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

******

CORRECTION

A front-page story Saturday understated the amount the state Department of Transportation is paying a management consultant, McKinsey & Co. The correct total is $3.6 million. DOT agreed in an April 11 contract to pay McKinsey $1,098,250 to evaluate the department. In a June 19 contract amendment, DOT agreed to pay McKinsey $2.5 million more to help department officials change DOT's structure and organization.

******

State Department of Transportation officials are paying a consultant $2.5 million to help make the agency more responsive, accountable and transparent.

They are keeping much of the work secret.

Attorneys for DOT and McKinsey & Co., an international management consultant hired in April to evaluate DOT, blacked out several pages of contract details and stamped other pages "CONFIDENTIAL" before DOT released them to The News & Observer.

Other contract documents indicate that McKinsey initially was asked for a candid, sweeping assessment of DOT's "strategic direction and organizational structure." It was expected to file reports in May and June.

DOT has declined to release a word of its consultant's findings. The April 11 contract includes an unusual pledge that DOT will seek McKinsey's permission before making public references to McKinsey or releasing any "reports, analyses or other such materials" it receives from McKinsey.

DOT officials now say they did not request or receive any written reports from McKinsey, whose contract ends in mid-October.

"They verbally work with us and assist our team in taking that information," said Mark L. Foster, the department's chief financial officer. "No, there is no report. ... They gave us a presentation on their software or whatever, of what they found."

Foster said there was no attempt to hide the results.

"This is not a secretive thing by any means," he said.

By all accounts, McKinsey got an earful of bad news when it surveyed thousands of DOT workers and interviewed at least two dozen key legislators, state officials, business executives and local transportation officials. Foster confirmed that DOT employees complained that they lack a shared understanding of their mission. He briefly described other criticisms: Road projects cost too much time and money. It's hard to figure out who is responsible for any DOT project.

'No unified vision'

"There was no unified vision in terms of goals and strategic direction," Foster said in an interview. "Loud and clear, it came out."

Foster, 53, came to DOT from the corporate world in 2003. He is one of the chief architects of what he calls a transformation intended to make DOT more businesslike and to rebuild its sagging credibility with state leaders.

"We knew that unless we were able to make DOT more efficient and sort of get our business act together, it was going to be very difficult to go out and argue for more money," he said.

Gov. Mike Easley this year rejected as "absurd" DOT's forecast that North Carolina would fall $65 billion short of needed transportation funds over the next 25 years. Legislators spurned requests for new transportation funding.

Sen. Clark Jenkins, a Tarboro Democrat who is one of the legislative leaders McKinsey interviewed last spring, says he admonished DOT leaders to reassess their performance. "A lot of people thought that needed to happen before they sent any new money to DOT," he said.

Jenkins has prodded transportation officials over the past several years to speed their work on highway projects.

Legislative critics often cite the U.S. 70 Clayton Bypass as an example of inefficiency at DOT. Planning for the highway started in 1991. Construction began in 2005 and is ahead of schedule, thanks in part to dry weather this year, but DOT was faulted for design and environmental problems that delayed the start of work for several years.