Consultant refuses to release documents from its ODOT probe

Transparency key to funding package, lawmaker says about major 2017 Oregon Legislature decision.

The consulting firm that was paid $1 million by the state for an outside review of Oregon Department of Transportation's management doesn't want to release state-owned documents that would let the public and lawmakers check its work, the Portland Tribune has learned.

The review by New York-based McKinsey & Co. was intended to respond to critics of the highway agency and ensure ODOT is prepared to effectively manage greater transportation spending, as lawmakers consider major fee and tax increases this legislative session.

Released on Jan. 30, the consultant's final report on ODOT included an executive summary framed in positive and complimentary language while acknowledging room for improvement. The report then detailed a culture that is lacking in dissent and accountability, wastes money, and needs a clearer and more coordinated strategic vision for its future.

The state is withholding an earlier draft version of the McKinsey report after the company objected to its release in response to a public records request. Also being withheld are copies of interviews conducted by the firm and the results and comments from a survey of ODOT employees.

Lawmakers should not approve the funding package until the report's supporting documents can be reviewed, says the state Senate's top-ranking Republican, Sen. Ted Ferrioli, R-John Day. "The source material should be provided so you can look at the narrative, go to the footnotes and follow it back to the origin," Ferrioli said. "Otherwise you cannot assess whether you agree or disagree with the auditor's conclusions ... without that you essentially have a PR document."

The contract McKinsey signed with the state on Sept. 22, 2016 states clearly that all "tangible items" developed during its research are part of its "work product," which the legal pact says constitutes "exclusive" state property.

McKinsey, however, declined to release records of its interviews to the Portland Tribune, instead referring questions to the state. In a Feb. 17 letter, McKinsey's Washington, D.C.-based Associate General Counsel Karen Lowy wrote an eight-page letter to Noah Ellenberg, the Oregon Department of Justice's public records counsel, objecting to a records request by Portland Tribune reporter Paris Achen on behalf of the EO Media Group/Pamplin Media Group Capital Bureau.

In the letter and an accompanying email, Lowy suggests the company is prepared to sue. "McKinsey respectfully requests that the Draft Report be withheld from public release in its entirety," she wrote. "... McKinsey retains and asserts the right to pursue all available legal and equitable remedies."

Matt Shelby, a spokesman for the state Department of Administrative Services, said his agency continues to process the draft audit and seek possession of McKinsey research that is state property, in response to a Jan. 26 request from the Tribune. The state formally requested work product documents from McKinsey on Feb. 28.

"I understand from our phone conversation that you question whether some of these items qualify as work product," wrote the state records lawyer, Ellenberg, to the McKinsey lawyer, while calling her attention to the Tribune records request. "...However, it would certainly seem that any information you obtained as a result of access provided to you to ODOT employees would be work product owned by DAS."

"We are working to honor our obligations under our contract with McKinsey, and at the same time, honor our obligations under the public records law," Shelby said. "That's taking more time than I'd like, but we continue to work diligently towards a resolution."

If the McKinsey documents are released, they could potentially shed light on why the draft report initially did not address questions about ODOT's management of conflict-of-interest policies. The McKinsey contract called for it to examine those policies.

While the McKinsey report has often been called an "audit" by lawmakers, the consultant did not follow standard government auditing practices. Governmental auditors in Oregon follow recognized auditing rules, organize their research, and throw open their files so every statement in an audit can be traced back to a specific source document or interview.

Gary Blackmer, the former elected city of Portland auditor, also spent more than six years heading the state Audits Division. Transparency in an auditor's research boosts credibility and public understanding, Blackmer said, likening it to how reputable scientists publish their research methodology so others can replicate it. "It's just a good practice that, if you're doing objective analytical work, you would make the approach you used available to other people to look at. It can help fortify your conclusions."

Other aspects of the McKinsey review have raised questions. For instance, the company interviewed 17 ODOT "senior leaders and managers" and 34 "stakeholders." But it did not tap some individuals and organizations with knowledge of ODOT operations who have been critical in the past, despite asking ODOT for input on who it should interview.

For instance, the Association of Engineering Employees of Oregon, which represents ODOT engineers, has over the years been a consistent voice raising concerns over ODOT management and road and bridge construction quality, giving testimony to the Legislature and assisting secretary of state auditors looking into ODOT as well as the agency's internal auditors.

"AEE was not engaged on the McKinsey study by ODOT, or by McKinsey," said Joelle Davis, a consultant who helps manage the Salem office of the union.

Nor did McKinsey contact Catherine Mater, the former chairwoman of the Oregon Transportation Commission, whose inquiry into ODOT decision-making was halted when former Gov. John Kitzhaber removed her from that post. She since has penned newspaper op-eds critiquing the agency.

In an interview, Mater said she's not offended, noting she spent only seven months on the transportation commission.

But Ferrioli, the Republican senator, called her omission "a red flag."