Elaine Chao under scrutiny for $67 million grant to her husband's home state

A Government Accountability Office (GAO) examination has raised serious concerns about the process by which Transportation Secretary Elaine Chao determined project grant recipients, finding that it did not treat all applicants with “the assurance of fairness.”

One of the beneficiaries of that process was Boone County, Kentucky — a jurisdiction represented by Chao’s husband, Senate Majority Leader Mitch McConnell.

Politico reported on Tuesday that a $67.4 million grant application for Boone was “initially flagged by professional staff as incomplete.” After the Department of Transportation gave Boone and a minority of the other incomplete applicants a second chance to fix their submission, Chao selected it as among the 26 grant winners from an initial pool of 258 applicants.

The discretionary grant was Kentucky’s largest from the department.

Given that Chao’s husband, McConnell (R-KY), faces a potentially tough 2020 reelection race, the Boone grant could be seen as especially problematic.

“The arrangement raised ethical red flags because McConnell has touted his ability to deliver federal grants to his home state as a frequent refrain in his reelection campaign,” Politico noted. “And as the leader of the Senate, he has significant control over the oversight of his wife’s department, an unusual concentration of power in one couple.”

After some of the grant applicants complained about the lack of clear standards, the GAO began a review last year. Its report documented “recurrent and long-standing” concerns about how grant recipients are chosen and the department’s lack of a paper-trail for its decision-making process.

Susan Fleming, the director of the GAO physical infrastructure team, told Politico that the system “really invites skepticism, and it raises questions about the integrity of the process and ultimately the decisions that are made.”

“Are these decisions driven by merit? Or are they driven by other factors?” she asked, noting that professional staffers dinged the majority of the grant recipients for having a “high uncertainty” for cost effectiveness, raising “a red flag.”

Emails obtained by Politico also showed that Boone County officials had communicated with Chao’s current chief of staff and former McConnell campaign staffer Todd Inman, who has been “known to offer extra guidance to Kentuckians with business before the secretary.” It was not immediately clear when that communication took place.

Rep. Peter DeFazio, chair of the House Transportation and Infrastructure Committee, requested an inspector general’s investigation in October following earlier Politico reports that Chao’s department provided special treatment for Kentucky and that Inman gave extra assistance to McConnell’s allies and constituents.

The department’s Office of Inspector General told Politico and confirmed in a phone call that there was an “open review” into the matter.

The Department of Transportation has itself denied the characterization that Inman is a special liaison for Kentucky and that the department had any bias toward the state.

A spokesperson said in an email Tuesday that staff had “reached out to those projects with incomplete [grant] applications that were best aligned with the required criteria.” They claimed Politico’s reporting contained “multiple inaccuracies.”

“…The Boone County […] project was a high-performing application that met and exceeded both the merit and statutory criteria involved in the INFRA program, including the benefit-cost ratio,” they wrote. “This project improved its application after not being selected in prior years and being debriefed by DOT technical staff.”

Still, the spokesperson said, “DOT is committed to working to implement GAO’s recommendations and is always looking for areas to improve the grant-making process.”

Chao previously came under fire in May for a broken pledge to sell off construction material stocks worth between $250,000 and $500,000. She sold off her shares in June, according to the New York Times, stating in a letter to Transportation Department lawyers that she had made an “inadvertent misstatement” about the holdings when she was first nominated.

This article’s subhead has been updated to state that Chao’s alleged favoritism is under review, not necessarily a specific action she took.

Published with permission of The American Independent Foundation.