Government performs at its worst when three elements converge: tons of money, no accountability, and few or no controls. That those elements practically define our system of governance is an unavoidably grim reality. Add a common denominator--basic human greed--and the combination invariably equals short-changed taxpayers and enriched insiders.
Nowhere does this equation hold more true than in the issuance of government contracts, which usually takes place with minimal public scrutiny. The idea that friends, cronies and campaign contributors line up at the trough for handouts when their pals control the purse strings hardly provokes a whimper any more, let alone outrage. Only when deals blow up do their flaws become apparent--the indictment of ousted agriculture commissioner Meg Scott Phipps, who squeezed fair operators for campaign cash, came after more than 50 years of mutual backscratching by the former commish and his favorite carny, Strates Shows.
Competitive bidding laws inject a healthy dose of honesty into the business of purchasing goods and services (though public officials and contractors have occasionally discovered creative ways of circumventing them). Public servants charged with buying computers and building roads generally utilize a fair and open process, with qualified vendors on equal footing and the lowest bidder landing the deal.
Not all contracts work that way. Some aren't subject to the bidding laws by virtue of political exemption. Others, such as contracts for consulting or engineering services, involve intangible needs beyond the bottom line and don't fit a competitive bidding model. Being subjective in nature, these are also the ones most subject to abuse.
State government, with its access to huge pools of available cash and bare-bones oversight, is especially susceptible to exploitation by officials with a fondness for patronage. Who is watchdogging the line-item activities of the Golden LEAF Foundation, for example, the agency that doles out millions from the tobacco settlement like gumballs?
Fortunately, the Triangle's municipalities are relatively free from the kind of contracting scandal that has enveloped the agriculture department. When directed by the Raleigh City Council to hire an outside consultant, for example, City Manager Russell Allen issues a public invitation for proposals, convenes an ad- hoc group of experts to evaluate them, then makes a recommendation for council approval. The entire business is conducted in the light of day, and has worked admirably to remove politics from the mix.
Occasionally the system breaks down, however, as it did late last year when the city decided to hire a federal lobbyist to advance its interests in Congress. Allen did his part, researching the use of lobbyists in other cities, establishing objective criteria for the job, selecting and then interviewing the three most fitting firms from the dozen that submitted proposals, then ranking them. The council's budget and economic development committee unanimously approved Allen's recommendation to hire the top choice, Ball Janik.
But when the matter came to the full council for a vote, the four Republicans on the supposedly non-partisan council rejected Ball Janik--a move that appeared to have been orchestrated in advance. Among the no votes was budget committee member John Odom, who had previously voted for the firm without objection. Instead, the four proposed hiring Capitol Link, which did not measure up as well as other consultants according to the criteria and had not made Allen's final cut. But Capitol Link had another advantage--its N.C. representative was state Republican Party chairman Bill Cobey (now a candidate for governor), who was sitting in the council chamber during the debate. Democrat Benson Kirkman joined the majority, and Capitol Link got the contract.
It would be hard to imagine a worse choice for lobbyist than Cobey. One of the chief requirements of the job is to work closely with the local congressional delegation, composed of Democrats David Price, Brad Miller and Bob Etheridge. In his role as opposition party chairman, Cobey helps line up candidates to run against the three and raises money to defeat them. Price first won his seat by beating Cobey in 1986 and was relentlessly attacked by his opponent during the campaign. "I don't associate Bill Cobey with good times," says Miller, chuckling. "It's not a happy relationship."
It's too early to tell if the city's $55,000 has been wasted. The actual lobbying is being done by the family firm's D.C.-based founder, and Cobey is not actively involved. But the subversion of the contracting process enraged Mayor Charles Meeker, who fired off an angry letter to council members. "Selecting consultants and other professionals is a serious matter," Meeker wrote. "Our citizens must have confidence that such selections are made on the basis of merit, not politics or friendship."
Even Kirkman, who cast the deciding vote, acknowledges that the action should have been handled better. "The process was screwed up," he says.
At least Raleigh has a process. The Durham Housing Authority board of commissioners has recently witnessed firsthand the pitfalls when one doesn't exist. Authority executive director James Tabron resigned in April after admitting that he'd used the agency's credit card to buy personal items, including a pricey ring (allegedly for his daughter) and African art, and to award himself a $2,500 cash advance. That alone was enough to can Tabron, who for his part has denied wrongdoing beyond a lapse in judgment. But reporters from The News & Observer and The Herald-Sun found evidence of other iffy dealings when they began digging through the former director's files.
The most questionable concerned Tabron's relationship with Troy Chapman, a Pennsylvania development consultant. Tabron hired Chapman and his company, Residential Development Co-Ventures, to help navigate federal regulations in the conversion of a Fayetteville Street housing project to private apartments. The authority paid Chapman's company about $48,000 for his work, which a source close to the agency called a worthwhile investment. Nevertheless, the contract with Chapman was awarded with no formal proposal, and no other consultants were considered. In fact, the authority has no set guidelines for how such contracts should be handled, though any over $50,000 must be approved by the board.
The documents show that Tabron was also working with Chapman on a series of far-flung development projects in the Virgin Islands, Indiana, Florida and elsewhere. News accounts noted that in brochures and other papers, Chapman variously claimed to be the Durham Housing Authority's development director and contact person as well as the president of the agency's non-profit arm, none of which were true. Housing authority officials do say that Tabron was representing the agency, and that his consulting work would yield hundreds of thousands of dollars in development fees. But no one on the board knew about the projects until they hit the papers, raising questions about the true nature of the arrangement. And the only thing the city has to show for those efforts to date is the hefty tab for his travel expenses. That plus an investigation by the federal Department of Housing and Urban Development into Tabron's activities that may further tarnish the agency's reputation.
Furthermore, the authority is now trying to extricate itself from Chapman, who may have a legal claim on more than $200,000 in fees from the Fayetteville Street deal--a claim apparently stemming from an agreement with Tabron that was never approved by the board. "I suspect it was more on the level of a handshake deal," says board member John Dagenhart, "and you can see where that ends up."
Had the Authority done its due diligence, it could have learned that Chapman had been ripped in a 2001 HUD report for his dubious achievements while directing the Chester (Pa.) Housing Authority. Among other problems, the report stated that Chapman had engaged in a series of development schemes disturbingly similar to the ones he and Tabron cooked up that were supposed to generate substantial fees and profits for the agency; instead, they practically bankrupted it. (Chapman has refused to explain his activities to reporters.) Board members might also have learned from their own city manager, Marcia Connor, who found trouble when she violated her own contracting guidelines last year during the botched search for a police chief.
Dagenhart says the board is looking at revamping the way it selects consultants in the future. Meanwhile, partly in the hopes of realizing some of the promised fees from the out-of-state deals, the board has retained none other than Tabron as a consultant through September, guaranteeing him more than $30,000. But neither Dagenhart nor other board members contacted for this column can say if Tabron is making any progress, or whether he's even working on the projects. "I have no knowledge of that," Dagenhart says.
The Raleigh lobbyist and Durham Housing Authority consulting contracts are minor league compared to what the state or feds dish out on any given day, mere chump change in the taxpayer treasure chests--to keep things in perspective, the U.S. Defense Department recently owned up to the fact that billions of dollars in appropriations cannot be accounted for. But the slippery local deals serve as immediate reminders to municipal employees responsible for awarding no-bid contracts that they must keep their houses in order or suffer the consequences. As for the kings and queens of patronage in state government still rewarding their confederates with fat contracts, that'll have to wait for another day, and the next nasty scandal.
Contact Burtman at email@example.com.