In the News

Crain's Chicago Business Blog, June 30, 2010

A suburban state legislator is starting to ask lots of questions about why Metra spends more money on Washington lobbying than perhaps any other transit agency in the country.

In the latest sign of the new scrutiny Metra is drawing since the suicide of longtime Executive Director Phil Pagano, Sen. Susan Garrett, D-Lake Forest, says Metra may not have followed proper procedure in spending at least $3.5 million on Washington government-relations firm Carmen Group Inc. in the past five years.

As I reported last year, Carmen is where John Ladd, the son of former longtime Metra Chairman Jeff Ladd, happens to be an exec, though he reportedly does not work on Metra matters.

Metra insists nothing is untoward. But, in a tacit admission that things need to change, the agency today began advertising to renew all its legislative consulting contracts — contracts that previously were awarded without competitive bidding.

Here's what's been unearthed by Ms. Garrett, who has been busily asking Metra for copies of contracts and other details under provisions of the state's Freedom of Information law:

According to Metra records given to Ms. Garrett, Carmen has been paid $420,000 to $950,625 a year from 2005 to 2009, with its basic rate about $60,000 a month.

A two-year contract signed in June 2004 was renewed for another two years in June 2006, with Metra then extending it another year as per an option clause. Using his own authority, Mr. Pagano subsequently extended the pact another nine months.

The pacts have been widened with at least three change orders, adding about $460,000 to their face amounts. Metra says the firm was assigned additional duties, but Ms. Garrett says some of the paperwork provided her was "almost illegible and appeared to be missing signatures."

In comparison, she says, in 2009 the Los Angeles County Metropolitan Transportation Authority spent $204,000 and New York's Metropolitan Transportation Authority $160,000, according to disclosures to the U.S. Senate.

That would be consistent with what I reported last year — a National Journal piece that said Metra spent more than any entity (private or public) in the state, including Northwestern University, State Farm Insurance and CME Group.

In a June 25 letter to the senator, Metra Chairman Carole Doris noted that the agency has already, as per her suggestion, named an interim inspector general and is seeking a permanent one. It also has commissioned an outside forensic audit to review agency financial controls, she said.

Ms. Doris went on to suggest that Metra got its money's worth from Carmen, having received more than $100 million in federal funding for the North Central Line and other new projects in recent years.

Carmen also assisted in getting Homeland Security and Create freight-rail funds from Washington, she said.

Ms. Doris is right that Metra has done well. But Ms. Garrett is equally right in effectively asking whether the politically connected Metra couldn't have done as well by making a few phone calls itself to key members of Congress and federal bureaucrats.

After all, at the moment, the head of the U.S. Transportation Department is not only from Illinois but a Republican, ex-Congressman Ray LaHood, with numerous other Illinoisans spread throughout key transit agencies and places like, um, the White House.

Results from Metra's request for proposal to prospective new lobbyists are due in August. It will be interesting to see what kind of financial deal they get.