[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]



 
                    METROPOLITAN WASHINGTON AIRPORTS
                 AUTHORITY: A REVIEW OF THE DEPARTMENT
                 OF TRANSPORTATION INSPECTOR GENERAL'S
                      FINDINGS AND RECOMMENDATIONS

=======================================================================

                               (112-109)

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                           NOVEMBER 16, 2012

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure


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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                    JOHN L. MICA, Florida, Chairman
DON YOUNG, Alaska                    NICK J. RAHALL II, West Virginia
THOMAS E. PETRI, Wisconsin           PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina         JERRY F. COSTELLO, Illinois
JOHN J. DUNCAN, Jr., Tennessee       ELEANOR HOLMES NORTON, District of 
FRANK A. LoBIONDO, New Jersey            Columbia
GARY G. MILLER, California           JERROLD NADLER, New York
TIMOTHY V. JOHNSON, Illinois         CORRINE BROWN, Florida
SAM GRAVES, Missouri                 BOB FILNER, California
BILL SHUSTER, Pennsylvania           EDDIE BERNICE JOHNSON, Texas
SHELLEY MOORE CAPITO, West Virginia  ELIJAH E. CUMMINGS, Maryland
JEAN SCHMIDT, Ohio                   LEONARD L. BOSWELL, Iowa
CANDICE S. MILLER, Michigan          TIM HOLDEN, Pennsylvania
DUNCAN HUNTER, California            RICK LARSEN, Washington
ANDY HARRIS, Maryland                MICHAEL E. CAPUANO, Massachusetts
ERIC A. ``RICK'' CRAWFORD, Arkansas  TIMOTHY H. BISHOP, New York
JAIME HERRERA BEUTLER, Washington    MICHAEL H. MICHAUD, Maine
RANDY HULTGREN, Illinois             RUSS CARNAHAN, Missouri
LOU BARLETTA, Pennsylvania           GRACE F. NAPOLITANO, California
CHIP CRAVAACK, Minnesota             DANIEL LIPINSKI, Illinois
BLAKE FARENTHOLD, Texas              MAZIE K. HIRONO, Hawaii
LARRY BUCSHON, Indiana               JASON ALTMIRE, Pennsylvania
BILLY LONG, Missouri                 TIMOTHY J. WALZ, Minnesota
BOB GIBBS, Ohio                      HEATH SHULER, North Carolina
PATRICK MEEHAN, Pennsylvania         STEVE COHEN, Tennessee
RICHARD L. HANNA, New York           LAURA RICHARDSON, California
JEFFREY M. LANDRY, Louisiana         ALBIO SIRES, New Jersey
STEVE SOUTHERLAND II, Florida        DONNA F. EDWARDS, Maryland
JEFF DENHAM, California
JAMES LANKFORD, Oklahoma
REID J. RIBBLE, Wisconsin
CHARLES J. ``CHUCK'' FLEISCHMANN, 
    Tennessee
VACANCY
                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................     v

                               TESTIMONY
                                Panel 1

Hon. Gerald E. Connolly, a Representative in Congress from the 
  State of Virginia..............................................     8

                                Panel 2

Hon. Ray LaHood, Secretary, U.S. Department of Transportation....    12

                                Panel 3

Hon. Calvin L. Scovel III, Inspector General, U.S. Department of 
  Transportation.................................................    20
Hon. Michael A. Curto, Chairman, Board of Directors, Metropolitan 
  Washington Airports Authority, accompanied by Hon. Tom Davis, 
  Vice Chairman, Board of Directors, and John E. Potter, 
  President and Chief Executive Officer, Metropolitan Washington 
  Airports Authority.............................................    20

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Hon. Eddie Bernice Johnson, of Texas.............................    43
Hon. Eleanor Holmes Norton, of the District of Columbia..........    44
Hon. Chris Van Hollen, of Maryland...............................    46

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Hon. Gerald E. Connolly..........................................    47
Hon. Ray LaHood..................................................    49
Hon. Calvin L. Scovel III........................................    56
Hon. Michael A. Curto............................................    63

                       SUBMISSIONS FOR THE RECORD

Hon. John L. Mica, a Representative in Congress from the State of 
  Florida, request to submit article ``Dulles Rail Board Ignored 
  Warnings of Nepotism,'' Liz Essley, Washington Examiner, Nov. 
  16, 2012, at 4.................................................     4
John E. Potter, President and Chief Executive Officer, 
  Metropolitan Washington Airports Authority, response to request 
  for information from Hon. John L. Mica for the employment 
  status of personnel of concern as identified by the U.S. 
  Department of Transportation Office of Inspector General 
  report, ``Audit Report: MWAA's Weak Policies and Procedures 
  Have Led to Questionable Procurement Practices, Mismanagement, 
  and a Lack of Overall Accountability''.........................    26
Hon. Ray LaHood, Secretary, U.S. Department of Transportation, 
  response to question from Hon. Thomas E. Petri, a 
  Representative in Congress from the State of Wisconsin, 
  regarding the status of the consolidation and realignment plan 
  for FAA facilities.............................................    55
Hon. Calvin L. Scovel III, Inspector General, U.S. Department of 
  Transportation, request to submit his office's report entitled, 
  ``Audit Report: MWAA's Weak Policies and Procedures Have Led to 
  Questionable Procurement Practices, Mismanagement, and a Lack 
  of Overall Accountability,'' AV-2013-006 (Nov. 1, 2012)........    68
Hon. Michael A. Curto, request to submit the Metropolitan 
  Washington Airports Authority's Board of Directors' response to 
  the reports issued by the U.S. Department of Transportation 
  Office of Inspector General and the joint letter of Aug. 4, 
  2012, from Hon. Ray LaHood, Governor Robert F. McDonnell of 
  Virginia, Governor Martin O'Malley of Maryland, and Mayor 
  Vincent C. Gray of the District of Columbia....................   119

    Enclosure A: Memorandum Suspending Use of Certain Categorical 
      Exceptions (Aug. 2012).....................................   132
    Enclosure B: Recommendations from Inspector General, Nov. 1, 
      2012, Final Report.........................................   134
    Enclosure C: Code of Ethics for Members of Airports Authority 
      Board of Directors (Sept. 2012)............................   140
    Enclosure D: Code of Ethics for Employees of Airports 
      Authority (Sept. 2012).....................................   156
    Enclosure E: Draft Financial Disclosure Form for Airports 
      Authority Board of Directors (Oct. 2012)...................   174
    Enclosure F: Airports Authority Travel Policy (Sept. 2012)...   181
    Enclosure G: Airports Authority Bylaws (Oct. 2012)...........   204
    Enclosure H: Airports Authority Freedom of Information Policy 
      (July 2012)................................................   218
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                    METROPOLITAN WASHINGTON AIRPORTS
                       AUTHORITY: A REVIEW OF THE
                      DEPARTMENT OF TRANSPORTATION
                          INSPECTOR GENERAL'S
                      FINDINGS AND RECOMMENDATIONS

                              ----------                              


                       FRIDAY, NOVEMBER 16, 2012

                  House of Representatives,
    Committee on Transportation and Infrastructure,
                                            Washington, DC.
    The committee met, pursuant to call, at 9:05 a.m., in Room 
2167, Rayburn House Office Building, Hon. John L. Mica 
(Chairman of the committee) presiding.
    Mr. Mica. Good morning. I would like to call this hearing 
of the House Transportation and Infrastructure Committee to 
order.
    This morning we are conducting an oversight and 
investigations hearing, and it is relating to the Metropolitan 
Washington Airports Authority. And, in particular, we will be 
discussing the results of a report by the inspector general 
relating to some of the Authority's weak policies, procedures 
that have led to questionable procurement practices, 
mismanagement, and a lack of overall accountability, according 
to the title of the report, which was issued November 1, 2012.
    The order of business today will be opening statements by 
Members, and then we have three panels. Mr. Connolly will be 
part of our first panel; Mr. LaHood; the inspector general, 
third, and the chairman of the Airports Authority Board. So, 
with that, I will proceed. I have some opening comments, and 
then we will recognize other Members and go forward.
    Well, it is sort of a sad day, I think, for Metropolitan 
Washington, also a sad day for advocates of improving and 
expanding and conducting good transportation projects and 
policies in the Nation's capital and surrounding area because 
the inspector general has produced a report--I think some of 
you have seen it. I just referred to the report. And this is an 
audit report.
    This was not requested by this committee. It was requested, 
actually, by two Members of the House: one, Mr. Wolf, the 
gentleman from Virginia, Frank Wolf, who has been a strong 
advocate for transportation, also a leader in transportation 
initiatives for northern Virginia and for the country; and then 
Mr. Latham, who chairs an important appropriations subcommittee 
that oversees transportation spending and funding issues in the 
House of Representatives.
    And it does, unfortunately--the report does, unfortunately, 
highlight exactly what the title has portrayed, that there are 
serious problems in our Nation's capital Airports Authority.
    The Federal Government does have an important role. We own, 
I believe, the properties, and we have the long-term leases, as 
outlined by a law and various agreements for operation. The 
Authority has more than the airports; it also is responsible 
for control of the daily operation, maintenance of the Dulles 
Toll Road and also another important project I worked on with a 
number of the Members here. We finally made it a reality, but 
that is the extension of the Metrorail to IAD. So it has an 
important connection both to the Congress, which created, 
again, its existence, and it also has multiple important 
responsibilities.
    This is not a criticism particularly by this committee. Our 
staff and investigative personnel have conducted some review, 
and, unfortunately, their findings mirror the findings of this 
IG report. Let me just talk about some of the most disturbing 
findings.
    And, again, we want to uncover what has been going on. We 
also want to look at how we can bring this to a halt. I know 
Mr. Wolf has taken some steps to put provisions into some of 
the, I think, appropriations legislation, and other corrective 
measures are certainly warranted. But this is to see what went 
wrong and then try to make certain that it is corrected and it 
doesn't happen again. And, also, people need to be held 
accountable.
    Under the DOT IG review, first, some of the Airports 
Authority contract award and procurement practices. They found 
that, unfortunately, even though there is a requirement for all 
contracts over $200,000 to be bid competitively, that always 
didn't take place. Between January 2009 and 2011, June of 2011, 
the Authority awarded 190 contracts that exceeded $200,000. 
Only some 68 were actually awarded with full and open 
competition. Five were sole-source awards with a combined value 
of some $6 million.
    Another nearly quarter of a billion dollars of contracts--
and I think there were 117 of those, the balance of the 
contracts--were awarded using categorical exemptions. All of 
this raises very strong concerns, again, for compliance with 
open and fair and honest competition.
    Let me just talk about the next point that the DOT IG's 
review of the Airports Authority, compliance with the code of 
ethics. And some of this has already been reported, but their 
findings are that there were tickets to the 2009 Super Bowl, 
valued at almost $5,000; 4 golf tournament trips; a trip to New 
York City to attend a major baseball league game; 19 other 
major sporting events; 3 concerts; a fishing trip; and a host 
of other things that certainly are improper.
    Unfortunately, the operation of the Airports Authority is 
now becoming a poster child for some of the corrupt practices 
that I think need to be brought to a halt and accounted for. 
And that is, again, the purpose of this hearing.
    And one of the other major points that the IG reviewed is 
the hiring and compensation practices. They found out that the 
Authority officials either circumvented or ignored 
competitively going after candidates and having an open and 
honest and fair process in order to place some of the 
candidates they preferred into a position. Unfortunately, they 
also have been accused of nepotism, both some from some of the 
key personnel, including, I guess, the personnel HR director 
has resigned, but also even board members.
    And additional findings of the inspector general cited 
awarding excessive salaries, unjustified hiring bonuses, 
questionable cash awards, and ineligible benefits. So that is 
not my findings; that is the findings of the inspector general. 
We will hear from him in a minute.
    Then I was reading an account this morning. There is a 
report which I would like to see which is still in, I am told, 
a draft form, but it was an anonymous employee survey. And they 
gathered comments in 2010 of some of the extensive 
mismanagement issues at the Authority.
    But some of the comments that are in the report--which, 
again, hasn't been released, I don't believe, or finalized. 
This is what some of the employees said: Stop the corruption, 
favoritism, discrimination; hiring advancement of unqualified 
people, top management people; VPs having board members in 
their pocket for favors; VPs violating laws, practices, and 
lacking ethics and fairness.
    Here is another comment: Nepotism and favoritism. Here is 
another comment: It needs a severe culture change. Here is 
another one: There is way too much nepotism; take my word for 
it and independently look into it.
    And the list goes on. I will make these part of the record.
    [The information follows:]

