DOT Questioned Over Consulting Firm's Price Tag

The Department of Transportation paid $3.6 million for a report to improve the agency's efficiency and accountability. Agency leaders were questioned Tuesday over why so much money was spent when less expensive options were available.

Posted 11:42 p.m. Dec 11, 2007 — Updated 3:58 a.m. Dec 12, 2007

RALEIGH, N.C. — The Department of Transportation paid $3.6 million for a report to improve the agency's efficiency and accountability. Agency leaders were questioned Tuesday over why so much money was spent when less expensive options were available.

"We felt with the changes within the department that they [McKinsey & Company] were clearly the most qualified," DOT Secretary Lyndo Tippett said.

Tippett explained the selection process for the management consulting firm to a legislative oversight committee. He said the first phase of the project came down to three firms: Booz Allen Hamilton's bid of $145,000, Mercer Management's price tag of $495,000 and McKinsey & Company's proposal of $1.1 million.

In April, the DOT picked McKinsey & Company. A second phase of the report brought the total paid by taxpayers to $3.6 million.

"There's a lot riding on this so the pressure should be felt by everybody that has their fingerprint on it," State Rep. Ty Harrell, D-Wake said. "The contract information itself with DOT was kinda kept quiet. It wasn't open."

Harrell is among those asking questions about the report and demanding results.

"I want to make certain the dollars that are being spent are definitely being spent wisely," he said.

Sen. Richard Stevens, R-Wake, also has a lot questions, but at this point is not second-guessing the DOT's decision.

"What I don't know is what those firms were gonna do for their fees. It's very difficult to hire a consulting firm just based on a fee," Stevens said.

The 472 page report, released last month, was based in part on confidential interviews and surveys of nearly 9,000 DOT employees and interviews with state leaders.

Workers complained about low morale and a lack of vision. The agency was also accused of having a lack of accountability and being "too political."

The report found that the DOT's structure prevents some divisions from working well with each other and that the agency does not do a good job of recruiting new workers or keeping the good ones.

Employees also said they were dissatisfied with low pay and outdated technology.

Among the recommendations are that the DOT increase accountability and streamline projects. McKinsey employees are to work with the DOT over the next year and half to try and make the agency more efficient.

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