Audit hits Utah Inner Ports Authority over untendered contracts

The port’s new management should guarantee the agency greater transparency in its use of public funds, according to the report.

(Francisco Kjolseth | The Salt Lake Tribune) Trucks carrying shipping containers move in and out of the Union Pacific Intermodal Terminal in the Utah Inland Harbor jurisdictional area, as seen Wednesday, Nov. 10, 2021.

The Utah Inland Port Authority needs better planning and transparency in its spending, according to a limited audit presented to lawmakers on Tuesday.

When the legislature created the Port Authority in 2018, it exempted it from most rules that other state agencies must follow. This includes the contract procurement process. The Port Authority relied too heavily on this exception, according to the audit.

The Salt Lake Tribune previously reported on some of the port’s no-tender contracts, including a multi-million dollar deal with QuayChain, an obscure California company that has few credentials other than his links with the former port manager. Two Utah real estate companies have also been awarded a 30-year contract for a proposed transshipment center, with the port shelling out millions to lease the land and pay contractors to build the facility. The site remains vacant land, but the port has been paying rent there since January 2021.

The port authority has issued 43 contracts so far with 29 suppliers, according to the audit. A whopping 81% of these deals have never been tendered.

“This reduces transparency,” adds the audit report, “and can foster an environment in which public resources are not sufficiently protected.”

More offers with high price tags are revealed

The Port Authority’s revenue comes from statutory appropriations and property taxes collected in the Port area, which is primarily in the northwest quadrant of Salt Lake City. He also secured up to $150 million in bonds after forming a public infrastructure district last year.

The Port Authority’s budgets are vague, offering few clues about where all of its public funds go. But the audit revealed at least two previously unknown deals.

Just over $8 million was spent on a lease-purchase payment for the “Stadler Rail test track”. No other details about this project were included in the report. The test track is a rail spur south of Interstate 80 and west of 5600 West that the Port Authority wants “to expand manufacturer rail access south of I-80 and [to] improve rail traffic in the region,” according to a person hired to manage public relations for the port.

The Port Authority also signed a $10 million contract with “NWQ, LLC” to build a road at 700 North. Road projects are usually funded by developers, the audit observed. The Port Authority has paid $4.6 million on this deal so far.

“We have reviewed the available documents to understand why [the port authority] pays the entire road construction bill,” the audit report noted. “We have not been able to obtain enough evidence to make a decision.”

Other expensive items listed in the report include $2.4 million spent renting the vacant transshipment site and $500,000 paid to build a computer network.

“While these decisions may prove prudent,” the audit report states, “we are concerned about the significant financial commitments made with public funds before a development master plan has been drawn up and all options have been considered. be considered”.

QuayChain exceeded its $2 million untendered contract by $1.7 million, and report auditors raised questions about the relationship between the company’s CEO and the port’s former chief executive, Jack Hedge.

“This contract is an excellent example of the need for board oversight and review of contracts,” the audit report adds. “…A fundamental concern with engaging in sole-source contracts is that decisions about how or why certain companies were hired can be difficult to defend.”

The audit further struck the chord for its lack of timeliness, metrics, and proper accountability with its contractors.

Efforts to improve surveillance

Despite all its dealings and spending, the Port Authority has few notable accomplishments or projects.

Apparent frustration at the lack of movement in the port prompted lawmakers to shake down authority earlier this year. A reorganized and streamlined Board of Directors was sworn in this spring. MEPs immediately commissioned the legislative audit. They also hired Ben Hart as their new executive director.

Most of the audit’s findings probably came as no surprise to the port’s new management, which has already implemented many of its recommendations.

The board has become more involved in the procurement process, for example, putting many major Port Authority spending projects on hold and updating policies. Hart has pledged to complete a master plan to better guide investments in the future. The board also formed an audit committee this month to improve internal controls.

In a statement released Tuesday afternoon, the Port Authority thanked the Office of the Legislative Auditor General for its recommendations, adding that staff supported the review.

“We are grateful for this audit,” Hart said in the release, “and its role in bringing substantial update to [the port authority’s] organizational policies and procedures.

Read the full limited audit report below:

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