    [GRAPHIC] [TIFF OMITTED] T6706.006
    
    Mr. Mica. And I would also like to see that draft when it 
is finalized and made part of the record.
    So, again, we are here on a sad day when we have to conduct 
this type of investigation and review and also look at, again, 
the positive steps that can be taken to correct this.
    So with those comments, again, I welcome our witnesses and 
invite other Members for their opening comments. And I will 
yield first to Ms. Norton.
    Ms. Norton. Thank you, Mr. Chairman.
    The Metropolitan Washington Airports Authority, which we 
call MWAA, is a so-called independent public body, but it was 
created by Congress, by an act of Congress called the 
Metropolitan Washington Airports Act of 1986. That act 
authorized a compact between the Commonwealth of Virginia and 
the District of Columbia.
    MWAA has 1,400 employees and leases the land and manages--
leases the land on which the 2 airports stand from the Federal 
Government and manages Ronald Reagan National Airport and 
Washington Dulles Airport. In addition to managing the 
airports, MWAA has been given responsibility for the Dulles 
Corridor Metrorail Project, with an estimated cost of $5.8 
billion, including $977 million in Federal funds.
    This hearing is timely and important in light of the 
Department of Transportation inspector general's audit report 
released just this month and the recent news stories almost 
every other day about inappropriate spending by MWAA and 
potential and actual conflicts of interest.
    The IG report concluded--and here I am quoting--``MWAA's 
contracting policies and practices are insufficient to ensure 
compliance with the Airports Act and the lease agreement 
between DOT and MWAA,'' end quote. And he went on to say, ``The 
code of ethics and related MWAA policies and procedures in 
place at the time of our audit lack the rigor needed to ensure 
credibility and integrity of management and employee 
decisions.''
    Following the IG's report released in May, MWAA has taken 
some action to improve its ethical standards by approving a new 
travel policy, a new code of ethics for the board and for 
employees. MWAA has also revised the board's bylaws and Freedom 
of Information Act policies and has terminated contracts with 
former board members. However, I believe more action is needed.
    To address the contracting policies, which have perhaps 
been the most troubling, yesterday I introduced H.R. 6592, for 
which I am seeking cosponsors, that would require MWAA to 
comply with the Federal Acquisition Regulations that set rules 
that govern all aspects of the acquisition process for 
virtually every Federal branch agency.
    Given the continuing ownership of the airports by the 
Federal Government, MWAA's creation by Congress, and the 
significant Federal taxpayer dollars for which MWAA is 
responsible, there is no reason why MWAA should use a different 
standard from that for Federal agencies, particularly given the 
shortcomings reported by the IG. It certainly would make no 
sense for MWAA to attempt to reinvent a new set of procurement 
procedures and ignore the long-tested Federal Acquisition 
Regulations, which provide legal guidelines for every aspect of 
procurement and that maximize fairness and transparency.
    I am grateful to Secretary LaHood for his quick attention 
to the IG's findings, appointing an accountability officer to 
work with MWAA to strengthen its policies. In addition, 
Secretary LaHood cosigned a letter with the Governors of 
Virginia and Maryland and the mayor of the District of Columbia 
highlighting their concern with the lack of accountability and 
transparency and laying out specific necessary reforms.
    My bill, along with steps that MWAA has already taken and 
is continuing to take, should help MWAA regain its bearings. I 
look forward to hearing from today's witnesses about what 
reforms are necessary and how to ensure that MWAA is a good 
steward of the valuable assets it controls.
    And I thank you, Mr. Chairman.
    Mr. Mica. Thank the gentlelady, and recognize the chair of 
the Aviation Subcommittee, the gentleman from Wisconsin, Mr. 
Petri.
    Mr. Petri. Thank you very much, Mr. Chairman.
    As your remarks indicated, this committee has, I think, 
great confidence in General Scovel and the inspector general 
process, and this hearing and his report illustrates the 
importance of that to the good functioning of our Government. 
It is sad but true that, sometimes, if people don't think they 
are being watched, they do things that they shouldn't be doing. 
And the inspector general is the watcher, and the report is the 
result of that.
    Now, what did he find? He found inappropriate sole-sourcing 
contracts, accepting elaborate gifts from contractors, nepotism 
and hiring irregularities, unjustified and costly bonuses, and 
a variety of other unethical actions on the part of the board 
and members of the staff of the Metropolitan Airports 
Authority.
    This hearing illustrates the seriousness with which this 
committee and Congress takes not only the report but the 
actions that it uncovered. And we hope and look forward to 
hearing what remedial actions are being taken to make sure this 
doesn't happen again.
    And, with that, I thank the chairman for recognizing me and 
yield back the balance of my time.
    Mr. Mica. Thank you, and let me recognize Mr. Cummings 
next, the gentleman from Maryland.
    Mr. Cummings. Thank you very much, Mr. Chairman, for 
convening today's hearing to examine the outrageous abuses of 
the Metropolitan Washington Airports Authority, otherwise known 
as MWAA.
    These abuses are many and far-ranging and run counter to 
the public mission of MWAA. Members of the board of directors 
failed to live up to the high expectations placed on them by 
the taxpayers of Maryland, Virginia, and the District of 
Columbia. I, too, have contributed a portion of my taxes to 
MWAA, so I come to this hearing both as a Member of Congress 
and as a disappointed taxpayer. Just as I argued when we found 
that banks receiving TARP funds were continuing lavish 
spending, neither I nor any of my fellow taxpayers paid taxes 
with the intention of funding MWAA's lavish travel, fine wines, 
and trips to the Super Bowl.
    On many occasions, MWAA's board members violated the trust 
put in them by the taxpayers by pouring money into 
noncompetitive contracts, hiring family members, and taking 
gifts that would make Jack Abramoff blush. As such, as MWAA 
board members enjoyed their travel accounts, concerts, and golf 
tournaments, I am sure that the citizens of the DC metro area 
would particularly appreciate more functional airports, such as 
a Silver Line project, free of massive spending overruns.
    I call upon MWAA today to continue to revise all of their 
internal practices, especially the code of ethics. Further, I 
urge MWAA to incorporate the recommendations made by the 
inspector general's report, as there are clearly shortfalls in 
the current standards of conduct. I look forward to hearing 
from today's panelists about what has been done and will 
continue to be done to correct these problems.
    The sort of abuses that have occurred must stop and must 
stop immediately. Engaging in these practices is completely 
unacceptable, and in other circumstances they would be 
criminal. MWAA must swiftly recover from these missteps and 
work to regain the public's trust, while making its sole 
mission that of being a responsible steward of some of this 
region's most essential transportation and infrastructure.
    With that, I am hopeful that today's testimony will yield 
not only explanations but include concrete steps for remedying 
these significant issues.
    And with that, Mr. Chairman, I yield back.
    Mr. Mica. Thank the gentleman.
    Do other Members seek recognition?
    Ms. Richardson, the gentlelady from California?
    Ms. Richardson. Yes, thank you, Mr. Chairman, and our 
ranking member for calling this hearing today to review MWAA's 
efforts to evade problems brought to light by the Department of 
Transportation's inspector general.
    As customary, it is always beneficial to have the 
participation of our Secretary, Ray LaHood, who is well-versed 
with the workings of this committee and the body as a whole.
    Today our purpose is to consider the inspector general's 
findings, which are limited to just a few years but 
unfortunately paints a troubling picture of what might have 
occurred since 1987.
    After reviewing the report, it is clear that reform is 
needed at MWAA. According to the report, and over the years, 
there has been a blatant disregard for competitive bidding 
practices by awarding contracts to former board members, 
initiating work before the contract was awarded, awarding sole-
source contracts without properly vetting bidders, and 
continually creating loopholes to bids in an effort to sidestep 
regulations on bids valued at over $200,000.
    Now, I will say as a Member of Congress, my legislative 
career has been devoted to, particularly on this committee, to 
make sure that all companies--small business, minority, 
veterans, various businesses--would have an opportunity to 
compete. So by reading this report, it is particularly 
disturbing because it gets at the heart of what many of us have 
worked to do to make sure that all companies, particularly 
American companies, have an opportunity to do business and have 
gainful employment and hire others in this country.
    I understand that MWAA has since amended some of these 
policies since the IG's report, including revisions to its 
contracting manual. However, I would hope that all of the 
inspector general's recommendations would be incorporated in 
their policies.
    Going forward, I believe that Congress should take action 
to require any authority's board and employees that use 
taxpayer dollars to comply with either State or Federal 
transparency and procurement regulations before entering in a 
lease with DOT. A perfect example of this is the board of 
directors at the Dallas-Fort Worth International Airport. That 
board is required to follow the Texas State law and guidelines 
related to governance, transparency, and procurement. Failure 
to comply can lead to punishment by imprisonment or fines.
    I applaud both Congressman Wolf and Congressman Latham in 
their efforts to shine light on this troubling revelation. I 
want to also again thank our witnesses, including our colleague 
who is here with us today, for being with us and affording us 
the opportunity to improve upon the situation, which is what 
all hearings should be about.
    Thank you very much. I yield back.
    Mr. Mica. Thank the gentlelady.
    Do other Members seek recognition?
    If not, then we will turn to our first panel. And we have a 
single Member testifying or asking to comment today, and that 
is Gerry Connolly, who represents the 11th Congressional 
District, takes in a good portion of the area that is served by 
these transportation agencies.
    So, welcome. And you are recognized.

