2nd Utah inland port audit blasts lack of ‘transparency and accountability’ in contracts

SALT LAKE CITY — A second audit of Utah Inland Port Authority practices emphasizes again that the agency should adjust its contract agreement policy, which state auditors say “lacks adequate transparency and accountability.”

The report, released by the Utah Office of the State Auditor Thursday, focused on a complaint the office received about a $2 million communications and logistics management network deal. The port reached the agreement through a sole source procurement, meaning that it didn’t go through a bidding process.

State auditors found that the port authority is “not subject” to the Utah Procurement Code; however, they add, the Utah Inland Port Authority’s policy presents a pair of weaknesses. The report says that the agency’s policy lacks “documentation of a sole source procurement justification” and “public notification of sole source procurement, including its justification,” which may cause issues with accountability and transparency, respectively.

They recommend that the port authority update its policy to require public notice of contracts and written justifications for any sole-source procurements in the future.

“Procurement policies are intended to provide a good value for taxpayers. Although state statute permits sole source procurement, these procurements can still be designed to improve accountability and prevent abuse,” Utah State Auditor John Dougall said in a statement Thursday. “Increasing transparency, such as providing notice prior to granting a sole source contract, allows possible suppliers to step forward when they believe they have a possible product or service of which a governmental entity might be unaware.

“Because of the prominence of the Utah Inland Port Authority, it should strive for the best and strongest procurement policies possible,” he said.

Miles Hansen, chairman of the Utah Inland Port Authority board, in a response to state auditors on Sept. 15, said inland port management is currently “reviewing and updating” its procurement policy. The agency’s review is expected to be complete by November, which will dictate any changes to the policy.

He added that the board has promoted one of its staff members to serve as a chief compliance officer, a position that will oversee improvements to financial oversight, transparency and accountability among other responsibilities.

“We are a learning and growing organization,” Hansen wrote. “We are very appreciative of any suggestions for improvement and look forward to implementing the recommendation made here in an expeditious manner.”

The audit findings released Thursday follow a separate audit of other Utah Inland Port Authority practices released last week. The first report also stressed the importance for the agency to update its procurement policies among a few “concerns.” The biggest concern that report highlighted, however, is that the port authority was making financial commitments without “adequate planning, gaps in organizational structure that reduce internal controls, and the need for stronger procurement and contract management.”

It also raised concerns about the inland port’s initial director, Jack Hedge, having “sole discretion” to make contracting decisions “unilaterally.” Hedge, now the agency’s president, announced earlier this month that he would retire at the end of October.

Meanwhile, a report published by a national logistics expert earlier this week, raised concerns about some of the projects the Utah Island Port Authority planned to build in the coming years, arguing that the facilities would have a “very difficult time attracting enough business” to succeed.

The Utah Inland Port Authority approved $150 million in bonds last year for major projects that would build up the inland port in the coming years. Ben Hart, the port authority’s newly hired director, announced Tuesday that the agency is temporarily pausing all major capital spending until it creates a master development plan, amid the concerns brought up over the past few weeks.

“Until we have a really good, long-term master plan in place, we want to hold off on any major expenditures,” he said. “For us, hitting pause to make sure everything is in place is definitely the best solution.”