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Published: Sep 29, 2007 12:00 AM
Modified: Oct 02, 2007 07:30 AM

Consultant's review of DOT under wraps

McKinsey & Co. was asked to prepare a sweeping evaluation of the transportation agency, but DOT and the company are keeping a tight rein on the information

 

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A 'NEED TO KNOW' BASIS

In an April 11 contract in which McKinsey & Co. was hired to assess the state Department of Transportation, DOT officials promised to get written permission from McKinsey before they released any reports they received from McKinsey, or before they made public reference to McKinsey:

USE OF NAME AND REPORTS

In the event it is awarded a contract the Contractor may, in connection with the provision of services, furnish the State with reports, analyses or other such materials (the "Materials"). The State understands and agrees that any such Materials will be furnished solely for its internal use and may not be furnished in whole or in part to any person or entity other than as described in this Section without Contractor's prior written consent. The State may furnish Materials to any of the State's employees who (I) need to know such information, (II) are informed of the confidential nature of the Materials, and (III) agree to comply with the restrictions stated in this Section. The State further agrees that, without the Contractor's prior written consent, it shall not refer to Contractor or attribute any information to Contractor in any communication external to the State for any purpose, including without limitation in press releases or web sites. The provisions of this paragraph are subject to the requirements of the laws of the State of North Carolina, including, by way of example and not as a limitation, the North Carolina Public Records Act, N.C. General Statue[sic] Chapter 132.

BLACKED OUT

McKinsey & Co., a management consulting firm with offices in 51 countries, was one of a handful of firms that bid in March for a contract to evaluate the state Department of Transportation's structure and strategy.

McKinsey's proposal was incorporated into a pair of contracts it signed with DOT in April and in June for a total of $2.5 million. When DOT officials released the contract documents in response to a public records request from The News & Observer, most of McKinsey's proposal was blacked out.

The blacked-out information covered several pages. It included details about:

* The company.

* The specific employees who would oversee the DOT job.

* McKinsey's work plan for accomplishing what DOT wanted.

* How much money McKinsey wanted for its work.

Bid prices and work plans frequently are key elements in competitive bids for government contracts, which are public records under state law. An exception in the public records law allows a bidder to request confidentiality for information it deems a trade secret.

A DOT official said McKinsey requested the action because it considered the information proprietary.

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DOT leaders decided they needed an outside consultant to analyze their problems and recommend solutions. "Our credibility would not be as good as if someone from the outside assisted us," Foster said.

But DOT officials do not plan to provide any report created by McKinsey when they update a legislative committee in October on their work to modernize the department. Legislators will hear DOT's assessment only.

"No, it's all going to be us," Foster said.

Jenkins, co-chairman of the committee, wants to hear McKinsey's findings -- straight from the consultant's mouth.

"I would expect McKinsey to make a report," he said.

9,000 DOT responses

McKinsey surveyed all 13,000 DOT employees, and 9,000 responded, Foster said. McKinsey conducted 60 interviews with DOT leaders, held nine focus-group talks with 112 employees and interviewed members of the state Board of Transportation and about 20 legislators, business people and local and regional transportation officials who work regularly with the department, he said.

Asked about the heavily blacked-out contract documents, Foster said McKinsey wanted to shield its information from competitors.

"Clearly they felt that it was very proprietary in terms of their methodology," he said.

Foster referred questions about the deletions to DOT's lawyer, Elizabeth McKay, a special state deputy attorney general. State officials declined to make her available for interviews.

DOT officials provided the heavily blacked-out contract documents in response to an Aug. 30 request from The N&O. They said they did not provide reports from McKinsey because none existed.

The N&O filed an expanded public records request Tuesday for all communications from McKinsey and for DOT documents related to McKinsey's work. A DOT spokesman said Friday that department officials were working to fulfill this request.

State law allows businesses in some cases to request confidentiality for information they deem "trade secrets" in contract bids and other documents that otherwise are considered public records.

Amanda Martin of Raleigh, a lawyer for The N&O and the N.C. Press Association, said DOT lawyers appeared to have gone too far in holding back contract information, including the dollar amount of McKinsey's bid for the job and a description of the work it would do.

"I believe the state is withholding more information than it is legally entitled to withhold," Martin said.

She said there is nothing in the contract documents to change the original requirement that McKinsey file written reports about its evaluation of DOT. And she said DOT officials did not have the power under state law to promise that they would not release McKinsey's reports without written permission from McKinsey.

Provision challenged

"I think this is an illegal provision," Martin said. "The state does not have the ability to enter into this contract as it is written."

Jim G. Humphrey, Charlotte city transportation director, wants to know what McKinsey reported to DOT after it interviewed him and a handful of his colleagues from across the state. Humphrey and other local officials have complained that DOT is centralized and secretive and not attuned to urban needs.

"We had one meeting to share some concerns, but I'm not even sure that our concerns are on a list somewhere that someone is looking at to see if there is a way to address them," Humphrey said. He said he has seen only a brief summary prepared by a DOT administrator.

"However many millions of dollars they have spent and thousands of interviews have taken place have been narrowed down to four or five bullets -- each having 10 words," Humphrey said. "Words like 'accountability.' "


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