TESTIMONY OF THE HONORABLE GERALD E. CONNOLLY, A REPRESENTATIVE 
             IN CONGRESS FROM THE STATE OF VIRGINIA

    Mr. Connolly. Thank you, Mr. Chairman.
    And before I begin my testimony, I just want to thank you 
personally. When I was chairman of Fairfax County, before I 
came here to Congress, you were a good friend in helping us 
work through problems on the Silver Line project rail to 
Dulles. You and your predecessor, Mr. Oberstar, worked in a 
bipartisan way to help us save that project, understanding what 
a critical investment that is not only for our region but for 
the National Capital. And I thank you for your leadership and 
your help on that project because it is going forward. It looks 
good. I know Secretary LaHood has been a friend to the project, 
as well. And it means a lot to this region.
    Again, thank you, Chairman Mica and Ranking Member Eleanor 
Holmes Norton and members of the committee, for holding this 
very important oversight hearing on the findings and 
recommendations contained in the Department of Transportation 
Office of Inspector General audit report of the Metropolitan 
Washington Airports Authority, known as MWAA, its management 
policies and processes.
    I appreciate the opportunity to testify on something that 
is so important to my constituents in the 11th District of 
Virginia and, indeed, throughout this region. I commend the 
leadership of Congressmen Wolf and Latham in requesting that IG 
Scovel initiate an audit of MWAA operations.
    I also applaud Secretary LaHood's proactive leadership and 
his commitment not only to overseeing but, more importantly, 
actively assisting MWAA in implementing those needed reforms. 
Appointing an accountability officer, for example, was an 
important first step toward transforming the Authority. And the 
Secretary has my full support in regard to DOT's effort to 
amend its current lease with MWAA to enhance accountability, 
transparency, and internal controls.
    We must not forget that as a self-funded, independent 
organization employing approximately 1,400 employees, MWAA is 
far more than its board of directors and senior leadership. The 
poor performance of some political appointees and senior 
managers ought not to tarnish the excellent work performed by 
the Authority's career staff members over many years, who have 
admirably kept the Dulles Corridor Metrorail Project on track, 
to be completed on time and mostly within budget, and in their 
day-to-day work to ensure orderly operation of the airports and 
management of the Dulles Toll Road as well as other projects.
    One would never guess from recent headlines that during its 
25 years of existence the Airports Authority has actually 
established a successful, scandal-free track record of 
financing and overseeing major enhancements and renovations to 
both National and Dulles Airports.
    That being said, I have cosponsored with my colleague, 
Congressman Wolf, legislation that would streamline and 
restructure the governance of MWAA and give Virginia the 
majority of seats. I have long said it is inappropriate to 
afford Maryland and the District of Columbia disproportionate 
influence over facilities wholly located within the 
Commonwealth of Virginia and that primarily affect Virginia 
residents.
    Any logic behind the current structure collapsed, it seems 
to me, when MWAA took over responsibility for operating the 
Dulles Toll Road and constructing Dulles rail. Plain and 
simple, Virginians want Virginians primarily responsible for 
setting local toll rates.
    By reducing the number of members from 17 to 9 and 
staggering the terms so no Governor has a disproportionate 
influence over the composition of that board, our bipartisan 
legislation can create greater accountability, especially to 
the folks in Virginia, and restore some public confidence in 
MWAA. To take that a step further, I would even support 
starting with an entire slate of new members.
    Now, with respect to the IG report, one cannot defend the 
indefensible. In reviewing the interim and final DOT OIG audit 
report, ``indefensible'' is one of the milder terms one could 
apply to some of the management deficiencies and ethical 
practices exhibited by MWAA's board and senior leadership. 
Unfortunately, in this instance, one can judge the book by its 
cover, as the report's title, ``MWAA's Weak Policies and 
Procedures Have Led to Questionable Procurement Practices, 
Mismanagement, and a Lack of Overall Accountability,'' 
accurately captures the Authority's shaky management practices. 
Stories of extravagant travel, unjustified hiring bonuses, 
questionable cash awards, and widespread nepotism already have 
grabbed headlines as a result of OIG's investigation.
    While some of the criticism focused on actions of certain 
board members, the final audit report demonstrates clearly that 
the depth of management and ethical failures extend far beyond 
any one person. The fact of the matter is the bar for 
professional and ethical conduct needs to be raised 
considerably for all current and future board members and 
senior managers of MWAA.
    The finding from OIG that I found most troubling involved 
serious management deficiencies, particularly MWAA's 
noncompliance with requirements in the Airports Act, its lease 
agreement with DOT, and commonsense contracting practices. From 
initiating work before awarding a contract, issuing sole-source 
contracts without adequate justification, providing favored 
bidders with nonpublic information to bestow an unfair 
competitive advantage, MWAA's acquisition practices and 
procedures could serve as a case study in how not to administer 
procurement policy.
    In addition, MWAA's failure to meet its own contracting 
manual requirements when utilizing categorical exceptions was 
an inexcusable restriction of fair and open competition. The 
Authority's decision to delegate procurement authority to 
employees outside of its procurement and contracts department, 
subsequently losing track of which personnel they had granted 
this authority, while simultaneously failing to hold employees 
to delegated limits, is emblematic of MWAA's lack of internal 
controls and disregard for sound management principles.
    Fortunately, MWAA has demonstrated it now understands the 
gravity of this situation and is taking steps, however tardy, 
to ensure that the final chapter of this embarrassing period 
for the Authority may yet be one of redemption. The decisive 
actions initiated by the board and senior leadership, including 
the arrival of new board members and the replacement of some 
senior managers, are an encouraging indication that MWAA is 
committed to restoring its reputation and, more importantly, 
public confidence in the operation.
    Developing a new travel policy, increasing transparency 
through new ethics policies, and instituting strong internal 
controls for procurement are essential corrective actions in 
order to eliminate nepotism and favoritism while ensuring that 
MWAA is always in compliance with the Airports Act and its 
lease agreement with DOT.
    As the committee is aware, MWAA Board Chairman Michael 
Curto sent a letter to Secretary LaHood and Governors McDonnell 
and O'Malley and Mayor Gray of the city earlier this week 
detailing actions the Authority already has taken or plans to 
take in response to the OIG's 12 broad corrective actions and 
30 specific sub-recommendations. I appreciate the candor and 
resolve from Chairman Curto and MWAA leadership to work swiftly 
with regional partners to address those shortcomings.
    It is difficult, Mr. Chairman, to overstate the importance 
of MWAA to our region's transportation network and prospects 
for economic growth. It is absolutely essential that our 
region's congressional delegation, DOT, and MWAA continue to 
work together to fully address every single DOT OIG 
recommendation. Given the diffuse accountability embedded in 
the current governance of MWAA, restoring the public confidence 
will be an arduous but absolutely necessary part of this 
process.
    In closing, I want to again express my gratitude to you, 
Mr. Chairman, and Ranking Member Eleanor Holmes Norton for 
providing me the opportunity to testify before the committee. 
And I look forward to working with you as we proceed in the 
future.
    Mr. Mica. Well, we thank you for your testimony, your 
participation, and your recommendations.
    And I don't see any--Ms. Norton, did you have a question?
    Ms. Norton. Yes, I do have a question for Mr. Connolly.
    I certainly agree with his analysis of the issues and the 
defects in the present regulations, such as they are, at MWAA. 
I regret the part of his testimony which veers off into an 
entirely regional matter that has been settled, I thought, by a 
compromise--a compromise that the District of Columbia only 
reluctantly accepted.
    The 1986 legislation was enacted in order to regulate 
traffic between Reagan National and Dulles Airport. Dulles was 
receiving virtually none or too little of the air traffic. 
Reagan, which was already overcrowded, was receiving much more 
of the traffic. Since the airport compact was enacted in 1986, 
there are three airports in this region, and they have divided 
up the traffic in a very rational way--the airport in Maryland, 
the airport here in the District, and Dulles Airport. Although, 
Mr. Chairman, you are aware that every time the FAA bill comes 
up, there are Members who want more and more of the traffic in 
the District of Columbia.
    The reason that the two airports are regulated and the 
reason that the District of Columbia is in this at all is 
because Reagan National Airport receives much--and that is 
located in Virginia, not, I believe, in Mr. Connolly's 
district--but that receives traffic that is, in fact, coming to 
Washington and, therefore, is a preferred airport by much of 
the traffic. The Federal Government owns the land and wanted to 
make sure that the traffic was more evenly divided.
    Now, Mr. Wolf has had two attempts. The one that everyone 
has signed on to gives Virginia twice as--gives Virginia the 
same number--excuse me--the same number as the number of 
members on the Authority from Maryland and the District of 
Columbia combined. The other legislation would give Virginia 
essentially all of the authority, and the other members would 
have no say because they would so outnumber Maryland and the 
District of Columbia.
    If compromise is to be the way of the lame duck and the way 
of the 113th Congress, I certainly hope we won't open that 
issue, which was reluctantly settled to the favor of Virginia 
and which I think has no place in this hearing today.
    And I thank you, Mr. Chairman.
    Mr. Mica. You wanted to respond, Mr. Connolly?
    Mr. Connolly. Yeah, thank you, Mr. Chairman. And I 
certainly appreciate Delegate Norton's point of view. I 
respectfully disagree. I think it has everything to do with 
today's hearing.
    I think, clearly, the practices of this governing body, of 
MWAA, have shown serious flaws with the governance structure. 
And I would simply say, if we are talking about control over 
one's own destiny, which I support, I certainly support voting 
rights for the District of Columbia. I don't think Congress 
ought to be making management decisions for the city's budget 
or other aspects of its governance.
    Delegate Norton has overlooked the fact that there are 
also, in addition to the Maryland and DC appointees on the 
board, 3 Federal appointees, so that, as a matter of fact, 10 
of the 17 members are not Virginians or not appointed by 
Virginia. And they are making decisions about toll rates.
    What has changed since 1986 is that the Airports 
Authority--which, by the way, carved out BWI. So the third 
regional airport is not part of the purview of MWAA, 
interestingly. But now we are not just managing airports, we 
are building the largest transit extension in America and 
managing it, and we are controlling the toll road entirely 
within Virginia. And the underlying fee is a Virginia property, 
not a Federal property.
    And so that is what has changed. And I respectfully think 
we ought to consider changing that governing structure so that 
Virginians have more of a say now in things that profoundly 
affect my commuters and my citizens on the toll road, which is 
financing a large part of the extension of rail.
    Mr. Mica. OK. Ms. Norton had asked a question. Just a 
clarification. So your recommendation, did I hear it right, was 
to dismiss all of the current board members?
    Mr. Connolly. The legislation does not address that, Mr. 
Chairman. What I said was, if we are going to start with a 
clean slate, we--if this legislation were to become law----
    Mr. Mica. Oh, totally clean. Not, like, any of the more 
recent members. The other thing----
    Mr. Connolly. Our legislation is silent with respect to 
that.
    Mr. Mica. OK. There are--well, let's see. We have expanded 
the membership; now they want to contract the membership and 
limit some of the membership, according to some of the 
proposals. All that fight has to go forward. We are not going 
to settle that here today. But I will be interested in your 
opinion on that as we move forward. I will also take Ms. 
Norton's into consideration and the other Members'.
    With that, we will let you go. Thank you for your 
participation, again, your recommendations and your testimony.
    And we will welcome Secretary LaHood.
    Mike, if you can get his little--OK, here we go.
    I want to take this opportunity to welcome our Department 
of Transportation Secretary and former colleague, the former 
gentleman from Illinois, still the gentleman from Illinois but 
now from DOT, Secretary of Transportation LaHood.
    Welcome, and you are recognized.

