obviously saw the 1986 Airport Act as anything of the kind, saw
it as very necessary. It was agreed to by all involved.
I would have absolutely no objection to looking at that
1986 act. What I object to is preemptory action by one Member
of Congress to take over the whole Airports Authority when
neither this committee nor any other committee has any
information about why this was done this way.
And this is not the place to hassle this out on a home-rule
basis. If people want to talk about home rule, let's start with
the District of Columbia; then we will get to Virginia. You
have got a compromise on that now. I hope that doesn't get
reopened.
Let me ask a question. I am sorry I was called out for a
few minutes, but I would like to ask a question in relation to
the bill I have just introduced. I introduced it in good faith.
I believe there should be hearings before we decide what to do.
But I introduced it because I didn't want to see us or see the
Airports Authority the kind of hassle it took to get the
procurement regulations that now guide most of the Federal
Government.
So this question is really taken from testimony from Mr.
Curto, who says that the contracting manual and other
procedures to correct best practices and promote fair and
competition is in revision. And he says the manual is a lengthy
and highly technical document. Tell me about it. I am sure it
is.
Now, what I want to know from--I suppose this question is
for Mr. Scovel. And of course I am quoting from Mr. Curto's
testimony, and of course Mr. Potter would be the one to
implement whatever comes out.
Do you believe that the Federal acquisition laws and
regulations, which I didn't--I didn't look to see when they
have been enacted, but all I know is they have stood the test
of time--do you believe that they could be useful here, rather
than going through the kind of procedure which Mr. Curto in his
testimony calls ``lengthy and highly technical'' so that we
could get more quickly to settle what should govern this
independent body that is, for all its effects, a hybrid body
but more closely related to the Federal Government than to any
other part of the compact?
Mr. Scovel. Ms. Norton, thank you. Your question relates
specifically to adoption of the FAR as the acquisition
provision that would apply to MWAA. I am glad you did not ask
for my endorsement of your legislation because I don't believe
that is my role. However, I think I can speak to the underlying
proposition that the FAR, indeed, is a useful benchmark or a
baseline on which MWAA may build its acquisition function.
In fact, relating back to the original Airports Act, which
you mentioned, you will remember that the GAO was assigned an
audit role with regard to MWAA and specifically instructed to
determine whether MWAA's acquisition function was being
executed, quote, ``in accordance with sound Government
acquisition principles.'' And that refers, but not in so many
words of course, to the FAR.
So that is already embedded in one form in the underlying
legislation. And our audit, released on November 1st, used the
FAR as a benchmark as well because we determined that that
would be the best source of sound Government accounting
principles on which to judge MWAA's execution of its
acquisition responsibilities.
Ms. Norton. Well, thank you, Mr. Scovel.
Mr. Curto, Mr. Potter, do you see my point? And do you
agree with Mr. Scovel?
Mr. Potter. I do see your point, Delegate Norton. And I
would just like to comment that our contracting manual has been
reviewed by GAO. It is in compliance with FAA requirements,
because we are spending Federal money, so we have to comply
with those requirements. It has been reviewed by the FAA.
Recently we changed it----
Ms. Norton. Mr. Curto says, ``We are revising our
contracting manual and other procedures.''
Mr. Potter. Right. I am just----
Ms. Norton. Is it revised already?
Mr. Potter. It is in the process of being revised. But over
time it has been revised to be compliant with FAA requirements
because we do spend AIP money.
With the rail project----
Ms. Norton. Mr. Scovel, was the manual in compliance, so
this is something we don't even have to worry about? It was
already in compliance with----
Mr. Potter. It----
Ms. Norton. Just a moment. I have asked Mr. Scovel, who I
think is the authority on this issue.
Was it already in compliance? Do you regard it as already
in compliance? Mr. Curto says they are undergoing a lengthy
revision, so I am just trying to get the facts here.
Mr. Scovel. It was in compliance on a number of important
respects. However, with respect to other important factors, we
would judge it not to be, specifically as it relates to
fostering or encouraging competition.
