Second audit criticizes the Utah Inland Port for its no-bid contracts

The state auditor responds to a complaint about a $2 million deal.

(Chris Samuels | The Salt Lake Tribune) A QuayChain observation trailer stands outside the Union Pacific Intermodal hub in Salt Lake City, Thursday, June 2, 2022.

Rebukes of the Utah Inland Port Authority and its contracts keep piling up.

The Office of the State Auditor issued a brief report Thursday criticizing the port authority for a lack of transparency and accountability with its business deals. The inquiry started after the auditor received a complaint through a hotline about a $2 million agreement, which port authority officials confirmed was a contract with QuayChain (pronounced “keychain”).

Most state agencies must solicit bids to ensure the best value for taxpayers. But when state lawmakers formed the port authority in 2018, they carved out an exception to the normal procurement process. Another audit released by legislative staffers last week found the agency overly relied on its exemption. It also found the port authority’s administration failed to adequately discuss business deals with its board.

“Because of the prominence of the Utah Inland Port Authority,” State Auditor John Dougall said in a news release, “it should strive for the best and strongest procurement policies possible.”

QuayChain is an obscure California-based company that appears to have few qualifications other than business ties to the port’s former executive director, Jack Hedge.

The Salt Lake Tribune previously reported the company was hired last year to install about 250 cameras across Salt Lake City’s northwest quadrant for a project called the “Intelligent Crossroads Network.” Those cameras have built-in artificial intelligence that can be trained to track truck identifiers, like business logos and hazardous material markings.

The port authority paid QuayChain $2 million to set up and test its camera network, but the company stood to make millions more by selling subscriptions to its publicly funded data service.

This month’s legislative audit found QuayChain was about to exceed its budget by $1.7 million.

Asked earlier this year why QuayChain deserved a no-bid contract, Hedge told The Tribune the vendor provided a “unique service offering” that “nobody” else in the market was capable of providing.

A computing professor asked to review the contract, however, disagreed. He said his own students could build the AI network.

The port authority’s new board, appointed this spring, and its new executive director, Ben Hart, recently put contracts with QuayChain and other vendors on hold. Leadership is instead focused on developing a master plan for the inland port. It has also vowed to retool its procurement process and shine more daylight on its use of public funds.

In an interview, Hart said he was aware of the audits in advance, as well as the negative attention they might bring.

“If we weren’t moving forward n a very positive direction, these audits would really concern me,” Hart said. “... I feel we’re going the right direction, but to build a strong foundation you’ve got to cleanse the wound.”

The port authority has issued 43 contracts to date with 29 vendors, according to the prior legislative audit. The vast majority of those agreements never went out for bid. Hart said only handful of those agreements remain active.

“We’re excited for the chance to re-emerge,” Hart said, “and show what benefits we can provide for the state of Utah.”

In a written response to the state auditor’s findings, port authority board chair Miles Hansen said updates to its contracting policy will be ready by November.

“We are a learning and growing organization;” Hansen wrote, “we are very appreciative of any suggestions for improvement and look forward to implementing the recommendation made here in an expeditious manner.”