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Transportation Cabinet seems to attract trouble

FRANKFORT — Nothing is more constant in Kentucky state government than scandal at the Transportation Cabinet.

If it's not alleged bid-rigging on road construction contracts — currently the subject of an FBI investigation — it's bribery demands by cabinet inspectors, land deals that benefit cabinet employees, illegal hiring and firing based on politics, alleged business favors for the governor's mistress and child pornography on cabinet computers.

And that's all just in the last few years.

Old Frankfort hands say ne'er-do-wells are drawn to the Transportation Cabinet for the same reason the notorious Willie Sutton (the original ”Slick Willie“) claimed to rob banks: ”Because that's where the money is.“

The cabinet employs about 4,500 people in offices and garages throughout the state and spends up to $2.5 billion a year.

”The cabinet is a large pool of available business for many industries in Kentucky,“ said state Sen. Julian Carroll, D-Frankfort, a former governor. ”Not only for road contractors, but for the asphalt industry, the concrete industry, signage businesses, seeding business for the side of roads, insecticide spraying and many others.“

On the campaign trail, gubernatorial candidates predictably pledge to clean up the Transportation Cabinet if elected. But time and again, the winners — who tend to get a lot of campaign cash from road contractors — see history repeat itself on their watch as FBI agents roll in the door once more.

In 2004, Gov. Ernie Fletcher declared that he finally had solved the problem by appointing retired Air Force Gen. Maxwell Clay Bailey as transportation secretary. Bailey was a highly ethical military man with no alliances to Kentucky politics or asphalt, Fletcher said.

That was true — but before too long, Fletcher replaced Bailey with Williamsburg Mayor Bill Nighbert, who had plenty of alliances. Nighbert muzzled the cabinet's internal watchdogs, got indicted twice in an investigation of state hiring practices and nurtured a close relationship with prominent contractor Leonard Lawson.

Cabinet records show that, under Fletcher, Lawson and other contractors were invited to weigh in on the careers of engineers who oversaw their projects. Fletcher chose one of Lawson's employees for the cabinet's No. 3 post. When Lawson objected to an inspector general's draft report about expensive and questionable changes to contracts held by Lawson's companies, the cabinet fired the inspector general and withheld his report from the public for months.

The FBI now alleges that Nighbert may have played a role in the sale of confidential cabinet bid estimates to Lawson. Nighbert's attorney denies that allegation. Nobody has been charged.

Over time, the Transportation Cabinet grew hazardously cozy with a small pool of major road contractors, and the businessmen exerted undue influence, said Transportation Secretary Joe Prather, appointed to clean up the cabinet by Gov. Steve Beshear.

”It's built to a peak in recent years,“ said Prather, a former state lawmaker. ”That's the situation we found ourselves in when we walked in the door on Dec. 12.“

Not everyone agrees. The Kentucky Association of Highway Contractors argues that the Transportation Cabinet does not have a recurring problem with scandal, except in distorted and dishonest newspaper stories.

”I think it's unfortunate that these allegations come about,“ said Charles Lovorn, executive director of the contractors group. ”In many cases, this is inflated in the minds of the media.“

Lack of competition

Observers warn that the chummy relationship between the Transportation Cabinet and road contractors — plus contractors' friendships with governors and state lawmakers — opens two holes in the road-building process that are ruthlessly exploited.

The first hole: too many contracts are awarded without competition. As a rule, single-bid contracts cost more than competitively bid contracts; but in many parts of Kentucky, only one contractor will submit a bid. In recent years, for example, Lawson's former company Mountain Enterprises dominated the paving business in Eastern Kentucky with single bids.

Critics suggest that contractors carve up the state to establish their own turf and avoid competing against one another. In 1983, Mountain Enterprises pleaded guilty in federal court to such a practice — illegally colluding with its competitors on state road bids —– and it paid a $150,000 fine.

House Transportation Chairman Hubert Collins, D-Wittensville, said Kentucky is long overdue to fix this problem. ”We had a project recently in Johnson County for $1.25 million,“ Collins said. ”There were four bids, and it came in under estimate. That's what we want to see.“

The second hole: Too many change orders are approved after a project is awarded, expanding the work and often adding millions of dollars to the cost. In some instances, the changes were not shown to be necessary, but they demonstrated contractors' influence inside the cabinet, according to the 2004 inspector general's report.

The transportation secretary should personally supervise change orders — and conservatively — so they don't get out of hand, said C. Leslie Dawson, who was Gov. Martha Layne Collins' transportation secretary in the 1980s.

”Too often over the years, it seems, changes are made in road contracts,“ Dawson said. ”And I don't recall seeing change orders that decrease the bid.“

A sprawling empire

Even if contractors could be held at a professional arm's length, transportation secretaries would struggle with another problem, observers said: Watching over thousands of employees at the cabinet's huge Frankfort headquarters and scores of district offices and highway garages from Paducah to Pikeville.

The sheer number of jobs alone can create problems.

The hiring investigation during Fletcher's administration started in part with Republican political demand for merit-system jobs at highway garages, which can be one of the few attractive employers in some rural counties.

Fletcher's predecessor, Paul Patton, had a transportation office filled with half a dozen ”principal assistants,“ who were politically connected Democratic officials with salaries up to $76,000 and vague duties. Some simultaneously held other full-time jobs, including a U.S. Postal Service carrier.

The cabinet's inspector general, David Ray, said his office keeps busy investigating about 150 to 175 cases a year, many of them possible ethics conflicts inside the cabinet.

The cabinet ”didn't become the giant that it is until the mid-1950s, with the advent of the interstate highway system,“ Dawson said. Governors before that had highway commissioners, but their chief concern was building modest roads between county seats, he said.

The key to managing a sprawling empire, Dawson said, is strict supervision.

”To do the job right, you are going to have to keep a close eye on the money and likely upset some people,“ he said. ”But if you don't do it right, you can have the FBI on your tail.“

Prather, the current transportation secretary, said there's no way to quickly get control of the cabinet. He said he's trying to install people of integrity in the top appointed positions, while guaranteeing that cabinet engineers — who are career employees — can direct the actions on road projects as they think necessary, without pressure from above or outside.

”I will be absolutely livid if I find out that someone in the cabinet is making decisions for the wrong reason or because of undue influence,“ Prather said. ”My mission is to return the cabinet to the condition where Kentuckians can have pride in it.“