[Congressional Record (Bound Edition), Volume 149 (2003), Part 13]
[Senate]
[Pages 17994-17995]
[From the U.S. 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.

[[Page 17995]]

  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 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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