Result of audits: UIPA leader wants the authority to be 'squeaky-clean'

Brice Wallace 

The new executive director of the Utah Inland Port Authority is hoping the organization becomes “squeaky-clean.”

Ben Hart’s comments come in the wake of a pair of state audits calling for changes at the port authority designed to beef up oversight and compliance with state procurement policies.

During a port authority board meeting early this month, Hart noted several changes already taking place at the authority — one being the advancement of a compliance director to chief compliance officer — and several more that are planned, including the hiring of a chief financial officer.

One of the audits contains several recommendations and 27 checklist items for board members to follow.

“It’s a lot,” Hart told the board about the audit recommendations. “We appreciate that opportunity to try and get better, and our goal is to implement not only every one of those 27 best practices and the other recommendations, but also continue to work on any statutory changes that we need, and also make sure that, the word that just comes to mind is that we’re squeaky-clean.

“I want to be associated with the port authority as a squeaky-clean agency that does everything by the book and is fully transparent. So you have our commitment, again, that we will be working toward that standard.”

Hart said the board’s Oct. 11 meeting (after The Enterprise press deadline) would feature a first draft of a business plan for the authority. By its November meeting, a new procurement policy would be presented to the board. He also said that, with a few exceptions, the authority has canceled some sole-source contracts, or agreed with the vendors that they would be mutually terminated, or that they will expire at month’s end.

“We hope that as we’re going through our meetings, particularly over the next two or three meetings, you’re going to notice a lot more transparency,” he said. “We’re going to be bringing contracts back” for board reconsideration, including those related to new hires, he added.

In late September, Hart said the port authority had put the brakes on big-ticket spending items until a master plan is in place to help guide the future of its 1,600-acre jurisdictional area in Salt Lake City’s Northwest Quadrant area. The master plan process could have a request for proposals in place by November and a vendor selected by year-end. Then a nine-month process will include outreach events and receiving public input.

The new approach follows criticism of the port authority contained in the state audits released in late September.

An audit by the legislative auditor general acknowledged that the authority is still developing but recommended it needs greater focus on planning and increased board involvement, stronger oversight and management of procurement and contracts, and uniform reporting requirements. It noted that the authority had $150 million in bond proceeds largely unspent with the master development plan in its beginning stages.

The audit found that 81 percent of the authority’s contracts were obtained through the sole-source, or no-bid, method.

It recommended that the authority complete its master development plan prior to any major expenditures from bond proceeds. It also called for the authority to appoint an audit committee and appoint a board member as treasurer.

In a response to that audit, the authority said it “wholeheartedly” agreed with all the recommendations and the other best practices and had taken several steps toward complying.

A subsequent audit by the state auditor’s office focused only on the authority’s procurement practices after the office received a hotline complaint that alleged the authority improperly procured a contract for a communications and logistics management network worth $2 million. The office said a “key weakness” in the authority’s purchasing policy was that the sole-source procurement policy lacked adequate transparency and accountability. It recommended adding those requirements to its policy “to ensure competition is encouraged, and procurement processes are reasonably transparent (publicly noticed) and accountable (documented).”

In a reply letter to the office, board Chair Miles Hansen said the authority would review and update the procurement policy by November.

The audits came after a white paper was released that studied a proposed port authority transloading facility. The report was by Robert C. Leachman, professor of industrial engineering and operations research at the University of California at Berkeley and principal at Leachman & Associates LLC.

In the 51-page white paper, Leachman concluded that a proposed transload facility near Union Pacific Railroad’s intermodal terminal in Salt Lake City, where imported goods would be switched from rail to truck trailers, “will have a difficult time securing a substantial amount of business.”

“The facility is unlikely to attract imports destined to points outside the Intermountain region,” it said, adding that large nationwide retailers practice supply chains that offer lower costs than can be realized handling the goods via Salt Lake City.

Warehouses in the Greater Salt Lake City area or the Greater Denver area have routes that are too short to re-coup the labor costs of switching goods from marine containers to domestic trailers, it said. “It will be difficult,” it said, “for the proposed facility to secure a steady, ongoing import business large enough to fill a typical-sized facility.”

Likewise, the export market is much smaller than the import market and the volume “would be quite modest,” it said.

The white paper also says the proposed facility “is unlikely to foster a significant reduction in emissions associated with imports.”

The authority could instead be beneficial to Utah by placing a regional distribution center or online fulfillment center on land it controls near the Union Pacific property, the report said.