The sole-source requirement, for instance, in the FAR that
requires all Federal agencies to publish a notice of an intent
to award a sole-source contract before the contract is
executed, to permit watching contractors who may have an
interest in the proposition to come in at the last moment and
say, ``We can deliver that service at a better price,'' that
was not a part of MWAA's acquisition manual, and clearly it
should be.
Ms. Norton. And that, of course, was what I found most
troubling, the number of sole-source contracts, a very
substantial amount, has been unheard of in my own service in
the Government. And the so-called categorical--what in the
world is a categorical exception, for example?
Mr. Scovel. It is an exception to the rule that is stated
in MWAA's acquisition manual that competition for contracts
over $200,000 must be engaged in. However, there were a list of
six categories of exceptions for which that rule could be
waived. It was waived de facto by virtue of being included in
the manual. But justification for that waiver, for that
exception, had to be included in the contract file.
When my audit team went in and looked at a sample of
contracts that had been awarded using these categorical
exceptions, we found 56 percent lacked adequate justification.
So we couldn't tell exactly what was the basis for executing
particular contracts under these so-called exceptions.
Ms. Norton. So, Mr. Potter, you may have misunderstood my
question. I understand that you are in the process of revising.
Well, who wouldn't be, given the criticism that sole-source
contracts have received?
I am simply trying to find whether there is a more rapid
and sure way, instead of having your own manual--which,
remember, you have had your own manual before--to adopt
regulations that would never be questioned because they have
been tested and because they are used every day by virtually
every Federal agency. Why would that not be the fastest and
perhaps best way to get to the best practices?
Particularly considering that these procedures can be
altered to fit a particular agency. So there are small, minor
kinds of alterations because every agency is different. Yet
every agency goes to this tested set of regulations and gives
the kind of fair notice that, to be fair, I think members of
your board never had. I mean, when they are told that there are
categorical exceptions for a contract over $200,000, well, you
can expect that they will then, of course, expect them to be
awarded. So while they are being criticized and while the staff
is being criticized, let's remember that they were, in fact,
abiding by your rules.
And wouldn't, given the criticism that MWAA has received,
wouldn't it put you above criticism to simply adopt the same
Federal regulations that every other agency now has adopted?
Mr. Potter. We have committed to our board to have a new
contracting manual by the first quarter of next calendar year.
We are working very closely with the----
Ms. Norton. 2013?
Mr. Potter. 2013. We are working very closely with the
accountability officer to modify our contracting manual to live
up to the expectations that are in the FAR. However----
Ms. Norton. Are you using the FAR as a guide?
Mr. Potter. Yes, we are. However, we are not the Federal
Government, and there are, for example, appeal rights that do
not exist legally----
Ms. Norton. Of course. And there are many differences that
other agencies have and have adapted in their own regulations.
Mr. Potter----
Mr. Potter. So, in short, we are living up to the spirit of
what you want to do, but it can't be totally comprehensive----
Ms. Norton. I understand.
Mr. Potter [continuing]. Because of restrictions in the
law.
Ms. Norton. And that goes without saying. You understand,
of course, the GAO is going to look at what you produce. If you
are already there, who would want to put you through anything
other than--and if you were following the FAR, I would have no
objection to that.
Mr. Davis?
Mr. Davis. Actually, I think your legislation sets a bar
that we have to meet. It is not clear whether we do it exactly
through the FAR. We need to be a little more nimble on bid
protests and notice requirements and the like.
But I appreciate the fact it sets a bar for us in terms of
the transparency and the notice requirements that we need to
meet. And I think it is fair to say we want to meet that bar.
We may do it slightly differently in some areas, but we could
work with you on that. I think it would be helpful.
Ms. Norton. I would appreciate it. I am suggesting that
anything that keeps from you reinventing the wheel ought to be
useful to you.
Can I ask if law contracts, law firm contracts, all fell
within this categorical category? Mr. Scovel?
Mr. Scovel. They did, Ms. Norton. One of the key categories
was legal, financial, and legislative representational
services. Those were deemed a de facto exception to the rule
that contracts over $200,000 needed to be competed.
