Texas workers cut while firm spends

Brenda Bell

Published: Tuesday, Nov. 1 2011 12:00 a.m. MDT

AUSTIN, Texas -- For more than a year before Texas canceled its $144 million contract with an engineering firm it had hired to handle more than $1 billion in federal hurricane disaster relief grants, state managers warned that the firm, HNTB, had radically overspent its budget and should be relieved of most of its duties.

In the end, it was some of those same supervisors at the Texas Department of Rural Affairs who were fired and HNTB that carried on "full steam ahead," in the words of one of the supervisors.

''Everyone was shocked," recalled a manager who survived the November 2010 purge but later left the department. "Everyone knew then the rumors of HNTB taking over were true."

In February, Rural Affairs Executive Director Charlie Stone laid off his disaster recovery division -- about 35 employees, almost all of them earning a fraction of the salaries the government was paying HNTB -- and outsourced their work to the contractor. According to HNTB's contracted billing rates, its 14 highest-paid employees charge between $200 and $360 an hour for their services, though the highest-paid Rural Affairs employee made $126,000 a year, or $61 an hour.

As a state Senate committee begins an inquiry this week into how the hurricane relief money has been managed, the Austin American-Statesman has learned that HNTB is positioning itself for more state work.

In September, the Department of Public Safety contracted for HNTB's services to support disaster planning and response -- a broad range of duties now carried out by the department's Division of Emergency Management.

The division coordinates the state's emergency response to hurricanes, wildfires, floods and other natural disasters and deals with homeland security. Through various programs, it disbursed $397 million in Federal Emergency Management Agency grants between September 2009 and August 2010.

State and federal records show that HNTB spent 90 percent of the money budgeted for managing infrastructure grants to communities stricken by hurricanes Ike and Dolly while seeing only 20 percent of the projects to completion. The Texas Department of Housing and Community Development, which managed the housing component of the hurricane relief program without an outside contractor, stayed within its budget.

HNTB is a Kansas City-based company with deep ties to Gov. Rick Perry's administration, having given close to a half-million dollars to the Republican Governors Association, which Perry formerly led. It was the lead consultant for Perry's proposed (and eventually abandoned) Trans-Texas Corridor highway project.

Until mid-2009, Ray Sullivan, Perry's presidential campaign communications director and his former chief of staff, was a lobbyist for HNTB. Reggie Bashur, a Perry campaign adviser, still is, according to Texas Ethics Commission reports.

HNTB's engineering contracts with the Texas Department of Transportation, whose commissioners are appointed by Perry, have earned the firm $119 million over the past four years, according to figures provided by the department.

As for the Department of Rural Affairs, Stone was dismissed as executive director in early March by the new chairman of the Rural Affairs governing board, who is also appointed by Perry. The agency was later dismantled, its remnants merged with other agencies in a long-anticipated budget-cutting move championed by Perry, who shifted responsibility for both housing and infrastructure disaster grants to Texas Land Commissioner Jerry Patterson.

''It was like a movie where everyone dies in the end," quipped a former employee. He and several former co-workers who were interviewed for this story requested anonymity, saying they feared for their job prospects in state government or those of their spouses. Stone did not respond to requests for comment.

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