Risk at the Airports Authority

Friday, April 12th, 2013

“Weak policies and procedures have led to questionable procurement practices, mismanagement and a lack of overall accountability.”

The OIG Audit report AV-2013-006, issued Nov 1, 2012 in regard to the Metropolitan Washington Airports Authority (MWAA) is compelling reading. Any alert organisation will ask a rhetorical question, “Could this be happening to us?” Some will find it impossible to answer. There are many reasons why this will be so, including:

1)      an absence of procurement risk modelling

2)      reliance of trust in procurement and stakeholders that they ask acting in a professional manner

3)      a total reluctance to expose deficiencies in performance and non-compliance with financial and other controls

4)      professional arrogance “we know everything and have nothing to learn.”

5)      corruption.

The MWAA report uncovers some dark corners that are worthy of professional comment.

a)      “MWAA’s contracting policies and practices do not encourage competition”

There is a damning comment in the report “These weaknesses are exacerbated by ineffective contract management and oversight and a lack of adequate procurement integrity policies to ensure impartiality when awarding and administering contracts.”

In our consulting experience we have encountered many situations where competition is not encouraged. In fact we can go further. Competition has been discouraged. Why?

  • Corruptive practices
  • Unable to effectively manage change processes
  • Blocking by production/finance/quality/directors
  • Monetary savings unwelcome “we must spend the budget”


b)      “We identified some MWAA Board members and senior officials, such as Vice Presidents, who engaged in questionable contracting practices, compromising MWAA’s contracting policies and internal controls for procurement.”

This highlights the corporate culture that many organisations would do well to consider.

We have encountered situations where:

i.          Strategies have been overridden for personal gain

ii.          Contracting guidelines have been ‘waived’ for convenience

iii.           Financial authorisation limits have knowingly been exceeded

c)      “However, we identified cases in which MWAA’s Board of Directors did not issue formal solicitations for contracts or involve the Procurement and Contracts Department until the contracts were ready to be awarded.”

We find it astonishing that we are now in 2013 and Procurement remains, in some organisations, relegated to a passive, administrative role. It is equally astonishing that so called professionals are happy with their lot in these environments! A significant, relevant question on a procurement audit is, “What is the value of purchases that is not subject to the control of procurement?”

d)      “MWAA issued out-of-scope contract actions over $200,000 – including contract modifications and task orders – without Board approval.”

The report points out that the expansion and renovation of the Dallas Airport main terminal, an $8 million contract awarded in 1989, has grown by 1,700 per cent to a total value of $147 million. The general point here, for the project community, is the ease of simply extending work packages to the incumbent contractor, rather than entering into a tender competition. As a side consideration to contract price increases, we have recently completed an audit where a price increase of 758.68% was accepted without challenge.

e)      “MWAA allowed work to begin prior to contract award dates – that is, before the contracting officer completed and signed the contract documents.”

The report states that “of the 709 contracts MWAA awarded between January 2009 and June 2011, contractors started work on 27 per cent before their official award dates. For example, MWAA paid one contractor $572 per hour to attend a 5-hour Board meeting on January 6, 2010 – during which the Board of Directors approved the selection of the contractor.”

Comment is superfluous, other than to cite another example where an MWAA Board member requested that a consultant firm proceed with work on a sole source contract 58 days before MWAA’s Procurement and Contracts Manager gave his required approval for the award.

f)       “MWAA’s financial disclosure process has also lacked the rigor needed to ensure employees fully report conflicts of interest that damage the Authority’s credibility.”

The report lists gifts that were accepted, including:

  • Two tickets to the 2009 Super Bowl, associated travel, and accommodations in Tampa, FL, valued at almost $5000
  • Four trips to golf tournaments, including one trip to the 2009 US Open Golf Tournament in Long Island, NY.

The report cites that another key area of concern is the lack of requirements to ensure all contracting officers …………….. certify that they do not have personal financial interests in the contracts they award and administer. This is an obvious area of risk that unquestionably exists in many organisations.


This is an informative, high quality audit report. At the very least it should prompt our more alert readers to consider what is actually happening in their own organisation. Brian Farrington Ltd has PROCURISKÒ, a modelling tool that can be purchased by organisations to probe their exposure to varied forms of risk. We welcome opening discussions with you to explain its benefits.


Please call us on +44 (0)1744 20698 for more information.