UDOT didn't have documents to support $13 million settlement

Published: Monday, April 11 2011 11:00 a.m. MDT

SALT LAKE CITY — A state audit of the Utah Department of Transportation ordered by Gov. Gary Herbert couldn't find documentation to support a controversial $13 million settlement payment secretly paid to a failed bidder.

UDOT "did not obtain complete and adequate documentation to support the settlement" and did not have formal policies and procedures in place to resolve such conflicts, according to the audit released Monday.

State auditor Auston Johnson said although what was a new bidding process worked in the end, the settlement appeared to suggest otherwise because it took place so quickly and with so little information.

"Everything around it makes it look like it was done deceptively and I don't believe that it was," Johnson said. "I think they could have done a better job of documenting, and getting the documentation for it, but I think that was the right step."

Johnson pointed out in his management letter attached to the audit that his office's review "did not include determining whether it was appropriate for UDOT to agree to a settlement."

UDOT spokesman Nil Easton said the bidding process is already being strengthened and noted settlements don't happen often. "For us, it was all about learning to do it better," Easton said.

The governor's deputy chief of staff, Mike Mower, said the audit "found absolutely no evidence of undue influence" on the bid award. Mower said Herbert has met with UDOT's executive director and is satisfied the needed improvements to the process will be made.

The settlement surfaced in the weeks before the November election, amid questions about the influence of campaign contributions to the governor on the award of state contracts, especially the record $1 billion-plus reconstruction of I-15 through Utah County.

Herbert accepted some $82,500 in contributions from members of the winning bid team on that project, Provo River Constructors. One member of the bid team, Guy Wadsworth, contributed $50,000 and had two private meetings with the governor before the contract was awarded.

The governor and legislative leaders were surprised by the settlement, quietly negotiated by UDOT Executive Director John Njord months earlier to avoid any delays on the project.

The 2011 Legislature passed a new law requiring UDOT to seek approval for future settlements.

An adviser to the governor, Kirk Jowers, head of the University of Utah's Hinckley Institute of Politics, said despite the hard hit Herbert's campaign took over the controversy, the governor still won big last November.

"I think he was vindicated in the election and nothing was changed with that in this audit," Jowers said. "It's his choice now whether he will take up the mantra on being a reformer" and extend some of the audit's findings on transparency and conflicts of interest to other areas of state government.

In its written response to the audit, UDOT said fighting the challenge from the losing bidder, Flatiron/Skanska/Zachry, would have delayed the rebuilding of I-15 through Utah County and increased costs by $33 million over 18 months.

Other costs of not allowing the winning bidder to go forward with the project that's now about halfway completed would have added as much as $7 million a month to that total, UDOT said.

Rebidding the project, the other option to the settlement, carried a price tag of between $20 million and $30 million, UDOT told the auditors, in addition to having to pay Provo River Constructors for its costs.

So, UDOT said it entered into negotiations with Flatiron and proposed paying the "certified costs to prepare their bid proposal."

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