LANSING —The Michigan Department of Transportation has made a major shift in who supplies its traffic signal control equipment, just as its former director has taken an executive position with the company that benefits from the change.
MDOT used to buy all its traffic signal control equipment and softwarefrom Siemens Mobility, Inc.
But that changed last October, the same month Kirk Steudle, who, for the previous 12 years, headed up the department, was named senior vice president of Econolite Systems, Inc., a Siemens competitor based in California.
On Oct. 3, 2018, the state agency changed its specifications to allow the purchase of traffic signal controllers suppliedby Econolitein addition to those made by Siemens, a German multinational company with offices throughout the U.S.
On Oct. 22, Econolite issued a news release sayingit had hired Steudle, who had announced last September he would retire from state government Oct. 31.
And last Tuesday, the State Administrative Board approved a $2 million contract to buy a central traffic signal control system from Econolite, which beat out Siemens and two other companies. Tuesday's award isthe first phase in a much larger planned purchase that could amount to tens of millions of dollars.
The series of events involving Steudle and his new employerraises serious questions for a national advocate for government ethics reform, whosays the dealings shows that if Michigan wants to maintain public trust in its government, it needs to join many other states in restricting how top state officials can jump to jobs in the private sector.
"The optics are terrible," said Paul S. Ryan, vice president of policy and litigation for Common Cause, a Washington, D.C.-based group that pushes for government ethics and campaign finance reform.
Steudle did not respond to messagesseeking comment.
Jeff Cranson, a spokesman for MDOT, said he doesn't know when Steudle first had contact with Econolite about going to work for the company. He said Steudleknew there was an evaluation underway in 2018, which began in August 2017, to change MDOT specifications to allow the purchase of controllers other thanones supplied by Siemens. But Steudlehad no role in, or sign-off on, the decision to add Econolite controllers to the specifications as the only other approved option, he said. Officials at MDOT did not discuss with Steudle the request for proposals that culminated in the contract awarded last week, he said.
Michigan is consistently ranked among the worst states in the nation for laws related to government transparency, ethics and conflicts of interest. For example, there is no "cooling off" period or "revolving door" law restricting top officials such as Steudle from seeking contracts involvingtheir former agencies.
"It's important to have a revolving door restriction in order to prevent the public from losing faith in their government and thinking that public officials are personally benefiting and are getting sweetheart deals for their new employers," said Ryan.
Steudle, who worked 31 years for MDOT and served as director under both Democratic and Republican governors, is listed as one of the key personnel in the Econolite proposal. He alsosignedthe cover letter for the company's detailed proposal.
"We look forward to your favorable consideration of our proposal and the opportunity to demonstrate our solution and show that it provides the best path forward for MDOT," Steudle wrote the state purchasing department this spring May 31.
Michigan law says state lawmakers who resign from office are prohibited from lobbying for the remainder of their term. But it sets no restrictions for lawmakers when it comes to non-lobbying jobs, and it also hasno restrictions or time limits whatsoever on when or where top appointed officialssuch as Steudle, who has not registered as a lobbyist with Econolite,can go to work.
Eric Raamot, chief technology officer for Econolite, would only say the companyresponded to an open bidding process that was very transparent.
"We compete nationally on similar projects with many of the same companies and are looking forward to bringing a state of the art advanced traffic management system to Michigan," Raamot said.
At least 18 states have laws or rules that would have barred Steudle from seeking a state contract involving his former agency, according to a summary compiled by the National Conference of State Legislatures.
In Louisiana, for example, former agency heads can't get involved in transactions involving their former agencies for two years after leaving state employment.
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Ryan said the case involving Steudle also points to the need for restrictions or prohibitions on state government officials negotiating their next private sector job while still on the payroll in their public sector jobs. Based on the timeline, it appears that happened in this case, he said.
MDOT has nearly3,200 traffic lights, many of them located along state routes that become major city thoroughfares, such as Woodward Avenue (M-1) in Detroit.