    TESTIMONY OF THE HONORABLE RAY LAHOOD, SECRETARY, U.S. 
                  DEPARTMENT OF TRANSPORTATION

    Secretary LaHood. Thank you, Mr. Chairman and the members 
of the committee, for the opportunity to appear before the 
committee today to address management issues at the 
Metropolitan Washington Airports Authority and to share with 
you steps we have taken to help get the organization back on 
track.
    At DOT, we care deeply about the long-term success of MWAA. 
I was deeply concerned to learn about the lack of 
accountability, transparency, and sound judgment by the MWAA 
board in its activities. The public expects and deserves more 
from a public agency entrusted with managing the airports 
serving the Nation's capital and also building the Silver Line.
    The DOT inspector general's report laid out very serious 
and troubling examples of the Authority's operation, but the 
reports also may provide a clear and concrete road map for DOT 
and MWAA itself to bring management practices up to the highest 
levels.
    At the DOT, we took immediate action to help MWAA address 
these problems and made concrete changes that will preserve 
these fundamental reforms. This summer, I appointed Kimberly 
Moore as a Federal accountability officer. And I want to give 
your colleague, Frank Wolf, a lot of credit for this. Frank and 
I worked together on this. This was his idea. And Kim Moore has 
done a great job in a very short period of time. She has worked 
with MWAA to improve ethics, procurement, and governance 
policies.
    I also brought together the Governors of Maryland and 
Virginia, along with the mayor of the District of Columbia, to 
ensure a united front in addressing these issues. In fact, we 
sent a letter to Chairman Curto and the MWAA board of directors 
in August laying out both our concerns and necessary reforms to 
reform transparency.
    And if you wouldn't mind, Mr. Chairman, just 
parenthetically, I just want to list the eight items that were 
in the letter and tell you where we are at.
    Number one, overhaul financial procurement and HR policies. 
That is underway.
    Terminate all existing contracts with former board members 
and former employees. That is done.
    Terminate all employment relationships with former board 
members. That is done.
    Adopt post-employment restrictions for board members and 
employees that meet Federal standards. That is done.
    Strengthen ethics code. Completed.
    Tighten travel procedures. Completed.
    Implement transparency programs. And the board is, at their 
last meeting, is pretty well complete on that.
    Strengthen oversight of the Dulles rail project, which is 
using a lot of taxpayer dollars. That is ongoing with our 
Federal Transit Administration stakeholders and MWAA.
    So I am delighted that, out of the eight items, many of 
them are complete. And I think that goes to the leadership of 
Mr. Curto and the CEO and president of MWAA.
    Since I appointed Ms. Moore as Federal accountability 
officer, MWAA has implemented new travel policies and ethics 
policies for MWAA's board and staff, terminated improper 
contracts and employment relationships, and undertaken to 
enhance the transparency of MWAA's board. Further improvements 
are currently underway.
    MWAA's success is important to all of us. We have made 
progress, but we can always do better. DOT looks forward to 
working with you, this committee, the Congress, our friends 
that represent this area in Congress, and we will keep all 
parties advised.
    I thank you for holding this hearing and inviting me to 
participate.
    Mr. Mica. Thank you for your testimony.
    And we will just ask a couple of questions here.
    You cited some of the things that have been done to correct 
the situation. And I guess you have Kim Moore, who has been 
charged with some of that responsibility on oversight----
    Secretary LaHood. May I introduce her? She is here, Mr. 
Chairman. If she could just stand----
    Mr. Mica. That is great. Good. Well, welcome. An important 
responsibility.
    And we appreciate you; Mr. Wolf for his work and efforts to 
launch some of this; Mr. Latham; and Ms. Moore's efforts to get 
this under control.
    Now, I think the board terms, are they 6 years? And I don't 
know how many members have been on how long. Do you know the 
sort of----
    Secretary LaHood. No, but maybe Mr. Curto can answer that 
when he is up here. I don't know specifically.
    Mr. Mica. Well, my point here is, I thought I heard Mr. 
Connolly say maybe we need to clean house and start over. What 
is your opinion there?
    Secretary LaHood. Well, we----
    Mr. Mica. Is that board salvageable?
    Secretary LaHood. We have, out of the 17 members, I think 
11 now--11 or 12 are new members. And the President has just 
nominated and are pending right now in the Senate two 
additional members that are Presidential. And we are hoping 
that there will be one other one.
    Really, I think in terms of cleaning house on the board, it 
has pretty well been taken care of because almost all the 
members are new members.
    Mr. Mica. So you think some of the culture that created 
this situation has been eliminated?
    Secretary LaHood. Yes, I do.
    Mr. Mica. OK. OK. Well, that is important. And then you 
have cited the steps that you have taken.
    Mr. Connolly actually made a pretty good case of making 
this more of a Virginia-centered Authority as opposed to the 
Presidential appointments in Maryland and the rest, DC. What is 
your opinion there?
    Secretary LaHood. Well, look, I am not going to--I think it 
is up to the board and the Congress and the people that 
represent the airport authorities to decide if they think there 
is a better approach to the organization of the board. I don't 
think the DOT Secretary should be deciding what the composition 
of the board is, how many members it should be. You know, that 
was done by people who have a lot more jurisdiction over it, 
and I am going to leave it to others to decide that.
    There are a lot of new board members on there. There is a 
lot of fresh blood. They have a new CEO and president, and I 
think he has done a good job.
    Mr. Mica. Well, what has taken place--and I commend also--
the inspector general has done an excellent job. He always 
does. And we will hear from him in a minute.
    Secretary LaHood. I agree with that.
    Mr. Mica. Again, sort of a sad--well, it is a very sad 
chapter, particularly in our Nation's capital, to have this----
    Secretary LaHood. I agree with that.
    Mr. Mica. So we hope we can--as Mr. Connolly also said, we 
have to restore public faith and trust in this important 
responsibility.
    Ms. Norton?
    Ms. Norton. Mr. Chairman, I do not want to convert this 
into a discussion of what is essentially a regional issue. But 
I do want to say for the record that what Mr. Connolly proposes 
is essentially a takeover of the Airports Authority by the 
State of Virginia. That has profound implications for the rest 
of the region. And I hope we don't get into those kinds of 
matters when this is a hearing about a matter on which 
everybody is in agreement.
    Now, Mr. Secretary, I would like to ask your view. I 
indicated in my opening statement that I had introduced a bill 
yesterday that would apply, the Federal Acquisition 
Regulations, to MWAA. I did that after looking at the 
regulations and seeing that they were tested; essentially, 
sometimes an agency will make small modifications. I also 
introduced it because I see that MWAA has been trying to 
reinvent the wheel. And I couldn't for the life of me 
understand if, considering that this is Federal land, 
considering that it is leased from the Federal Government, 
considering the amount of Federal funds involved, why the 
Federal Acquisition Regulations already there shouldn't simply 
apply and just get this over with.
    Do you see any reason why the Federal Acquisition 
Regulations, which are applied to virtually every Federal 
agency, shouldn't apply to MWAA, as well?
    Secretary LaHood. Well, first of all, I would like to look 
at your legislation, Delegate Norton, and I would like to work 
with you on it. And before I say something very definitive 
about the procurement, I would really like to talk to our legal 
team about it.
    But, look, we are going to work with you on this, as we 
have on all of these matters. You are obviously very 
enlightened about these things. And having served here with 
you, I know the importance of having good Federal procurement. 
So let's work together on it and see if we can figure out a 
better path.
    Ms. Norton. Well, I certainly appreciate that approach. I 
am trying to go to efficiency in Government.
    Secretary LaHood. Yes.
    Ms. Norton. There is a lot of, I think, justified and 
justifiable criticism about Government regulations. And the 
notion of going all over all of this plowed ground seems to me 
a colossal waste of time and energy. And I very much appreciate 
you are willing to consider the legislation.
    Secretary LaHood. We will do it. We will do it.
    Ms. Norton. Thank you, Mr. Chairman--or Madam Chairman.
    Mrs. Schmidt. [presiding.] Thank you.
    And now I will yield myself such time as needed for some 
questions.
    Nice to see you, sir.
    Secretary LaHood. Thank you.
    Mrs. Schmidt. I have a couple of questions.
    MWAA, I get why it was formed. I would like some more 
clarification on why BWI was left out of the loop, since it is 
in a competitive region with Dulles to get back and forth to. 
And is there an advantage or a disadvantage for Federal funds 
to be in the MWAA loop, or is it a wash?
    Secretary LaHood. I am going to--I think it would be better 
for me to let Mr. Curto and the Airports Authority answer the 
question. To be honest with you, I don't know the answer to 
your question about why BWI was left out. I probably should, 
but I don't. But I think it is better, when I don't know the 
answer, to say I don't know and let other people who do know 
answer it.
    Mrs. Schmidt. Fair enough.
    The second part is the toll road. I mean, maybe Dulles and 
Reagan have a little Federal control because it is Federal 
property. That might be the catch, I don't know. But the toll 
road is definitely Virginia property. Why is MWAA having any 
jurisdiction over the toll road?
    Secretary LaHood. Well, look, part of what MWAA is doing is 
they are the grantee for the construction of the Silver Line, 
which will deliver people from around the region to Dulles 
Airport. And we have jurisdiction over the funding for the 
Silver Line, and we have worked very closely with MWAA and 
others on that. Part of what we have under consideration now is 
the TIFIA loan proposal, which will influence the toll road. 
And so these things are all sort of tied together as a result 
of the involvement with the Silver Line project.
    Mrs. Schmidt. I understand the importance of the Silver 
Line project getting to Dulles. Had MWAA not been involved, 
would it still have occurred, the Silver Line? I mean, could it 
have occurred with Virginia working with the Department of 
Transportation on it without MWAA oversight?
    Secretary LaHood. Well, look, this project is a project 
that is a part of the whole Metro system, and the decision was 
made to have MWAA be the grantee, so to speak, because the line 
was going to end up at Dulles Airport.
    So could there have been another grantee? You know, I would 
have to go back and look at the debate that took place and how 
all of that happened.
    Mrs. Schmidt. My final question: The toll road is solely in 
Virginia?
    Secretary LaHood. Yes, the toll road is solely in Virginia.
    Mrs. Schmidt. And MWAA decides what the rate of the toll 
will be?
    Secretary LaHood. Well, look, it is in cooperation with the 
Commonwealth also.
    Mrs. Schmidt. OK. Thank you so much.
    Secretary LaHood. Thank you.
    Mrs. Schmidt. I am surprised by all of this. Thank you.
    Ms. Richardson, do you have any questions?
    Mr. Cravaack?
    Mr. Cravaack. Thanks, Madam Chair.
    Thanks, Secretary, for being here.
    Secretary LaHood. Good morning.
    Mr. Cravaack. Morning. Just a couple questions.
    It sounds like you already have a proactive approach in how 
to correct the problem.
    Secretary LaHood. We have taken a very proactive approach.
    Mr. Cravaack. Yeah, it seems like you have. You gave me a 
laundry list, and that actually shot down some of my questions. 
You might not have the answer to this, and the inspector 
general may have it, but what, in your opinion, was the most 
egregious findings that you found?
    Secretary LaHood. Well, the way that this came to my 
attention is when I read an article in a local publication 
about a contract that was given to a former board member where 
this board member was going to be paid for an extended period 
of time as a consultant. And when I read the article, I 
couldn't believe it.
    Mr. Cravaack. Yeah.
    Secretary LaHood. And that is when--to me, that was the tip 
of the iceberg.
    Mr. Cravaack. Yeah.
    Secretary LaHood. And then we started drilling down, and we 
came up with these eight items that were included in the letter 
from the two Governors and the mayor of Washington, DC.
    Mr. Cravaack. Yeah. Well, like I said, you have already 
answered my questions in your opening testimony, so thanks for 
drilling it down.
    Secretary LaHood. Thank you.
    Mr. Cravaack. I appreciate it.
    And I will yield back. Thank you.
    Mrs. Schmidt. Thank you.
    Mrs. Johnson, do you have any questions?
    Ms. Johnson of Texas. No.
    Mrs. Schmidt. Mrs. Edwards?
    Ms. Edwards. Thank you, Madam Chair.
    We will just actually go down the loop.
    Mr. Secretary, it is good to see you.
    I do want to just go back to this question of the 
governance structure for the Authority. Because, I mean, in 
your view, in terms of the amount of resources that we put both 
into the lease agreements and the activities going at Dulles 
and at National Airport and, in addition, the Federal resources 
going in to the Silver Line Metro system, doesn't that justify 
some more oversight at the Federal level than we have in a lot 
of other regions that don't share in quite the same 
relationship with the Federal Government?
    Secretary LaHood. Well, look, when it comes to the Silver 
Line, we have a lot of jurisdiction. Our FTA Administrator and 
the FTA has already done one audit to make sure that the phase-
one money was spent correctly. There will be another audit done 
early next year to make sure that what has continued is being 
done correctly. That is the way that we would operate with any 
transit program where we give them money.
    The uniqueness of this is that the construction of the 
Silver Line is being done by the Airports Authority. But our 
jurisdiction over the Silver Line is quite significant and is 
significant the way we do it with every other project that we 
do like this. We pay a lot of attention, there is a lot of 
oversight, and we do a lot of audits. We make sure the money is 
spent correctly. We make sure the contracts are let correctly.
    And so, you know, the whole idea of the governance of MWAA 
I think is better left for debate with the next panel, the 
chairman and the CEO and the president, you know, to get their 
take on it. I don't really want to get involved in that. I 
don't know if that is really my responsibility. I don't want to 
be telling every airport authority around the country how many 
members they should have and who should be serving on their 
boards. That is not our role.
    Ms. Edwards. Thank you, Mr. Secretary.
    And just one final question. The first phase of the project 
was done under a project labor agreement, but that is not true, 
then, for the second phase, but largely it is the same number 
and the same workers.
    What was the role of the FTA in its oversight around the 
development of a project labor agreement in the first phase?
    Secretary LaHood. Well, once the contract was let, then it 
is between the people who get the contract and the FTA and 
others to--well, between the contractor and MWAA to work out 
the project labor agreement.
    I assume that is going to happen in phase two. I think once 
the contract is let for phase two, people will sit around a 
table and figure out the PLA.
    Ms. Edwards. There have been some suggestions, both in the 
media and otherwise, speculating about the existence of the 
project labor agreement and moving into phase two as having 
something to do with all of this mess, apart from the other 
ethical issues, the mess surrounding departures of board 
members and the reconfiguration of the board.
    Do you know anything about that?
    Secretary LaHood. I really don't. Yeah. I really don't.
    Look, phase one has worked pretty well. It really has. I 
think phase two will work equally well. Because I think when 
you talk to these folks that are now in charge of MWAA, a new 
CEO and president, a relatively new chairman, they get it. We 
have a former Member of Congress who is the vice chairman of 
the board who is here today; he gets it. These people get it. 
They do. They know this has to be done correctly. They also 
know that a lot of people have an eye on them, not just all of 
you, but those of us at DOT and others.
    So I am confident this is going to be done correctly. They 
have pending before us a TIFIA loan. I mean, look, we are not 
going to give them a TIFIA loan if they are not doing things 
correctly. They know that.
    Ms. Edwards. All right. Thank you.
    And I yield.
    Mrs. Schmidt. Thank you.
    Mr. Coble?
    Mr. Coble. Thank you, Madam Chairman.
    Mr. Secretary, good to have you back on the Hill.
    Secretary LaHood. Thank you.
    Mr. Coble. I was going to ask you, Mr. Secretary, what 
DOT's next steps are in regard to MWAA, and you have touched on 
that briefly. Go into it in a little more detail, if you will.
    Secretary LaHood. Well, we put together a letter, signed by 
myself and the Governor of Virginia, the Governor of Maryland, 
and the mayor of DC, where we outlined eight items that they 
needed to correct quickly. And they have completed the majority 
of those. They still have more to go.
    We have our accountability officer, Kim Moore, assigned by 
me to work with the MWAA board. She has done a great job, and 
they have been very cooperative.
    And the other thing that I would say is that I have a lot 
of confidence in the new CEO and president, also in Mr. Curto, 
who you are going to hear from, but, as important, in Mr. 
Davis, a former Member of this body. They get it now. They know 
that things need to change.
    And they also know that if they are going to get phase two 
funded, if they are going to get a TIFIA loan from DOT, things 
have to be done correctly.
    And I believe they are on the right track.
    Mr. Coble. Well, personally I think you served a good 
watchdog role over there, Mr. Secretary. Good to have you back 
on the Hill.
    Secretary LaHood. Thank you.
    Mr. Coble. I yield back, Madam Chairman.
    Mrs. Schmidt. Thank you.
    Are there any other questions?
    Secretary LaHood. Thank you very much.
    Mrs. Schmidt. Thank you.
    I am sorry, Mr. Petri has--I am sorry, Mr. Petri.
    Secretary LaHood. Almost.
    Mrs. Schmidt. Not quite.
    Mr. Petri. This is slightly unrelated, but I just wanted to 
get on the record that when we passed the FAA reauthorization, 
it had a provision in it asking the FAA to engage in something 
similar to what we think of as the Army or the base-closing 
process, to look at underutilized FAA air-traffic-control 
facilities around the country, and work with the labor 
representatives and with others to come up with this.
    We know these deadlines are sometimes difficult to meet, 
but this was supposed to be submitted in June, and now we are 6 
months later, and if we don't bring it to the people's 
attention, it will end up probably continuing to drift into 
oblivion. So would it be--could you comment on that, or can 
this be given some attention?
    Secretary LaHood. I think what I will do, Mr. Petri, is 
consult with Michael Huerta, the Acting Administrator of the 
FAA, and, for the record, I will get you an answer.
    Mr. Petri. Thank you, because it is not huge numbers of 
dollars, but it is--it would save money, and we are looking for 
efficient operation, safe operation of the Government in every 
respect, and if we neglect these things, they pile up. So----
    Secretary LaHood. I agree.
    Mr. Petri. Thank you.
    Mrs. Schmidt. Thank you.
    Any other questions?
    Thank you very much for your time.
    Secretary LaHood. Thank you very much. All right. I got 
them warmed up for you. Good luck.
    Mrs. Schmidt. Welcome, gentlemen. We are joined by the 
Honorable Calvin L. Scovel, inspector general, U.S. Department 
of Transportation; the Honorable Michael A. Curto, chairman of 
the Airports Authority Board, Metropolitan Washington Airports 
Authority. We are also here with the Honorable Tom Davis, from 
Virginia; and Mr. Potter, the president and chief executive 
officer of the Metropolitan Washington Airports Authority.
    Welcome, gentlemen.
    We will begin with the Honorable Scovel.

