RALEIGH — A state Department of Transportation agency failed to seek competitive bids when it gave out contracts worth hundreds of thousands of dollars to a Raleigh consultant, and an investigation found other irregularities in the spending of federal grants worth millions of dollars.
Shelton A. Russell of Cary resigned as head of DOT’s Business Opportunity and Workforce Development office in December, as an internal investigation was winding down. The office spends mostly federal grants – more than $6 million since 2004 – to nurture businesses owned by minorities and women and to help them qualify for DOT contracts, mostly as subcontractors on road projects.
Russell, 48, said the accusations were unwarranted and that he stepped down when he saw the investigation was going against him. He defended his work at DOT.
“I think I did a great job,” said Russell, who had been in charge of the BOWD office, with about 18 employees, since 2004. “This thing caught me by surprise in terms of suggesting that I was operating inappropriately.”
Russell’s boss, Anthony W. Roper, was allowed in January to transfer from a top Raleigh job, as one of four DOT deputy secretaries, to a lower-paying, mid-level DOT job based in Edenton. Roper now serves as operations engineer in DOT Division One. A Jan. 13 investigative report by forensic accountants faulted Roper for “permissiveness” when he approved 19 noncompetitive contracts that should have been reviewed by DOT purchasing managers.
“Top management was setting bad examples and getting away with it,” said the report, released last week by Eric Boyette, then DOT inspector general. “We recommend a review of how ethical standards are communicated and enforced.”
Roper’s departure might not be related to the investigation. Two deputy secretaries have been ousted by the new DOT secretary, Tony Tata, who took charge after Gov. Pat McCrory’s inauguration in January. A spokeswoman said Roper had expressed a desire to return home to his family in Hyde County. Roper did not respond to a request for comment.
Boyette released a nine-page report of findings and recommendations he had commissioned last fall from a pair of accounting firms. He promised last Tuesday to provide follow-up details – but by Monday he himself was out of a job. A secretary said Boyette was no longer DOT’s inspector general, its chief internal auditor, and had been reassigned to another post.
Attempts to reach Boyette by phone and email were unsuccessful.
The investigation characterized Russell as ignoring DOT rules for competitive bidding, and other checks and balances, when he made unilateral spending decisions that Roper and others should have reviewed.
Russell had “personal relationships” with some vendors who won contracts, Boyette said. He said Russell handed out $97,180 for awards banquets, scholarships and other uses to legitimate organizations, but for purposes outside the agency mission.
“It appears they were chosen for the personal edification of” Russell, the report said.
Russell acknowledged minor relationships that had developed after he met two vendors through their DOT work. He scoffed at “the idea that I steered contracts toward folks.”
DOT released files on 18 contracts worth $1.1 million awarded between 2003 and 2012 to Raleigh-based Bridges Consulting Group LLC. Most of the documents were signed by Russell’s predecessors and, he said, approved by his superiors.
“That was not my selected vendor, but I was encouraged to do that contract,” Russell said
The N.C. Secretary of State’s website reports that the Bridges company was dissolved in 2000. Its president, W. Maurice Bridges, could not be reached for comment. State court records list tax and bank liens against Bridges, who was sentenced to probation in 2007 for failure to pay income taxes. Bridges could not be reached for comment.
A procedural problem
No DOT employee was accused of spending public funds for personal use, or spending it for services that were not performed. Boyette said there was no evidence of wrongdoing, and no need to seek involvement by the State Bureau of Investigation.
“It’s not like the money was being spent on things you wouldn’t approve,” Boyette said. “It’s the process and the way it was being done.”
Boyette’s report also said that:
• Russell and a subordinate, Marvin Butler, failed to report they held outside jobs, and they used their DOT computers in connection with the jobs. Butler was suspended without pay for two days, Boyette said. Russell said he had informed his boss about his marketing job.
• Russell’s office took in more federal money than it could spend, exceeding time limits spelled out in the grant awards. Only $4.8 million of $6.4 million awarded since 2004 has been spent. “One reason that funding was allowed to accumulate is that BOWD management ... did not include others in making decisions,” the report said.
• Russell used an assistant’s state purchasing card to buy office supplies and pay for services, when he should have gotten his own card. Russell said it was a card for the office, not for his assistant.
The report said the workforce development office has little to show for the money it has spent, with low numbers of minority- and woman-owned businesses winning DOT contracts.
But Russell argued that the program has shown results, and Boyette agreed.
“There is definitely a benefit from this program,” Boyette said. “It just needs proper management, and good ethical leadership at the top.”
Russell said he always followed state policies as he understood them, but he realized it was time to leave DOT.
“The wise thing for me to do is fall on the sword,” Russell said.
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