Ms. Norton. Uh-huh. I just want to say for the record--I am
sure Mr. Davis will confirm this today--a business often
doesn't give retainers anymore. It essentially makes law firms
compete for their business. Because this is no longer the world
in which we once lived, and that was long before--long before
this recession.
Law firms woke up to the fact that, while you don't always
go with the low bidder, that it is nonsense not to compete any
sizable contract, in the same way that anybody would go to more
than one contractor. Because before you went to do landscaping
in his front yard or before he went to have his home painted,
who would ever go to one painter and say, ``How much does it
cost to paint the front of my house? You've got the job''? If
you wouldn't do that in your own personal business, do not
expect it to be acceptable to the Government of the United
States or to an independent agency that was created by the
Government of the United States.
One more question, Mr. Potter. You were Postmaster General
of the United States, which means you ran one of the biggest
businesses, as it were, in the world. Did you have your own
regulations? What regulations did you use then? And could you
have done these kinds of categorical contracts, or did you, in
the Post Office?
Mr. Potter. Well, we were not under the FAR. We had----
Ms. Norton. Yeah, I understand that you were an independent
agency.
Mr. Potter. We had our own procurement manual. Obviously,
it emulated much of what was in the Federal Government. And,
no, we did not do the type of sole-source contracting that the
Authority has done for years.
Ms. Norton. So you adopted this only because you found it
in place there?
Mr. Potter. Well, I didn't adopt it at all. In fact, I
eliminated the use, put out an order that we will not use, once
I became aware of it, categorical exceptions for professional
services contracts. And I did that months ago. So----
Ms. Norton. You did it when it was----
Mr. Potter. Once I became aware of it, Delegate Norton.
Ms. Norton. Yeah. Well, I am very pleased that you have
done it.
And I appreciate the time you have given me, Madam Chair.
Mrs. Schmidt. Thank you.
Mr. Cravaack, you may have as much time as you need.
Mr. Cravaack. I am the last guy left, so there you go.
Appreciate it.
Congressman Davis, I got a quick question for you. You were
a board member when there was a previous board member that was
rehired; is that correct?
Mr. Davis. Right. Correct.
Mr. Cravaack. OK. How do you feel as a board member not
being referenced in hiring this individual by Mr. Potter and
Mr. Curto?
Mr. Davis. Well, I was aware. I mean, there were board
members it was run by. So it was not----
Mr. Cravaack. So was it approved by the board?
Mr. Davis. No, it was not approved by the board. This is
his----
Mr. Cravaack. Is that standard practice?
Mr. Davis. Generally, the CEO acts, and he sounds this out.
This was a complicated situation in this particular case with
the member who had been a former chairman of the Authority and
who did have an expertise in the area Mr. Potter talks about.
Mr. Cravaack. If I was a member of a board and my CEO took
action and the chairman took out without me really being
involved in the yea or nay, I, as a board member, would be
pretty upset about that action----
Mr. Davis. Right.
Mr. Cravaack [continuing]. I have to admit. To be honest
with you guys, this sounds like a can of worms, I mean, sitting
here taking a listen to this.
Mr. Scovel, tell me, why do you think it came to this? How
did it come to this? How did this board come to this?
Mr. Scovel. Mr. Cravaack, I think it is captured in a line
from the concluding paragraph of our report of November 1st.
MWAA is an independent public body, but over the course of the
last decade and a half, the focus became the independence of
the body and less so on its public responsibilities, to the
extent that, as we phrased it in our report, the prioritization
of personal agendas excluded consideration of the best
interests of the Authority.
And our report is replete with examples of it, I am sorry
to say. I know you asked Secretary LaHood what he thought was
the most egregious example, and he gave you one that appeared
to him. I could answer that question, too. And if I were to try
to pull together examples that are buried like nuggets
throughout our report of missteps--again, I will continue to
use that word--but missteps of senior leadership, both board
and staff at the Airports Authority, it would be a very sorry
tale.
And I know it might sound like a chronicle from ``The
Little Shop of Horrors,'' but it has implications for how these
jewels in the national capital area are run. These are Federal
assets----
Mr. Cravaack. Right.
