A House budget subcommittee today approved a pair of amendments pushing back on the administration for awarding a no-bid, sole-source contract worth $441,000 to the grandson of key Dunleavy booster Bob Penney.
The House Finance Subcommittee on the Department of Commerce, Community and Economic Development approved the amendments following the administration’s struggles to explain just how the contract came about, why the state skirted the normal competitive bid process or what exactly the state is getting out of it.
But because AIDEA is a state corporation whose operations and budget are dictated by its board outside of legislative control, the amendments are unable to put a halt to the contract.
The amendments were proposed by Rep. Jonathan Kreiss-Tomkins, D-Sitka, who said he was troubled by the administration’s vague defense of the need to skirt the state’s normal competitive bid process.
“I think AIDEA’s actions have questionable legality if they were challenged in court or by another firm,” he said. “I think it’s really important that the Legislature make clear to AIDEA that we expect them to operate in a transparent and competitive manner and offer opportunity for all Alaska firms to compete for services.”
Rep. Zack Fields, D-Anchorage, was also critical of the process, especially when it has the appearance of political payback to one of the governor’s biggest political donors.
“If the governor’s donors happen to be the best and that’s awarded through a competitive process, that’s fine,” he said. “It’s inappropriate to do that in a sole-source, no-bid process.”
AIDEA Executive Director and CEO Tom Boutin told the committee last week he awarded the contract outside of the normal competitive bid process because he was certain only Clark Penney could provide the state with economic development expertise at $8,000 per month. The contract totals $441,000 and covers four years.
Boutin didn’t offer any evidence backing his claims other than to say, “I know that to be true.”
Rep. Chris Tuck, D-Anchorage, said feelings aren’t enough to justify such spending.
“I don’t have a problem with the sole-sourcing. I don’t have a problem with who it went to as much as I have a problem with the due diligence that went into that,” he said, saying that the administration’s argument that there was no time for such review isn’t supported by the evidence. “We don’t have no record of that. We have nothing to show for that. It’s just a feeling. How do you know that those other consultants weren’t available?”
One amendment adds non-binding intent language to the budget, calling on AIDEA to “undergo a public and competitive bid process when awarding contracts,” arguing that “the contract awarding process should provide the opportunity for individuals and firms with similar experience to compete to provide services.”
The second cuts the spending authority for AIDEA in the upcoming budget year by $110,250—equal to one year of the Clark Penney contract. It originally sought to remove the entire $441,000 from the budget but was amended down during the committee meeting. It’s unlikely, though, that such a cut will have serious impact on the agency, which had about $3 million in unused spending authority last year.
Still, the committee had its skeptics about the amendments.
Rep. Sara Rasmussen, R-Anchorage, said that reaching into AIDEA’s operations could set a bad precedent and defended the state’s economic development efforts. Without citing specifics, she said she “had it on good authority that there have been some large investments for capital projects here in Alaska.”
She did concede, however, that the administration hasn’t done a good job of defending the contract.
“I agree that the administration has done a very poor job of explaining what was covered in the contract that was signed with Mr. Penney, but we don’t have another option in place at this point to secure those capital dollars for Alaska,” she said.
The committee ultimately voted 5-3 to accept both amendments, which will be included in the recommendations that are forwarded to the House Finance Committee. The vote on both amendments is as follows:
YEAS: Reps. Hannan, Tuck, Fields, Wool, Tuck
NAYS: Reps. Gillis, Lincoln, Rasmussen
As for “large investments for capital projects,” the U.S. Department of Transportation did announce today it had awarded $20 million for infrastructure improvements at the Port of Alaska in Anchorage, but that announcement came from U.S. Sen. Dan Sullivan.
Sullivan’s announcement outlined his work in highlighting the port’s needs on a federal level over several years. Penney, AIDEA and the state’s economic development team were not mentioned.