[Congressional Record Volume 149, Number 104 (Tuesday, July 15, 2003)]
[Senate]
[Pages S9399-S9400]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]







           PROTECTING THE NATION'S PASSENGER AVIATION SYSTEM



  Mr. KENNEDY. Mr. President, last week I joined Massport CEO Craig 

Coy, Logan Airport's Federal Security Director George Naccara, and 

Congressman Stephen F. Lynch to mark a significant milestone in our 

efforts to better protect the Nation's passenger aviation system. The 

occasion was the announcement that the Transportation Security 

Administration and Massport had reached an agreement concerning Federal 

reimbursements for Massport's installation of a comprehensive explosive 

detection baggage screening system.

  That the announcement was made at Logan Airport was fitting because 

since 9/11 Massport has been a leader among airport operators in 

strengthening aviation security. In fact, Logan was the only major 

airport in the country to have met the deadline mandated by Congress in 

the Aviation and Transportation Security Act by having its permanent 

baggage screening system up and running by December 31, 2002.

  In order to accomplish this feat, Massport had to invest nearly $146 

million of its own money before it was clear that the Federal 

Government would reimburse any of these costs. Additionally, meeting 

this deadline required the around-the-clock efforts of over 700 

laborers who completed 2 years of construction in less than 6 months. 

Finally, this effort required Massport to work in close collaboration 

with the Transportation Security Administration, an agency headed by 

dedicated and talented professionals, but also one that, having just 

been created, was still working to define its mission and scope in the 

9/11 environment.

  While there are still many security enhancements to be completed at 

Logan--as there are at every major airport in the country--solid and 

consistent progress is being made under Massport's new CEO, Craig Coy, 

and his management team. Just as they have done with regard to the new 

baggage screening system, Massport's leadership, security officials, 

and professional staff continue to work to define complex security 

challenges and to meet those challenges. And I believe they are setting 

a very strong example for those public agencies across the country 

charged with the complicated and costly responsibilities of protecting 

key pieces of our Nation's transportation, energy transmission, and 

public health infrastructure.

  The manner in which Massport is approaching these new challenges is 

outlined succinctly in an April 1 Boston Business Journal editorial by 

John A. Quelch, a Harvard Business School professor and the current 

chairman of the board of the Massachusetts Port Authority. The 

performance model Quelch describes is, I think, instructive for other 

public agencies--and some corporate boards--that are struggling to 

adopt a governance structure that encourages performance and works to 

eliminate obstacles to achievement.

  I ask unanimous consent to print the text of Chairman Quelch's 

article in the Record.

  There being no objection, the material was ordered to be printed in 

the Record, as follows:



            [From the Boston Business Journal, Apr. 1, 2003]



                 Better Governance In Public Agencies?



                          (By John A. Quelch)



       Corporate executives say they're concerned that new and 

     improved governance requirements will prove onerous and 

     irrelevant, dissuade talented people from serving as non-

     executive directors, and eat up valuable board time that 

     could be spent better on discussing the health of the 

     business.

       To ease their minds, these executives need look no further 

     than well-run public agencies, where tough governance 

     practices enhance professionalism and can be a source of 

     competitive advantage.

       Take, for instance, the Massachusetts Port Authority. With 

     $350 million in annual revenues, Massport runs Logan Airport 

     and the Port of Boston. Massport is governed by a politically 

     balanced board of six members plus a chairman, appointed for 

     staggered seven-year terms of the Massachusetts Governor. 

     Following the tragedy of 9/11, an independent commission 

     called for reduced political patronage in Massport 

     appointments. A professional CEO with corporate experience 

     was appointed following a nationwide search. A new, 

     politically independent, chairman was also appointed.

       Massport has since become a model of public agency 

     governance. Consider these practices from which many 

     corporations could learn a thing or two:

       Frequent Oversight. The Board meets ten times a year, 

     typically for four hours. Meeting agendas follow a systematic 

     pattern, varying with the annual planning and budgeting 

     cycle. Five committees, each chaired by a board member and 

     with its own charter, meet at least twice a year and report 

     back to the Board. These committees cover audit, human 

     resources and compensation, security, community affairs, and 

     facilities and real estate.

       Zero Compensation. Board members are not compensated. Yet, 

     despite the workload, attendance is consistent and commitment 

     is high. Members are attracted by a shared interest in 

     transportation and economic development challenges, and by 

     the opportunity to apply their professional expertise in the 

     public interest.

       Voting Transparency. The state public meeting law requires 

     all Massport board and board committee meetings open to the 

     public. Discussions of security issues, litigation and real 

     estate and collective bargaining negotiations can be held in 

     executive session if agreed to by a public roll call vote of 

     board members. Any member can request a roll call vote if 

     (s)he wishes to put each board member on the record.

       Patronage Control. A sunshine policy adopted by Massport 

     requires that requests for patronage appointments be reported 

     to legal counsel. All job openings have to be posted 

     internally and externally and requests for charitable 

     contributions are all channeled through an employee committee 

     which disburses an annual budget and reports to the board.

       Conflicts of Interest. Each board member maintains a 

     Register of Interests, recording his or her outside 

     employment, directorships in public companies and any 

     governmental appointments. State law requires disclosure and/

     or recusal where conflicts arise.

       Audit Independence. Massport's auditors provide no other 

     consulting services to the agency and the audit partner must 

     be rotated every five years. An internal audit function 

     reports directly to and is evaluated by the board.

       Shared Leadership. The roles of the chairman and chief 

     executive are, by board resolution, separated, as is common 

     practice in European companies but not the USA. The CEO is 

     selected and evaluated by the board. All decision-making 

     authority of the CEO is delegated from the board. Senior 

     management appointments, as well as substantial financial 

     commitments, require board approvals.

       Improved governance is essential to enhancing Massport's 

     newfound political independence and managerial 

     professionalism. These efforts are enhancing the pride and 

     commitment of the pro bono bond members, and commanding the 

     respect of bond rating agencies and other stakeholders.

       Though public agencies are not required to do so, Massport 

     is now in compliance with almost all relevant New York Stock 

     Exchange corporate governance recommendations. In addition, 

     Massport's CEO and CFO





[[Page S9400]]



     are leading the way among public agencies by being the first 

     in the nation to voluntarily sign off on the annual accounts 

     according to the terms of the Sarbanes-Oxley Act.

       If the corporate world is to regain public confidence, it 

     might do the unthinkable and follow the lead of public 

     agencies that good governance can enhance rather then hinder 

     performance.



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