Mr. Scovel [continuing]. Worth on the balance sheet of
fiscal year 2011 $9.1 billion. They generated revenues in
fiscal year 2011 of exceeding three-quarters of a billion
dollars. Forty-two million travelers passed through those two
airports in calendar year 2011. Every dollar of revenue is
derived directly or indirectly from the taxpayer or the
traveler. And the board, as I stated in my opening statement,
has a fiduciary responsibility to the Government of the United
States and to the taxpayer and to the traveler to make sure
that every dollar is expended properly and prudently.
Mr. Cravaack. Agreed.
Mr. Scovel. And, for instance, if you were to ask me again
what I considered the most egregious example, it would be this:
the fact that, since 2003, 7 former board members and
affiliated firms have been awarded 30 contracts, amounting to
almost $2 million. Out of those 30 contracts, 26 were for
lobbying services. That raises at least the appearance that
these contracts were nothing but a parachute for departing
board members.
One former board member was awarded 16 sole-source
contracts, totaling $262,000 over the past 10 years, the first
such contract only 3 months after the member left the board.
Another former board member was awarded eight contracts,
totaling over $500,000.
Now, I do want to note that as a result of our audit MWAA
has terminated contracts with former board members and has not
renewed contracts with other former board members. And in
September 2012 the Authority approved a new ethics code
prohibiting contracts with board members for 2 years after the
conclusion of their service.
Mr. Cravaack. Well, it sounds like the reason for the
results of this current board is because of your investigation,
Mr. Scovel. Would that be a correct statement?
Mr. Scovel. We have certainly assisted. But I do want to
give great credit to Mr. Wolf and Mr. Latham for alerting us to
it, for putting us on it.
And I also want to give great, great credit to Secretary
LaHood, who had seized on our preliminary findings released in
May, appointed an accountability officer, and together with the
other appointing authorities, delivered a letter in August to
the Authority expressing--and this is a quote--their
``outrage'' over some of the findings that we had reported in
May, and is also now undertaking to renegotiate the lease under
which MWAA operates, occupies, controls, and uses--and those
are the words in the lease--these valuable Federal assets on
behalf of the Department.
Mr. Cravaack. Well, Secretary LaHood said the only reason
this really initiated was from what he read in a newspaper
article. So kudos to him.
Mr. Potter, you didn't understand about the category
issues. As the CEO, how could you not? You said you only found
out about it a couple months ago. How could you not be aware of
these?
Mr. Potter. I was not aware of the use of categorical
exceptions. I was aware of some. For example, we buy off of a
COG contract, the Council of Governments for the metropolitan
area. That is one of the procurements that is considered a
sole-source contract. And, again, I think we need to work
through how we categorize some of those.
Again, I was not aware of the history that was just
described was over a 10-year period of time. So I wasn't aware
of those contracts. They weren't coming to me for approval. And
once I became aware of them, again, I moved very quickly to try
and resolve those matters.
Mr. Cravaack. Well, I appreciate it.
In the military we have a thing called ``lack of
confidence.'' And to be honest with you gentlemen, I have a
supreme lack of confidence in your board. And if it was up to
me, which it is not, I would dissolve the board and create a
new one. But that is just my opinion.
Mr. Davis. Fine with me.
Mr. Cravaack. Yeah. I know. Mr. Davis going----
Mr. Davis. Fine with me.
Mr. Cravaack. Hey, I am ready to pull the ejection seat,
right?
Mr. Davis. We get paid nothing. I mean, as I said, 38
meetings----
Mr. Cravaack. I understand that.
Mr. Davis. It is a labor of love. And although my
perspective might not have always been perfectly appreciated, I
look at where we are today versus 2 years ago, and I say, just
give us some time. We are really moving in the right direction.
These guys are determined to take us there, if that is any
comfort at all. Keep watching us. We want to prove ourselves.
Mr. Cravaack. Thank you, Congressman. I appreciate it. I
yield back.
Mrs. Schmidt. Thank you.
And I want to thank the gentlemen for coming. You were very
courageous and very open, and we appreciate that. And good
luck. And may you all have a good holiday on Thursday.
We will end this. Thank you.
[Whereupon, at 11:20 a.m., the committee was adjourned.]