Auditor's office refuses to provide details of firm's hiring to review tolls contract

NCDOT pays $50,000 for toll lanes study

RALEIGH, NC (WBTV) - The North Carolina Office of the State Auditor is refusing to provide correspondence that could detail how it came to hire a consulting firm to determine the cost of breaking a contract with a private firm to build toll lanes on I-77.

The North Carolina General Assembly asked Auditor Beth Wood to conduct an independent review of the state's contract with Cintra and determine how much it would cost to break the contract. Wood's office hired an outside consulting firm, Clary Consulting, to conduct the review.

Late last week, the North Carolina Department of Transportation released the report compiled by Clary Consulting, which estimated it would cost North Carolina taxpayers between $82 million and $300 million to break the contract with Cintra.

The review came amid much turmoil and new efforts to stop the contract, including a vote scheduled for this month by the Charlotte Regional Transportation Planning Organization on whether or not to move forward with the managed toll lanes as planned.

Following the release of the report, On Your Side Investigates requested the contract, invoices and communication between Wood's staff and Clary Consulting.

Invoices provided by Wood's staff show Clary was paid $45,785.10 for its work; roughly $4,000 less than the expected value of the contract.

Correspondence withheld

But Wood's office declined to provide any emails exchanged between staff in the auditor's office and Clary Consulting employees, citing a provision in the state law that exempts the auditors working papers from the North Carolina Public Records Act.

Tim Hoegemeyer, General Counsel in Wood's office, refused to provide additional case law or legal authority supporting his position that emails were included in the definition of 'working papers'.

"There is no need for additional authority beyond under N.C.G.S. 147-64.6(d) as that statute makes 'work papers and related supportive material' confidential," Hoegemeyer said. "The e-mails you seek are 'related supportive material'."

When On Your Side Investigates revised our request to seek only emails exchanged with Clary Consulting before it signed a contract with Wood's office, Hoegemeyer still refused to provide them.

Attorney Jonathan Jones, who is executive director of the North Carolina Sunshine Center, said the question of what is and isn't covered under the auditor's working papers exemption has never been answered in court. Jones said it is unclear whether or not the law would include emails but said correspondence before the contract would likely not be covered under the exemption.

"How do you define a work paper if you haven't entered into an agreement yet?" Jones asked.

But Wood issued a statement late Friday afternoon pushing back on any suggestion that any correspondence between her staff and Clary Consulting should be made public.

"The Office of the State Auditor is not "refusing" your request for documents, and believe (sic) that is a misrepresentation of our position in this case," Wood said. "For many years, the type of information you have requested has been classified as workpapers, and state law prohibits us from sharing workpapers publicly. For us to share this information would require us to violate state statute. We hope that the focus of your story will remain on the I-77 contract and not an incomplete understanding of the statutes under which we operate."

NCDOT listed as Clary Consulting client

Under the law, the auditor's office is not required to issue a request for proposals and accept bids when hiring firms to perform a review such as the one Clary Consulting was hired to conduct.

But On Your Side Investigates wanted to know why Clary Consulting was chosen to perform the review, so we asked spokesman Bill Holmes.

"We researched to find US firms with expertise in transportation/toll roads contracting," Holmes explained. "We found a couple of outfits with the expertise we needed and after making sure none of them had ties to the toll road company or contracts with North Carolina, we determined Clary had no conflicts and was capable of providing what we needed within the time frame we needed it."

Holmes said the auditor's office identified eight firms that met the criteria for what it was looking for and then narrowed the choice down to two, weeding out firms that had contracts with North Carolina, ties to Cintra or other apparent conflicts of interest.

"Clary Consulting was chosen due to availability, and having done a project very similar to ours for the State Auditor of Colorado," Holmes said.

But Clary Consulting lists North Carolina Department of Transportation among its clients on its website. In a response to a question about whether or not that presented a conflict of interest, Holmes said the auditor's office considered Clary Consulting's work for NCDOT in its initial conflicts consideration and determined it was not a conflict.

"Clary Consulting subcontracted with a company called Cambridge Systematics that had a contract with NCDOT.  The project was the NC I-95 Economic Impact Study," Holmes explained. "The piece that Clary Consulting did for Cambridge was a base high-level economic feasibility analysis.  Cambridge gave Clary seven different options for financing the project (including tolls) and Clary prepared feasibility data on these different options, as well as looking at the impact and cost of widening I-95 between exits 31 and 51 (near Fayetteville) and improving the exits, bridges, feeder roads, etc., associated with that area."

"In our opinion it did not create a conflict because Clary's contract was not directly with NCDOT, the project was finished in May 2013, well prior to our engagement, and it did not involve I-77 or cover the same subject matter," Holmes said.

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