Each traffic light has its own controller, found in a cabinet attached to the light post. Currently, about 500 of the state's traffic lights are remotely monitored and managed through an existing central control system, supplied by Siemens. Now, the state wants a central system with more remote capabilities than the current system has.
The state's request for proposals, issued in April, called for a new central control system for 280 traffic lights that would be compatible with controllers supplied by either Siemens or Econolite. The state is working on a separate request for proposals for controllers and plans to buy ones supplied by either Econolite or Siemens, or a mix of the two, state records show.
The four proposals the state received to supply a control system were scored by a four-member state evaluation committeemade up of two employees from MDOT and two from the Department of Technology, Management and Budget (DTMB). The committee first rated the proposals on technical issues, such as the qualifications of their key personnel and how they understood the scope of required services. Only those companies that passed a certain threshold on the technical evaluations were able to move on to the second phase of evaluation —price.
According to records obtained by the Free Press under Michigan's Freedom of Information Act, Siemens and another company, Missouri-based TransCore, were deemed to have not met the technical requirements and their bid prices were not considered.
Only Econolite and Kimley-Horn, which has an office in Livonia, scored high enough on the technical evaluations to have their bid prices considered. Econolite scored highest on the technical evaluationand was selected with a $1.98-million price, compared with Kimley-Horn's $3.9 million bid, records show.
Econolite scored much better than Siemens on the technical evaluation, despite the fact that some of the weaknesses identified in the two companies' proposals were similar.
For example, Siemens "appeared to only want to use Siemens controllers," the evaluators wrote. It promised it could have a system compatible with Econolite controllers within six months, but gave "no plans or details about how ... this would happen."
Econolite "heavily favored their own brand of controller, but was working to utilize the other MDOT preferred controller," evaluators wrote.
Cranson, the MDOT spokesman, said there have been performance issues with the Siemens software, including timing issues related to coordinating various traffic signals, data transmission issuesand problems adding new intersections to the Siemens software database.
Siemens spokeswoman Elizabeth Cho said the company is "surprised to hear of any performance issues with our MDOT controllers."
"We were never asked for any new functionality or given any indication that there was any dissatisfaction with their performance," Cho said.
Most of the direct interaction with the state involving Siemens products was through its former distributor, Carrier & Gable, Inc. of Farmington Hills, which has now partnered with Econolite, Cho said. A call to Carrier & Gable was not returned Friday.
"Siemens Mobility controllers have been the controller-of-choice for Michigan over the past 15 years —and now installed in approximately 90% of all intersections throughout the state, in large part, because of their reliability and future proven technology," Cho said.
"These controllers are also successfully installed in nearly every state throughout the U.S. —helping ensure more efficient commutes for hundreds of millions of drivers."
Cho declined comment on the biddingprocess or whether the company had any concerns about Steudle's role in the specification change and subsequent contract award.
Cranson said the department, through DTMB, would have requested bids for new equipment and software regardless of where Steudle went to work.
The department is now headed by Paul Ajegba, another MDOT veteran.
"All signals would benefit from remote management so as legacy equipment is replaced, it makes sense to use the better technology," Cranson said.
"There are myriad benefits to remotely managing the signals and not having to send a maintenance person out, especially to a faraway location every time a signal malfunctions," he said.
"Think of it in terms of monitoring your home’s heating, plumbing, electricity or security system when you’re on vacation."
Many Michigan local governments, such as Ann Arbor, are heavily invested in Siemens traffic light technology.
"The city of Ann Arbor employs Siemens technology for our traffic control systems and there are no plans being considered to change that," city spokesman Robert Kellar said Friday. "As to how MDOT’s decision will impact us, that is hard to speculate on and we will have to see how things shake out."
Contact Paul Egan: 517-372-8660 or pegan@freepress.com.Follow him on Twitter @paulegan4.Read more on Michigan politics and sign up for our elections newsletter.