TESTIMONY OF HON. CALVIN L. SCOVEL III, INSPECTOR GENERAL, U.S. 
DEPARTMENT OF TRANSPORTATION; HON. MICHAEL A. CURTO, CHAIRMAN, 
BOARD OF DIRECTORS, METROPOLITAN WASHINGTON AIRPORTS AUTHORITY, 
    ACCOMPANIED BY HON. TOM DAVIS, VICE CHAIRMAN, BOARD OF 
 DIRECTORS, AND JOHN E. POTTER, PRESIDENT AND CHIEF EXECUTIVE 
      OFFICER, METROPOLITAN WASHINGTON AIRPORTS AUTHORITY


    Mr. Scovel. Madam Chairwoman, Ranking Member Edwards, 
members of the committee, thank you for inviting me here today 
to discuss MWAA's governance. Before I begin, I ask consent to 
include in the record a copy of our recently issued MWAA 
report.
    Mrs. Schmidt. So moved.
    Mr. Scovel. Thank you.
    Over the past several months, we have reported a number of 
deficiencies in MWAA's internal policies and procedures related 
to contracting, travel, hiring, and transparency. MWAA is 
taking positive steps to correct these deficiencies, including 
strengthening several of its policies and terminating contracts 
with former board members. Further, in exercising the full 
extent of its authority, the Department has appointed a Federal 
accountability officer to monitor reform efforts, and is 
pursuing an amendment to the current lease with MWAA to ensure 
greater oversight and enforcement.
    While these are very positive steps, further actions are 
needed to ensure fiduciary and ethical responsibility and 
accountability to Congress, stakeholders and the public.
    First, MWAA needs management controls that will protect 
Federal assets and provide reasonable assurance of sound 
governance. A lack of such controls has allowed violations of 
applicable laws and agreements and even MWAA's own policies to 
go unchecked. Ultimately, MWAA's culture became one that 
tolerated questionable contracting practices, including 
awarding two-thirds of its contracts noncompetitively, adding 
out-of-scope work to existing contracts without proper 
justification, and initiating work before contract award. MWAA 
also released nonpublic contract information that gave 
potential contractors an unfair advantage in competition. These 
weaknesses were exacerbated by a lack of measures to ensure 
employees with delegated procurement authority do not violate 
the terms of their delegation or make improper purchases.
    Second, MWAA's code of ethics needs to ensure the integrity 
of decisions made by MWAA's board of directors and employees. 
MWAA's code of ethics and related policies and procedures have 
been insufficient to detect violations of antinepotism and gift 
provisions and to identify potential conflicts of interest. For 
example, employees regularly accepted inappropriate gifts from 
an MWAA contractor, including Super Bowl tickets, travel, and 
accommodations worth almost $5,000. Cursory reviews of 
financial disclosure statements and the lack of recurring 
ethics training have provided little assurance that employees 
were fully aware of MWAA's ethics requirements.
    Third, MWAA's hiring and compensation policies and 
practices need to ensure sufficient oversight and 
accountability. Senior officials have placed candidates into 
new or existing positions without job descriptions, 
competition, or completed background checks. We found that 
employees with criminal convictions worked at the Authority in 
sensitive and management positions for more than a year. In 
addition, MWAA managers awarded excessive salaries, 
questionable cash awards, and ineligible benefits. In one case 
MWAA created a new position for a former board member that 
included an annual salary of $180,000 for unspecified job 
duties before terminating that position.
    Finally, MWAA needs to expand its use of open committee 
meetings and continue to limit its use of executive sessions. 
This would further promote transparency, ensure accountability, 
and keep Congress, the public, and other stakeholders informed 
of its major decisions. MWAA has begun to take action to 
address our concerns. Notably MWAA has approved new codes of 
ethics for its employees and board, suspended the use of 
categorical exceptions for professional services, terminated 
contracts with former board members, approved a new travel 
policy, revised the board's bylaws and freedom of information 
policy, and enhanced screening for nepotism.
    While these efforts, coupled with the Department's planned 
actions, can help improve MWAA's accountability, significant 
attention will be required to ensure that new contracting, 
travel, ethics, and disclosure policies instill public 
confidence. The key will be implementation and enforcement.
    Mr. Chairman, this concludes my prepared statement. I would 
be happy to an any questions that you or other members of the 
committee may have.
    Mr. Mica. [presiding.] Thank you.
    And I think we are going to go ahead and hear all of the 
other witnesses. So we will turn next to the chair of the 
board, Mr. Michael Curto, and you are welcome and recognized.
    Mr. Curto. Good morning, Mr. Chairman and members of the 
committee, and thank you for the opportunity to discuss the 
Metropolitan Washington Airports Authority's response to the 
audit by the Department of Transportation's inspector general. 
I am Michael Curto, chairman of the Airports Authority board of 
directors, and with me today is the vice chairman of the 
Authority's board, Congressman Tom Davis, as well as our 
president and CEO, Jack Potter.
    This audit began 16 months ago, shortly after I joined the 
board, and shortly before Mr. Potter joined the Authority. In 
May of this year, the inspector general issued an interim 
report which raised a number of issues that we have been 
working to address. The final report issued November 1st raised 
additional issues and provided a number of recommendations.
    Mr. Chairman, I wish to be clear. The Airports Authority 
intends to address every issue raised in these reports, act on 
every recommendation, and fix every problem identified, and to 
do so in a manner that ensures they will not recur. It is my 
hope and the Authority's goal that through these actions we 
will restore the confidence and trust of our many friends and 
partners. I am confident we will succeed.
    Today our board of directors is a very different body than 
the board of only a year ago, and soon it will be even more so 
due largely to legislation sponsored by Congressman Wolf. By 
early next year only 2 directors on our 17-member board will 
have served more than 2 years. Importantly, many of these 
directors will have joined us after the IG's interim report was 
issued. They are aware of our challenges and are committed to 
fixing the problems.
    Our new leadership also is reflected in our new president 
and CEO. Mr. Potter brings a no-nonsense, get-it-done-right 
management style to the Authority. Working with him closely 
since becoming chairman in January, I am confident in his 
ability to lead the staff in successfully meeting these 
challenges.
    As the IG's final report acknowledges, we already have made 
good progress. We have adopted new policies and revised others, 
we have made our operations and governance more open, we have 
improved our internal controls and oversight, and we are 
strengthening our procurement process with other initiatives 
underway.
    Our purpose in all of these actions is to bring greater 
transparency, accountability, and unmistakable integrity to all 
areas of the Authority. Our efforts have benefited greatly from 
the counsel and guidance provided by the Federal accountability 
officer appointed earlier this year by Secretary LaHood.
    I would like to briefly recap some of our actions. We have 
revised the Authority's bylaws to increase transparency, 
including the posting of materials for board meetings to our 
Web site. We have revised our freedom of information policy to 
improve transparency, and have designated a freedom of 
information officer. We have approved a new travel policy with 
detailed procedures and clear guidelines for expenses. We have 
approved new codes of ethics for employees and directors with 
requirements for annual training. We have named an ethics 
officer to provide oversight, and we have conducted more than 
20 training sessions on the new codes for board members and 
employees.
    We have terminated all noncompeted contracts and employment 
relationships with former board members. We are revising our 
contracting manual to reflect best practices and optimize 
competition. We are revising our human resources programs to 
assure best practices in compensation and hiring. And we have 
created an internal control group to enforce policies and 
assure accountability. Finally, we have assigned special 
management teams across the Authority to address and formally 
respond to each recommendation in the inspector general's 
audit.
    We are submitting for the record a report we presented this 
week to Secretary LaHood. You heard Secretary LaHood mention 
the response to his letter. The response also goes to Governors 
McDonnell and O'Malley, and Mayor Gray. It describes in detail 
our actions to address the recommendations of the IG and the 
concerns these officials expressed this past August.
    I believe we are on the right track. I recognize the 
movement along this track will require hard work, and at times 
may be slow and encounter difficulties, but I am confident we 
will achieve steady and significant progress to strengthen the 
Airports Authority and rebuild the public trust and confidence.
    Mr. Chairman, we would be pleased to answer any questions.
    Mr. Mica. Thank you.
    And I see you are accompanied by John Potter, who is the 
president and chief executive officer. Did you have any 
testimony there?
    And then the vice chair of the board, Mr. Davis. Mr. Davis 
is well known to this committee, and our former colleague, and 
I guess were you made vice chair to investigate vice on the----
    Mr. Davis. I think the IG has done a good job of that.
    Mr. Mica. All right. Welcome back, Mr. Davis, a good friend 
and former colleague. And I am sure they are very fortunate to 
have your service on the board.
    Well, we will start with some questions, if I might.
    So, the investigation started how long ago, Mr. Scovel?
    Mr. Scovel. Mr. Chairman, in the spring of 2011, we were 
asked by Mr. Wolf and Mr. Latham to undertake an inquiry of 
MWAA's governance, transparency, and accountability.
    Mr. Mica. And I see you submitted it November 1st. And now, 
did your--since you submitted it November 1st, you watched some 
of the changes and implementation of some of your 
recommendations, or they were aware of your recommendations 
along the way? How do you feel about what they have done, and 
how much further is there to go?
    Mr. Scovel. Mr. Chairman, at Mr. Wolf's request 
specifically, on May 15th, we conducted a briefing on our 
findings as of that date for the benefit of the Department, for 
MWAA itself, and for the local stakeholders in northern 
Virginia who are most interested. We had previously briefed the 
Department as well as MWAA leadership on what we were about to 
say to the local stakeholders specifically. But at that point, 
starting in the middle of May, we saw tremendous effort on the 
part of MWAA and especially on the part of the Department to 
get their arms around all of the problems that we had 
identified in the findings.
    Mr. Mica. So most of what you heard today you feel 
confident is correct, that they have taken positive steps to 
implement.
    The second part of my question, is there a lot more to go? 
Can you comment on that based on what you know of their actions 
to date?
    Mr. Scovel. Generally, Mr. Chairman, I can say that they 
have taken numerous positive steps at MWAA, and we are 
tremendously gratified by the attention and energy from the 
Department, through the accountability officer and through the 
negotiations to modify the lease arrangement with MWAA for 
running the airport facilities. Those are all positive steps in 
the right direction.
    However, I have to note that I wear the title of ``hired 
skeptic'' that a member of this committee bestowed on me 
several years ago. I wear that title most proudly. And until we 
have seen a record of execution and data to substantiate, 
especially in the contracting area, that the improvements that 
are now on paper have actually been carried out over a period 
of time, I have to reserve judgment.
    Mr. Mica. I think we need to work with Mr. Wolf and others 
to make certain--and Mr. Latham--to make certain that, again, 
what we have heard today is not just on paper and part of it 
implemented, but all implemented.
    There were some pretty serious charges and some findings 
of--I termed it corruption when you are taking gifts, when you 
are--well, we had a whole host of illegal activities, in my 
opinion. I am not sure, I don't know whether they fall under 
Virginia law where they were committed, or Federal law. But do 
you--will you have criminal referrals, or are you turning any 
of this over to any other authorities so that people who 
violated the law will be held accountable?
    Mr. Scovel. Mr. Chairman, to be clear, what we reported on 
November 1st was the result of an audit. There are 
investigations, criminal investigations, underway. Agents from 
my office are participating under the leadership of the FBI. 
Those are independent matters. I am not cleared to speak at 
this point----
    Mr. Mica. OK. I don't want to get into that.
    Mr. Scovel [continuing]. On what is developing along those 
lines.
    Mr. Mica. But, again, there are authorities, and it 
appears, too, there might be violations of State or other 
jurisdictional laws. Are you cooperating with any other 
authorities or making referrals, or are they reviewing this 
information?
    Mr. Scovel. An assistant United States attorney is----
    Mr. Mica. Primary.
    Mr. Scovel [continuing]. Is spearheading the investigation 
conducted by my office and the FBI. I leave it to his good 
judgment on whatever authorities he may need to coordinate 
with.
    Mr. Mica. I guess you put personalities on a board, and 
sometimes you are going to have some weak regulations and some 
weak structure, but people perform well, and then in other 
instances people perform poorly and violate both the intent or 
actually the law and the spirit of the law.
    You heard, I think, Mr. Curto describe the changeover in 
the board members who were primary. Now, there are personnel 
also in place that actually participated. Some of the 
accusations were against the board members, some were against 
personnel. Now, Mr. Curto, you said there is only two left of 
the old members, is that----
    Mr. Curto. That is correct, Mr. Chairman. As of the new 
year, there will be only two board members that have served 
more than 2 years.
    Mr. Mica. Well, I don't want to get into a public forum 
about the two remaining board members. I will discuss that with 
Mr. Wolf and others.
    Of the personnel, the employed personnel, what changes have 
been made there? I mean, the board members go through a 
confirmation process or appointment process. Personnel are 
hired and fired. Can someone tell me who has been hired and 
fired and held accountable as far as employees? I guess the big 
offender here was the HR director, and he resigned; is that 
correct?
    Mr. Potter. That is correct.
    Mr. Mica. OK. Who wants to tell me? Mr. Potter, tell us the 
status of the bad players.
    Mr. Potter. Well, I will tell you this, that we have----
    Mr. Mica. Pull that up. It is a little hard to hear you.
    Mr. Potter. We have three vacancies that we are currently 
filling, the vice president of IT, the vice president of HR, 
and the manager of procurement. The three areas that they 
managed were highlighted in this report, and they are no longer 
with us.
    Mr. Mica. IG, is that sufficient to cover the personnel 
malfeasance that you saw?
    Mr. Scovel. Mr. Mica, I don't believe it is my role to 
execute--to make those management decisions or to execute them; 
however, I will note----
    Mr. Mica. Your investigation uncovered wrongdoing both by 
board members and employees, and if there are still bad players 
on the board, we can address that. If there are still bad 
players employed, some steps need to be taken. And you 
certainly must attribute some of the wrongdoing to some 
individuals who were in the employ. You said three people are--
--
    Mr. Potter. Well, if I could just add to that. We have been 
briefed by the IG this week in terms of identification of some 
of the players who played roles in some of this activity. When 
we went through that laundry list, several of the people that 
were identified are either no longer with us or in the process 
of being no longer with us. And, again, personnel management--
--
    Mr. Mica. Can you advise the committee as to the progress 
of the process of, they are no longer with us----
    Mr. Potter. Right.
    Mr. Mica [continuing]. And provide us with a list? We are 
going to leave--we will leave the record open the next 3 weeks 
to give them enough time. Is that fine, Ms. Norton?
    Ms. Norton. Yes.
    Mr. Mica. Without objection.
    [The information follows:]

    [GRAPHIC] [TIFF OMITTED] T6706.007
    
    Mr. Mica. And if you could provide us--again, the purpose 
of this is to hold people accountable----
    Mr. Potter. Right.
    Mr. Mica [continuing]. Make certain it doesn't happen 
again, and then to see that the recommendations of the 
inspector general are carried through, and, again, that we 
restore trust, as the gentleman from Virginia Mr. Connolly said 
is so important in this process. So again, we want people held 
accountable. We want the board to act, and clean up the mess 
and, again, the failure that is so embarrassing here.
    Mr. Scovel. Mr. Mica, if I may, Mr. Potter, to his credit, 
has reached out to my office requesting specific information 
that we obtained from the Authority pertaining to misconduct 
and the names of individuals that we believe may have been 
responsible for it. My staff met with Mr. Potter and his chief 
operating officer yesterday, and we have begun that process to 
make all of that information available to them for their 
management decisions.
    Mr. Mica. Well, again, we have begun that. He said they are 
in process. We want it to continue and be complete, holding 
people accountable. Otherwise, you know, this becomes a kabuki 
dance, and we are not going to put up with that.
    Mr. Potter. Thank you, Mr. Chairman, for recognizing the 
sensitivity of some of these personnel, and we will deal 
offline with you. Thank you.
    Mr. Mica. And even if it is by position, I don't care about 
the names, but if people have violated a trust, and the 
inspector general has helped identify them, and we also have 
Ms. Moore and others who are working on implementing some of 
the changes, you don't want the same cast of characters or 
violators in positions of trust. And we are going to clean 
house on the board and with employees and restore the 
confidence.
    Mr. Davis.
    Mr. Davis. Mr. Chairman, let me just say, I think the 
board, as Chairman Curto noted, is substantially reconstituted 
at this time. We welcome the oversight, the input from the IG's 
office and the Secretary's office. We are determined to clean 
house, let the chips fall where they may.
    Mr. Mica. Well, again, you can give us an interim report, 
and, you know, we will--in the new session I will ask that we 
follow through, because you want the right things done.
    Ms. Norton.
    Ms. Norton. Mr. Chairman, I will yield to my colleague from 
Maryland, and I will have questions after her.
    Mr. Mica. Thank you.
    Ms. Edwards. Thank you, Mr. Chairman, and thank you to the 
ranking member.
    Mr. Scovel, I really--I appreciate the job that the IG 
does. I think it is important to look at what you did so that 
you don't do it again. And thanks for highlighting that. And so 
in that--in that realm I want to ask you a couple of questions 
about the contracting and hiring processes or apparatus at the 
Authority.
    Contracts that were made with board members, those have all 
been terminated?
    Mr. Scovel. My understanding--and I would ask for some help 
from Mr. Curto and Mr. Potter on this--is that those contracts 
have been terminated, or they will not be renewed.
    Ms. Edwards. And are there still children, grandchildren, 
contracts with spouses' law firms; are those things still in 
place?
    Mr. Scovel. That I don't know.
    Ms. Edwards. Mr. Curto?
    Mr. Curto. No. I believe the contracts, all contracts with 
former board members and former employees have been terminated. 
With respect to relatives of employees or board members, I will 
let Mr. Potter address that specific question.
    Mr. Potter. We are looking at all hiring that has been done 
in the past 5 years to determine how people got on board. But I 
will tell you this: We are going to be very fair about the 
process. If we have relatives of employees who competed open 
and fairly for jobs, and if the panels were fair, we are going 
to continue to employ some people. There is nothing wrong with 
having a relative work as long as they got there in an 
appropriate way.
    Ms. Edwards. Well, I mean, I don't know that I agree with 
that, frankly. I mean, I think it depends on whose authority 
they report to, what their employment responsibilities are. 
That is why at lots of different agencies and in the private 
sector there are prohibitions around those hirings. I mean, 
there are a lot of jobs out there, and people may have to find 
other things to do.
    The contract that was with the law firm of the board 
member, is that board member still on the board?
    Mr. Curto. Yes. That board member is me.
    Ms. Edwards. So it is your wife is the--works at the law 
firm that has the contract with the Authority?
    Mr. Curto. No. The circumstances relating to that were as 
follows: The Authority requested an opinion of counsel from a 
law firm. I was not chairman at the time, I was not on the 
legal committee at the time, and the general counsel for the 
Authority made the decision to retain the law firm. My wife at 
the time was an employee of that law firm. She wasn't an 
attorney. She wasn't a partner in the law firm. She had no 
direct or indirect financial interest in the law firm.
    Ms. Edwards. Can I just ask, was that also competed, or was 
that just a sole-source contract?
    Mr. Curto. It was a decision by the general counsel, and it 
was a sole-source contract.
    Ms. Edwards. Mr. Scovel, is there a problem with that?
    Mr. Scovel. If I may have a moment.
    Ms. Edwards. I know I only have a moment and 37 seconds.
    Mrs. Schmidt. [presiding.] I am going to yield you more 
time because I am interested in this question.
    Ms. Edwards. Thank you.
    Mr. Davis. If I could add, this was one of those 
situations, and I wasn't in the loop in the decisionmaking on 
this, but you needed a law firm very quickly to get a very 
quick answer. So in a case like that, the general counsel just 
goes out to a series of firms, and I guess that was the 
decision that was made.
    Mr. Curto. Congresswoman, the determination that was made 
was that although it wasn't an actual conflict of interest, it 
certainly was an appearance of a conflict of interest. And at 
the time when the interim report was issued in May, I 
immediately made a statement recognizing, stepping back, that 
prospectively any actions I take would be to avoid even the 
slightest appearance of a conflict of interest.
    Ms. Edwards. Thank you.
    Mr. Scovel.
    Mr. Scovel. Ms. Edwards, if I may, these are the facts as 
determined by my audit team. As you well remember, on November 
17, 2011, Congress passed H.R. 2112, which amended the Airports 
Act to add additional seats to the board of directors and 
provided for the removal of directors for cause.
    The board apparently was concerned about the impact of that 
legislation on the board, and on November 18, 2011, members of 
the board instructed the general counsel to obtain a legal 
opinion on that legislation. When the general counsel asked 
members of the board for possible candidate firms, a board 
member, Mr. Curto, not yet chairman, but still a member of the 
board, suggested a firm where his spouse serves as the director 
of administration. The general counsel then contacted that 
firm, and arranged for that firm to begin drafting an opinion 
on the legislation. It was a sole-source contract, and it was 
executed without the immediate knowledge or involvement of the 
procurement and contract department of the Authority.
    Ms. Edwards. Thank you, Mr. Scovel.
    You know, I would just note that particularly in this 
region, there is a lawyer on every corner, and so it is not--
and with lots of different expertise in and around this city. 
And so it does strike me that whether for appearances purposes 
or for actual conflicts of interest, it sure would make sense 
to find another lawyer. And if you need some help, I am sure 
there are plenty of people who can do that.
    Let me just--one last thing. How many children and 
grandchildren of board members are still employed by the 
Authority?
    Mr. Potter. Well, we do not have an exact count. We are 
going through a process.
    Ms. Edwards. Is it more than one?
    Mr. Potter. Yes, it is more than one.
    Ms. Edwards. More than two?
    Mr. Potter. I don't have an exact count. We are going 
through the process right now of having all of our employees 
fill out a form that identifies relatives either within the 
Authority or on the board. And that process is currently 
underway, and once that process is complete, we will be able to 
know.
    Ms. Edwards. Mr. Scovel, in your view does it present a 
problem to have close relatives who are relatives of board 
members as employees of the Authority?
    Mr. Scovel. Clearly, it does. And I would like to point 
out, Ms. Edwards, that for a long time the code of ethics that 
applied to employees, to the staff of the Authority, prohibited 
nepotism, yet the code of ethics, until recently revised, that 
applied to the board of directors was silent on nepotism. And 
it was through that gap that decisions to suggest, if you will, 
or to recommend, or even to insist that friends and family 
members be hired within the Authority, those recommendations or 
suggestions were made by board members.
    Ms. Edwards. And have those recommendations been 
implemented in policy at the Authority?
    Mr. Scovel. My understanding is that the policy has been 
changed, or rather that the code of ethics that now applies to 
board members with respect to nepotism has been brought into 
conformance with what applied to employees as well. It is one 
of the recent positive changes I would certainly like to 
endorse and commend the board for taking.
    Ms. Edwards. Madam Chairwoman, if I could ask just one last 
question.
    Mrs. Schmidt. Go ahead.
    Ms. Edwards. Thank you very much, and I appreciate it.
    With respect to the contract with the board member that is 
now apparently terminated, I take it, how did that come about? 
Who asked whom to authorize the contract, and who approved it?
    Mr. Scovel. If I may have a moment, and then I will direct 
you as well to Mr. Potter, because both Mr. Curto and Mr. 
Potter engaged in, shall I say, missteps or misjudgments in 
their service on the Authority. They have been very candid in 
their discussions with me and my staff about those events, and 
I take it in a very positive manner that they are both here 
today and are available to answer all of your questions on 
these.
    However, as we understand the facts, as my audit team 
understands the facts, with respect to Mr. Potter's decision 
regarding the former board member, it was not specifically a 
contract matter, but rather it was an employment matter, and it 
ran like this: Mr. Potter determined that he needed a new 
position with a certain person in mind, and that would be the 
former board member, but he did not follow standard processes 
to create or fill that position. This was an advisory position 
for a board member to occupy immediately upon departure from 
the board. It did not have a specific job description, but it 
did have a paycheck, $180,000 per year, beginning 1 day after 
that board member left the board.
    There may indeed have been a legitimate and compelling 
business need to secure the services of that former board 
member, but the process to create and fill the position was 
unsatisfactory. And this is the case that is highlighted in our 
issued report as an instance where senior officials 
circumvented established hiring positions both for current 
positions and also for new positions, to the detriment, most 
certainly, of the credibility and integrity of the Authority, 
and perhaps with a very harsh effect on the morale of all of 
the rest of the staff, who knew that this was going on.
    Ms. Edwards. Mr. Curto, did--was that contract to the board 
member let under your leadership?
    Mr. Curto. Yes. Mr. Potter did employ that former board 
member this past year while I was chair.
    Ms. Edwards. And was there a conversation or other that 
ensued with other board members with respect to this, or was 
that just a decision between you and Mr. Potter?
    Mr. Curto. It was a decision made by Mr. Potter, and he 
conferred with me.
    Ms. Edwards. Did anyone else on your board ask you to 
engage in this contract with this former board member?
    Mr. Curto. No.
    Ms. Edwards. Did the former board member ask you to engage 
her in a contract?
    Mr. Curto. No.
    Ms. Edwards. And so you and Mr. Potter made the decision 
independent of anything or anyone else to let a contract with 
the former board member?
    Mr. Curto. It was principally Mr. Potter's decision, yes.
    Ms. Edwards. So you didn't sign off on it or anything, but 
it was under your leadership that it happened?
    Mr. Curto. Yes, it was during my tenure as chair, yes.
    Ms. Edwards. And so the other board members and staff who 
were engaged in behavior that was highlighted as egregious in 
the inspector general's report, are all of them still working 
at the Authority?
    Mr. Curto. I believe Mr. Potter addressed some of that 
inquiry earlier. He highlighted three senior-level positions; I 
believe the vice president for IT, human resources, and as well 
as a retirement in the procurement area. And then below the 
vice president level, there are a number of positions that he 
referenced earlier in response to an earlier question.
    Ms. Edwards. That are open----
    Mr. Curto. That are----
    Ms. Edwards [continuing]. Or pending.
    Mr. Curto. Some are no longer with the Authority, and 
others won't be with the Authority.
    Ms. Edwards. But on the board, the board members who--who 
were in place over this period of this kind of behavior that 
is--you know, a lot of which is unethical, who knows what other 
labels we would attach to it, how many of those board members 
remain?
    Mr. Curto. Well, as I related earlier, the board, beginning 
in this January, will principally be a newly constituted board. 
There will be, I think, approximately two board members that 
will have been on the board for more than 2 years. One of them 
was recently reappointed by Governor McDonnell. Another is Vice 
Chairman Davis, who will have been on approximately about 2 
years. Everyone else will have had a tenure of less than 2 
years, some as few as weeks, as of January.
    Ms. Edwards. Just as a matter for your consideration, do 
you think it is appropriate to remain on the board and Mr. 
Potter to remain as CEO while under your tenure these actions 
took place?
    Mr. Curto. I would hope so. I think that the body of the 
report, most of the findings and conclusions of the inspector 
general's report occurred prior to my time on the board and 
certainly prior to my tenure as chair. The misstep that I made 
with respect to the matter you referenced regarding the 
retention of the law firm, as I indicated, it was certainly an 
appearance of a conflict. It wasn't----
    Ms. Edwards. Well, the retention of the law firm at, I 
think, $100,000 and the contract with the former board member 
of $180,000, the travel, and other missteps of who knows how 
many thousands of dollars, it is not just a simple matter, and 
with that I yield.
    Thank you, Madam Chairwoman.
    Mrs. Schmidt. Thank you, and I am going to be generous with 
everybody, but I am going to yield to myself such time as I 
need.
    Mr. Curto, I want to follow up on some questions that Ms. 
Edwards brought up. Regarding the employment of your wife's--
the law firm that your wife worked in in an administrative 
capacity, didn't have clients, wasn't going to lead to a better 
paycheck for her, did you tell the board that she was employed 
there when that contract was let?
    Mr. Curto. In my financial disclosure I made it clear that 
my wife worked at that law firm. That is part of the normal 
financial disclosures. And when discussing it with the general 
counsel, I did.
    Mrs. Schmidt. You did?
    Mr. Curto. Yes.
    Mrs. Schmidt. And the general counsel didn't have a problem 
with it?
    Mr. Curto. I am not sure it was brought to his attention at 
the very outset, but I think once I helped facilitate the 
outreach, I then did tell them. I think it was underway at that 
time.
    Mrs. Schmidt. I am confused. I mean, so you put it in a 
financial disclosure. Most people don't read it. I have served 
on many boards in my time, and somebody makes a suggestion of a 
law firm, and one of the things that we always ask was, do you 
have any familiarity with it other than you know that it is a 
law firm? And they might say, well, I have used so-and-so as 
counsel in my past, but, you know, I don't have any family 
members working there. So on the boards that I have served on 
in the past, we always brought that out into the open. That 
kind of a discussion was not made?
    Mr. Curto. That discussion took place after they had been 
retained.
    Mrs. Schmidt. After they had been retained, OK. So not at 
the beginning. OK.
    Mr. Scovel?
    Mr. Scovel. Madam Chairwoman, just to add to that, and I 
think it may have just been clarified, but my audit team was 
informed by the general counsel that he was not aware at the 
time that he contacted the law firm and arranged for them to 
provide the requested legal opinion that Mr. Curto's spouse 
worked for that firm.
    Mrs. Schmidt. OK. The other troubling aspect that I have is 
a former board member that is brought back at a substantial 
salary, $180,000--that is actually more than what a Member of 
Congress makes, so it is a pretty substantial salary--was 
brought back without any vetting, and a special position was 
created for this individual, am I correct, or that position 
wasn't there before? Mr. Potter?
    Mr. Potter. That is correct.
    Mrs. Schmidt. Why did we need that position, and was there 
any other reason why this--was it a lady?
    Mr. Potter. It is a lady.
    The reason we needed the position was we have a significant 
challenge out at Dulles Airport. The challenge is that we have 
very high cost per enplanement rates, largely driven by the 
fact that there has been a major capital investment of over $4 
billion in recent years with an expanded international arrivals 
building, an underground rail to take you from the terminal out 
to the concourses, as well as other improvements, including the 
doubling of the size of the terminal. As a result of the 
capital investments coming to bear in terms of cost to the 
airlines, we have had to increase the cost per enplanements out 
at Dulles significantly, and it is affecting the competitive 
position of that airport.
    So when I got on board, I was looking to try and figure out 
how we could take advantage of the biggest asset we have at 
Dulles, and that is our land. And what I have come across is 
the fact that it is a very complicated community. There was a 
need for somebody that really understood the community, how 
developers work, how we interrelated between ourselves as a 
Federal leaseholder and the counties, because development on 
airport property obviously affects the counties, and there was 
a need to integrate our actions with the economic development 
communities in Fairfax, Loudoun, as well as the Commonwealth. 
And so I thought that the person that I hired was uniquely 
positioned to do that and would be able to ramp up very quickly 
an effort to do that. And I will tell you that in the course of 
the months that she performed that service, I got to meet and 
understand that community in a very rapid way.
    Now, in hindsight, as I have told the press and have 
readily admitted, my judgment was not good in terms of the 
hiring of that person. But given the situation, I wanted to 
move quickly to try and do the best I could to generate 
additional sources of revenue, nonaviation sources of revenue, 
for Dulles Airport. But I readily admit, and I was very candid 
with the IG when they came to speak to me about my motivation. 
That was my motivation, pure and simple. That board member had 
advised others on the board that she was leaving, and I thought 
that it was a service that could be performed.
    Mrs. Schmidt. Let me ask you, she was leaving. Was it to 
take another job, or what--she was leaving the board, and then 
suddenly you hired her to do a service outside of a board 
member, and you created this position. And I am understanding 
that you needed somebody to cobble things together. There was 
no vetting. She got $180,000 there. How long did she work, and 
what was the reason for leaving the board that she would have 
time on her hands and then suddenly use up that time doing this 
job? I am confused.
    Mr. Potter. Well, she was leaving the board, as she stated, 
because between her board duties, the fact that she had been 
running a company, and she was dealing with some health issues, 
she needed to concentrate her efforts on doing one job, and one 
job alone. She was seeking to close down her business and work 
a 40-hour week versus an 80-hour week.
    Mrs. Schmidt. So she left the board because she had some 
health issues. She had a job. Does she own her own company?
    Mr. Potter. She did at the time.
    Mrs. Schmidt. She did at the time. And so she closed the 
company down and got a $180,000 job, and how long did she work 
at that job?
    Mr. Potter. Well, she ended up working for about 6 months. 
I don't know the exact time. I can give you that.
    Mrs. Schmidt. And then why did she leave?
    Mr. Potter. Because the fact that one of the requirements 
in the letter that we received from the Governors and the 
Secretary of Transportation and the mayor were to end all 
contracts with former board members. In discussions, followup 
discussions, with the Secretary's staff, it was made clear to 
me that the expectation was we end those contracts under 
whatever terms they were, and put them in our past and look 
forward.
    So we complied with that, and we did as we were instructed. 
We ended all of those contracts with the sole purpose of 
putting them behind us, starting a new day, and reconstituting 
whatever works were required from those contracts.
    So I have to tell you, when it comes to those contracts, we 
had people who were doing a good service--and I am not talking 
about this individual in general--but we had contracts with 
former board members who were actually, prior to my time, 
recruited by my predecessors to help us do work. For example, 
we had a few folks who were helping us with lobbying efforts in 
Richmond. I can tell you the contracts that they had were under 
$50,000, and you would be hard pressed to replicate that in the 
private sector, and----
    Mrs. Schmidt. An arm's length for a long time and then 
suddenly----
    Mr. Potter. But we did not use any consideration. We 
recognized that the image of the institution is hurt by the 
fact that we have these contracts. We put them to an end, and 
the reason that they were problematic was not the work that was 
being done, it was the way they were established without 
competition. So we put them to bed, and we are going to 
recompete for those services that we continue to need. And I am 
going to recruit for somebody to perform the services that I 
just described because they are very much needed by the 
Authority.
    Mrs. Schmidt. OK. I am going to do two more questions, and 
then I will turn it over to the gentle delegate from this 
District. And I am going to be very liberal with everybody for 
time since we have gone off the map, but I think this is a very 
provocative discussion, and I think you will all agree.
    Mr. Scovel, do you have anything to add to the discussion 
about the employment of this individual?
    Mr. Scovel. No, I don't. What my audit team has determined 
is what I have already related for the committee's 
consideration. And we have found no evidence to suggest that 
Mr. Potter's decision to employ her and for the reasons that he 
just outlined were anything other than what he has spoken to 
this morning.
    Mrs. Schmidt. Do you think that the salary of $180,000 was 
a fair salary?
    Mr. Scovel. Not for me to judge. I, frankly, don't know 
everything that she was supposed to be doing. We were looking 
strictly at the process by which she was hired and the apparent 
circumvention of established hiring processes for creating the 
position and then filling it.
    Mrs. Schmidt. Finally, Mr. Wolf and Mr. Connolly have a 
bill that would shrink the board, and change the dynamics and 
direction of MWAA. How do all of you feel about that? What is 
your position insight on their bill?
    Mr. Davis. Can I start? Part of the frustration is if this 
were just the airports, it worked pretty well. Where this thing 
got complicated is the Airports Authority undertook the 
responsibility of building the rail project out to Loudoun 
County--actually two stops past the airport. It was at that 
point this got very complicated. It is not a normal skill set. 
Members from other regions started coming in and putting bells 
and whistles on the contracting, and it became very, very 
divisive. We got into a political food fight is the best way to 
put it. The Secretary got involved, and now, I think, we are 
going to bring the first phase of the rail project in on time 
under the amended budget.
    But it got complicated. Virginia, I think, has felt that 
this rail system is the largest rail project in the State. They 
really felt they needed to have the input and be able to decide 
how it should be built and where the stations should be 
located. Having members from outside Virginia making decisions 
that, in Virginia's judgment, were costing money and not being 
cost-effective, I think caused a lot of the problems. And so I 
think the legislation comes from that.
    When it comes to the airports, you know, I think the system 
worked pretty well for a long time, outside of some of the 
cronyism that developed.
    And I just would add, I think Jack Potter is the best thing 
that has happened to this Authority. He was Postmaster General 
before this. He has come in. He has had to manage a difficult 
board with some of the decisions. But as Mike has said now, he 
will have basically a brand-new board with a brand-new 
direction.
    We have nothing to cover up. It is open kimono. Whatever 
the IG says, we want to do the right thing. We serve without 
compensation. I didn't ask for this board. Originally when I 
was appointed, they said 12 meetings. We had 38 meetings my 
first year. It takes a lot of time away, and we do this for the 
public good.
    So we are doing everything we can. We found, I think, the 
best CEO. He has had to answer to a board that has just very 
recently turned over. And we are, I think, behind him at this 
point in the tough decisions he has to make.
    Mrs. Schmidt. Thank you for your input, and I share--my 
concern is most of this is--all of this is going on in 
Virginia, and yet you have to listen to folks outside the 
district, and while they are good-hearted--they have goodwill, 
I know, as a local person, and we had zoning issues. Everything 
comes to home. And you had somebody outside--we had a township 
situation where we owned the zoning, but the county wanted to 
put its input in, and we, quite frankly, didn't really care 
much about what the county said because it was all local.
    So I can understand your frustrations with other areas 
talking about where the line should go and where a stop should 
go when it is in your backyard and not theirs.
    Mr. Davis. I think the board, the new board, is pretty much 
in sync is my impression. There were some very controversial 
decisions about station placements, PLAs, and construction in a 
right-to-work State. But I think at this point the board is 
moving in a positive direction, and I think the chairman has 
done a good job of uniting it. Some of the decisions made in 
the past were made with former board members who had a 
different cultural view of the way the place ought to operate. 
I feel very good about the direction or I wouldn't stay on this 
board. I have got other things to do with my time.
    Mrs. Schmidt. Thank you so much for your time.
    Ms. Norton.
    Ms. Norton. Well, I appreciate, Mr. Davis, that you 
indicated that there is a new start and a new, let us say, 
regime, and that is why I regret that with Members sitting on 
this rostrum, who have very little information about the 1986 
Airport Act, deciding this is all a Virginia matter. Just let 
me say for the record, nobody could be more sympathetic with 
the notion of wanting what happens in one district not to be 
interfered with by people in another district, and no one 
obviously saw the 1986 Airport Act as anything of the kind, saw 
it as very necessary. It was agreed to by all involved.
    I would have absolutely no objection to looking at that 
1986 act. What I object to is preemptory action by one Member 
of Congress to take over the whole Airports Authority when 
neither this committee nor any other committee has any 
information about why this was done this way.
    And this is not the place to hassle this out on a home-rule 
basis. If people want to talk about home rule, let's start with 
the District of Columbia; then we will get to Virginia. You 
have got a compromise on that now. I hope that doesn't get 
reopened.
    Let me ask a question. I am sorry I was called out for a 
few minutes, but I would like to ask a question in relation to 
the bill I have just introduced. I introduced it in good faith. 
I believe there should be hearings before we decide what to do. 
But I introduced it because I didn't want to see us or see the 
Airports Authority the kind of hassle it took to get the 
procurement regulations that now guide most of the Federal 
Government.
    So this question is really taken from testimony from Mr. 
Curto, who says that the contracting manual and other 
procedures to correct best practices and promote fair and 
competition is in revision. And he says the manual is a lengthy 
and highly technical document. Tell me about it. I am sure it 
is.
    Now, what I want to know from--I suppose this question is 
for Mr. Scovel. And of course I am quoting from Mr. Curto's 
testimony, and of course Mr. Potter would be the one to 
implement whatever comes out.
    Do you believe that the Federal acquisition laws and 
regulations, which I didn't--I didn't look to see when they 
have been enacted, but all I know is they have stood the test 
of time--do you believe that they could be useful here, rather 
than going through the kind of procedure which Mr. Curto in his 
testimony calls ``lengthy and highly technical'' so that we 
could get more quickly to settle what should govern this 
independent body that is, for all its effects, a hybrid body 
but more closely related to the Federal Government than to any 
other part of the compact?
    Mr. Scovel. Ms. Norton, thank you. Your question relates 
specifically to adoption of the FAR as the acquisition 
provision that would apply to MWAA. I am glad you did not ask 
for my endorsement of your legislation because I don't believe 
that is my role. However, I think I can speak to the underlying 
proposition that the FAR, indeed, is a useful benchmark or a 
baseline on which MWAA may build its acquisition function.
    In fact, relating back to the original Airports Act, which 
you mentioned, you will remember that the GAO was assigned an 
audit role with regard to MWAA and specifically instructed to 
determine whether MWAA's acquisition function was being 
executed, quote, ``in accordance with sound Government 
acquisition principles.'' And that refers, but not in so many 
words of course, to the FAR.
    So that is already embedded in one form in the underlying 
legislation. And our audit, released on November 1st, used the 
FAR as a benchmark as well because we determined that that 
would be the best source of sound Government accounting 
principles on which to judge MWAA's execution of its 
acquisition responsibilities.
    Ms. Norton. Well, thank you, Mr. Scovel.
    Mr. Curto, Mr. Potter, do you see my point? And do you 
agree with Mr. Scovel?
    Mr. Potter. I do see your point, Delegate Norton. And I 
would just like to comment that our contracting manual has been 
reviewed by GAO. It is in compliance with FAA requirements, 
because we are spending Federal money, so we have to comply 
with those requirements. It has been reviewed by the FAA. 
Recently we changed it----
    Ms. Norton. Mr. Curto says, ``We are revising our 
contracting manual and other procedures.''
    Mr. Potter. Right. I am just----
    Ms. Norton. Is it revised already?
    Mr. Potter. It is in the process of being revised. But over 
time it has been revised to be compliant with FAA requirements 
because we do spend AIP money.
    With the rail project----
    Ms. Norton. Mr. Scovel, was the manual in compliance, so 
this is something we don't even have to worry about? It was 
already in compliance with----
    Mr. Potter. It----
    Ms. Norton. Just a moment. I have asked Mr. Scovel, who I 
think is the authority on this issue.
    Was it already in compliance? Do you regard it as already 
in compliance? Mr. Curto says they are undergoing a lengthy 
revision, so I am just trying to get the facts here.
    Mr. Scovel. It was in compliance on a number of important 
respects. However, with respect to other important factors, we 
would judge it not to be, specifically as it relates to 
fostering or encouraging competition.
    The sole-source requirement, for instance, in the FAR that 
requires all Federal agencies to publish a notice of an intent 
to award a sole-source contract before the contract is 
executed, to permit watching contractors who may have an 
interest in the proposition to come in at the last moment and 
say, ``We can deliver that service at a better price,'' that 
was not a part of MWAA's acquisition manual, and clearly it 
should be.
    Ms. Norton. And that, of course, was what I found most 
troubling, the number of sole-source contracts, a very 
substantial amount, has been unheard of in my own service in 
the Government. And the so-called categorical--what in the 
world is a categorical exception, for example?
    Mr. Scovel. It is an exception to the rule that is stated 
in MWAA's acquisition manual that competition for contracts 
over $200,000 must be engaged in. However, there were a list of 
six categories of exceptions for which that rule could be 
waived. It was waived de facto by virtue of being included in 
the manual. But justification for that waiver, for that 
exception, had to be included in the contract file.
    When my audit team went in and looked at a sample of 
contracts that had been awarded using these categorical 
exceptions, we found 56 percent lacked adequate justification. 
So we couldn't tell exactly what was the basis for executing 
particular contracts under these so-called exceptions.
    Ms. Norton. So, Mr. Potter, you may have misunderstood my 
question. I understand that you are in the process of revising. 
Well, who wouldn't be, given the criticism that sole-source 
contracts have received?
    I am simply trying to find whether there is a more rapid 
and sure way, instead of having your own manual--which, 
remember, you have had your own manual before--to adopt 
regulations that would never be questioned because they have 
been tested and because they are used every day by virtually 
every Federal agency. Why would that not be the fastest and 
perhaps best way to get to the best practices?
    Particularly considering that these procedures can be 
altered to fit a particular agency. So there are small, minor 
kinds of alterations because every agency is different. Yet 
every agency goes to this tested set of regulations and gives 
the kind of fair notice that, to be fair, I think members of 
your board never had. I mean, when they are told that there are 
categorical exceptions for a contract over $200,000, well, you 
can expect that they will then, of course, expect them to be 
awarded. So while they are being criticized and while the staff 
is being criticized, let's remember that they were, in fact, 
abiding by your rules.
    And wouldn't, given the criticism that MWAA has received, 
wouldn't it put you above criticism to simply adopt the same 
Federal regulations that every other agency now has adopted?
    Mr. Potter. We have committed to our board to have a new 
contracting manual by the first quarter of next calendar year. 
We are working very closely with the----
    Ms. Norton. 2013?
    Mr. Potter. 2013. We are working very closely with the 
accountability officer to modify our contracting manual to live 
up to the expectations that are in the FAR. However----
    Ms. Norton. Are you using the FAR as a guide?
    Mr. Potter. Yes, we are. However, we are not the Federal 
Government, and there are, for example, appeal rights that do 
not exist legally----
    Ms. Norton. Of course. And there are many differences that 
other agencies have and have adapted in their own regulations. 
Mr. Potter----
    Mr. Potter. So, in short, we are living up to the spirit of 
what you want to do, but it can't be totally comprehensive----
    Ms. Norton. I understand.
    Mr. Potter [continuing]. Because of restrictions in the 
law.
    Ms. Norton. And that goes without saying. You understand, 
of course, the GAO is going to look at what you produce. If you 
are already there, who would want to put you through anything 
other than--and if you were following the FAR, I would have no 
objection to that.
    Mr. Davis?
    Mr. Davis. Actually, I think your legislation sets a bar 
that we have to meet. It is not clear whether we do it exactly 
through the FAR. We need to be a little more nimble on bid 
protests and notice requirements and the like.
    But I appreciate the fact it sets a bar for us in terms of 
the transparency and the notice requirements that we need to 
meet. And I think it is fair to say we want to meet that bar. 
We may do it slightly differently in some areas, but we could 
work with you on that. I think it would be helpful.
    Ms. Norton. I would appreciate it. I am suggesting that 
anything that keeps from you reinventing the wheel ought to be 
useful to you.
    Can I ask if law contracts, law firm contracts, all fell 
within this categorical category? Mr. Scovel?
    Mr. Scovel. They did, Ms. Norton. One of the key categories 
was legal, financial, and legislative representational 
services. Those were deemed a de facto exception to the rule 
that contracts over $200,000 needed to be competed.
    Ms. Norton. Uh-huh. I just want to say for the record--I am 
sure Mr. Davis will confirm this today--a business often 
doesn't give retainers anymore. It essentially makes law firms 
compete for their business. Because this is no longer the world 
in which we once lived, and that was long before--long before 
this recession.
    Law firms woke up to the fact that, while you don't always 
go with the low bidder, that it is nonsense not to compete any 
sizable contract, in the same way that anybody would go to more 
than one contractor. Because before you went to do landscaping 
in his front yard or before he went to have his home painted, 
who would ever go to one painter and say, ``How much does it 
cost to paint the front of my house? You've got the job''? If 
you wouldn't do that in your own personal business, do not 
expect it to be acceptable to the Government of the United 
States or to an independent agency that was created by the 
Government of the United States.
    One more question, Mr. Potter. You were Postmaster General 
of the United States, which means you ran one of the biggest 
businesses, as it were, in the world. Did you have your own 
regulations? What regulations did you use then? And could you 
have done these kinds of categorical contracts, or did you, in 
the Post Office?
    Mr. Potter. Well, we were not under the FAR. We had----
    Ms. Norton. Yeah, I understand that you were an independent 
agency.
    Mr. Potter. We had our own procurement manual. Obviously, 
it emulated much of what was in the Federal Government. And, 
no, we did not do the type of sole-source contracting that the 
Authority has done for years.
    Ms. Norton. So you adopted this only because you found it 
in place there?
    Mr. Potter. Well, I didn't adopt it at all. In fact, I 
eliminated the use, put out an order that we will not use, once 
I became aware of it, categorical exceptions for professional 
services contracts. And I did that months ago. So----
    Ms. Norton. You did it when it was----
    Mr. Potter. Once I became aware of it, Delegate Norton.
    Ms. Norton. Yeah. Well, I am very pleased that you have 
done it.
    And I appreciate the time you have given me, Madam Chair.
    Mrs. Schmidt. Thank you.
    Mr. Cravaack, you may have as much time as you need.
    Mr. Cravaack. I am the last guy left, so there you go. 
Appreciate it.
    Congressman Davis, I got a quick question for you. You were 
a board member when there was a previous board member that was 
rehired; is that correct?
    Mr. Davis. Right. Correct.
    Mr. Cravaack. OK. How do you feel as a board member not 
being referenced in hiring this individual by Mr. Potter and 
Mr. Curto?
    Mr. Davis. Well, I was aware. I mean, there were board 
members it was run by. So it was not----
    Mr. Cravaack. So was it approved by the board?
    Mr. Davis. No, it was not approved by the board. This is 
his----
    Mr. Cravaack. Is that standard practice?
    Mr. Davis. Generally, the CEO acts, and he sounds this out. 
This was a complicated situation in this particular case with 
the member who had been a former chairman of the Authority and 
who did have an expertise in the area Mr. Potter talks about.
    Mr. Cravaack. If I was a member of a board and my CEO took 
action and the chairman took out without me really being 
involved in the yea or nay, I, as a board member, would be 
pretty upset about that action----
    Mr. Davis. Right.
    Mr. Cravaack [continuing]. I have to admit. To be honest 
with you guys, this sounds like a can of worms, I mean, sitting 
here taking a listen to this.
    Mr. Scovel, tell me, why do you think it came to this? How 
did it come to this? How did this board come to this?
    Mr. Scovel. Mr. Cravaack, I think it is captured in a line 
from the concluding paragraph of our report of November 1st. 
MWAA is an independent public body, but over the course of the 
last decade and a half, the focus became the independence of 
the body and less so on its public responsibilities, to the 
extent that, as we phrased it in our report, the prioritization 
of personal agendas excluded consideration of the best 
interests of the Authority.
    And our report is replete with examples of it, I am sorry 
to say. I know you asked Secretary LaHood what he thought was 
the most egregious example, and he gave you one that appeared 
to him. I could answer that question, too. And if I were to try 
to pull together examples that are buried like nuggets 
throughout our report of missteps--again, I will continue to 
use that word--but missteps of senior leadership, both board 
and staff at the Airports Authority, it would be a very sorry 
tale.
    And I know it might sound like a chronicle from ``The 
Little Shop of Horrors,'' but it has implications for how these 
jewels in the national capital area are run. These are Federal 
assets----
    Mr. Cravaack. Right.
    Mr. Scovel [continuing]. Worth on the balance sheet of 
fiscal year 2011 $9.1 billion. They generated revenues in 
fiscal year 2011 of exceeding three-quarters of a billion 
dollars. Forty-two million travelers passed through those two 
airports in calendar year 2011. Every dollar of revenue is 
derived directly or indirectly from the taxpayer or the 
traveler. And the board, as I stated in my opening statement, 
has a fiduciary responsibility to the Government of the United 
States and to the taxpayer and to the traveler to make sure 
that every dollar is expended properly and prudently.
    Mr. Cravaack. Agreed.
    Mr. Scovel. And, for instance, if you were to ask me again 
what I considered the most egregious example, it would be this: 
the fact that, since 2003, 7 former board members and 
affiliated firms have been awarded 30 contracts, amounting to 
almost $2 million. Out of those 30 contracts, 26 were for 
lobbying services. That raises at least the appearance that 
these contracts were nothing but a parachute for departing 
board members.
    One former board member was awarded 16 sole-source 
contracts, totaling $262,000 over the past 10 years, the first 
such contract only 3 months after the member left the board. 
Another former board member was awarded eight contracts, 
totaling over $500,000.
    Now, I do want to note that as a result of our audit MWAA 
has terminated contracts with former board members and has not 
renewed contracts with other former board members. And in 
September 2012 the Authority approved a new ethics code 
prohibiting contracts with board members for 2 years after the 
conclusion of their service.
    Mr. Cravaack. Well, it sounds like the reason for the 
results of this current board is because of your investigation, 
Mr. Scovel. Would that be a correct statement?
    Mr. Scovel. We have certainly assisted. But I do want to 
give great credit to Mr. Wolf and Mr. Latham for alerting us to 
it, for putting us on it.
    And I also want to give great, great credit to Secretary 
LaHood, who had seized on our preliminary findings released in 
May, appointed an accountability officer, and together with the 
other appointing authorities, delivered a letter in August to 
the Authority expressing--and this is a quote--their 
``outrage'' over some of the findings that we had reported in 
May, and is also now undertaking to renegotiate the lease under 
which MWAA operates, occupies, controls, and uses--and those 
are the words in the lease--these valuable Federal assets on 
behalf of the Department.
    Mr. Cravaack. Well, Secretary LaHood said the only reason 
this really initiated was from what he read in a newspaper 
article. So kudos to him.
    Mr. Potter, you didn't understand about the category 
issues. As the CEO, how could you not? You said you only found 
out about it a couple months ago. How could you not be aware of 
these?
    Mr. Potter. I was not aware of the use of categorical 
exceptions. I was aware of some. For example, we buy off of a 
COG contract, the Council of Governments for the metropolitan 
area. That is one of the procurements that is considered a 
sole-source contract. And, again, I think we need to work 
through how we categorize some of those.
    Again, I was not aware of the history that was just 
described was over a 10-year period of time. So I wasn't aware 
of those contracts. They weren't coming to me for approval. And 
once I became aware of them, again, I moved very quickly to try 
and resolve those matters.
    Mr. Cravaack. Well, I appreciate it.
    In the military we have a thing called ``lack of 
confidence.'' And to be honest with you gentlemen, I have a 
supreme lack of confidence in your board. And if it was up to 
me, which it is not, I would dissolve the board and create a 
new one. But that is just my opinion.
    Mr. Davis. Fine with me.
    Mr. Cravaack. Yeah. I know. Mr. Davis going----
    Mr. Davis. Fine with me.
    Mr. Cravaack. Hey, I am ready to pull the ejection seat, 
right?
    Mr. Davis. We get paid nothing. I mean, as I said, 38 
meetings----
    Mr. Cravaack. I understand that.
    Mr. Davis. It is a labor of love. And although my 
perspective might not have always been perfectly appreciated, I 
look at where we are today versus 2 years ago, and I say, just 
give us some time. We are really moving in the right direction. 
These guys are determined to take us there, if that is any 
comfort at all. Keep watching us. We want to prove ourselves.
    Mr. Cravaack. Thank you, Congressman. I appreciate it. I 
yield back.
    Mrs. Schmidt. Thank you.
    And I want to thank the gentlemen for coming. You were very 
courageous and very open, and we appreciate that. And good 
luck. And may you all have a good holiday on Thursday.
    We will end this. Thank you.
    [Whereupon, at 11:20 a.m., the committee was adjourned.]
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