Legislator to Rendell: End Insider Contracts: Governor’s relationship with Ballard Spahr leads to questions

Last Friday, The Bulletin published a series of articles and a box chart detailing the intimate relationship between Governor Rendell and his former law firm, Ballard Spahr. The investigative report shed light on numerous conflicts of interest in the awarding of state contracts, leading a state legislator to remark that Gov. Rendell should join efforts to "end insider no-bid contracts."

Brett Mandel, Executive Director of Philadelphia Forward, stated, "Even if these types of business arrangements are legal, I’m not sure I want my legislator and my governor to be engaged in them. You never want to
have a quid pro quo arrangement in business and politics, or even the
appearance of one." He added, "Openness and transparency are essential for good government. A little ‘sunshine’ never hurts, especially when it involves taxpayer dollars." Philadelphia Forward is an organization whose mission is to embrace issues of ethics, governmental integrity, and budgeting, in order to raise the level of public debate surrounding how public priorities are set.

The Bulletin’s repeated calls to the Governor’s office and the state’s Office of General Counsel were not returned. Additionally, several Democratic legislators declined to respond.

State House Reform Efforts

State Representative Doug Reichley, R-134, Lehigh County, has spearheaded the effort to reform how state contracts are awarded. He introduced a bill as part of a reform package aimed at restoring integrity and ethics in how state business is conducted. "The [Gov. Rendell/Ballard Spahr] articles describe a pattern of behavior, although legal, which is disturbing in its depiction of a mindset which looks to loot the public coffers. This is exactly the kind of stuff which is so regularly criticized when it happens at the federal level in Washington. The ethical accountability in Harrisburg and Philadelphia should not stoop any lower than that," Rep. Reichley stated.

The legislator reiterated his relentlessness in pursuing this type of reform. "Although the legislation introduced by Reps. Turzai, Godshall, Grell, and myself did not move forward in this session, we will be re-introducing the bills again when we reconvene in January." Rep. Reichley pointed out Gov. Rendell’s inconsistencies on fiscal issues. "The governor is publicizing the need for budget restraints, but seems to have a blind spot on how to reform the abuses within his own spending practices. He needs to get behind our efforts to end these insider no-bid contracts, and bring greater transparency to state government, which would save taxpayer dollars at the same time," he said.

Rep. Reichley’s bill would require contracts to the executive, legislative, and judicial branches, and the legislative caucuses, with an initial value over $100,000, be subject to the requirements of the procurement code.

The package of bills addressed various aspects of contract reform. One would remove "legal services" from the definition of contracts which can be awarded under the emergency provisions of the Procurement Code.
Another would require extensions to current state contracts be posted on the Department of General Service website before submission to the Attorney General for review. Another proposal would ban contracts from being awarded to anyone who donated to political campaigns within one year of the date a contract is posted for public bidding. The bills are pending in Democratically-controlled committees.

The Representatives said that changes in the Procurement Code are needed "to help restore the integrity of state government against contract abuses."

Action in the Senate

Members of the senate are planning to make reforming of state contracts a key part of the next legislative session. Since Republicans will control the chamber by a sizable majority (30-20), they are optimistic that such reform legislation will be given serious consideration by Senate leaders and committee chairs.

State Sen. Dominic Pileggi, R-9, Delaware/Chester counties, who serves as Majority Leader, addressed the issue by stating, "As former U.S. Supreme Court justice Louis Brandeis said almost a century ago, sunlight is the best disinfectant. The best way to ensure that government officials are acting in the best interest of those they represent is to make it easy for the public to review their actions."
Sen. Pileggi sponsored the new Open Records Law, Act 3 of 2008, which includes a provision to post every state contract worth $5,000 or more online at the state Treasurer’s web site. "To my knowledge, Pennsylvania is the only state in the nation that makes so many state contracts so easy to review."
(The contract database is available at http://contracts.patreasury.org/.)
"Our new Open Records Law, which dramatically strengthened Pennsylvania’s 50-year-old previous law, also makes it easier to obtain and review other official documents and records from both state and local government agencies," the Senator added.
Earlier this year, the Senate passed Senate Bill 903 which would prohibit state agencies from contracting with outside individuals or firms for consulting work, unless the contract is reviewed by the Attorney General for legality and conflict of interest, or is opened to a public competitive bidding process. "That is a common-sense reform, and it is unfortunate that the House did not take it up," Sen. Pileggi said.
"The package of bills introduced by House Republicans, described in one of your stories, also includes significant reforms which would improve the current process. Anyone interested in these kinds of changes should contact their own Senator and Representative to let them know that government reform remains an important issue," said the Majority Leader.
Sen. John Eichelberger, R-30, expressed concern that the extent of no-bid contracts authorized during the Rendell Administrations is still unknown. "I don’t have any idea about the number of no-bid contracts or their dollar amounts under Rendell or how it compares to any Republican administrations. The Turnpike is another rumored hot-bed for these (types) of deals," he stated. Ballard Spahr has received over $2 million in no-bid contracts for the Turnpike privatization plan, and performed nearly $800,000 worth of work with no contract at all.

The Department of General Services has stated that nearly all records prior to 2003 concerning no-bid contracts were "lost." Consequently, there is no manner in which to compare the frequency, number and dollar amounts of contracts doled out under the Rendell Administration with those from prior Administrations. Governor Rendell was sworn in as Governor in 2003.

"I had an amendment prepared in the summer of 2007 to add to the transportation bill, now Act 44, that would require competitive bidding. The Senate leadership did not want it to run, and I did not get it to the floor," Sen. Eichelberger said. "There was a commitment at that time to develop legislation to force competitive bidding across the board in state government, but it never got done. This is an indication of what the chances are for getting something passed," he lamented.

When asked how the public views these types of business arrangements, specifically no-bid contracts, the Senator replied, "This business model is what people expect from a corrupt government, and, unfortunately they have become accustomed to it." He added, "We couldn’t even get a bill passed this year banning bonuses to state employees. The Democrats in the House blocked it despite the continuous headline stories about "Bonusgate". There appears to be no collective shame on the part of the Pennsylvania General Assembly." The "Bonusgate" scandal refers to taxpayer-funded bonuses allegedly paid to legislative staffers who performed political campaign work while on state time. To date, twelve have been indicted by Attorney General Tom Corbett, and two are cooperating with prosecutors.

Asked how the average voter can make his opinion known on this issue, Sen. Eichelberger replied, "Interested people sitting at home today should write, email and telephone the Governor, as well as their House and Senate members, and let them know that they are not going to tolerate any unethical behavior on the part of people who’s duty it is to uphold the public trust. People with any specific knowledge of wrongdoing should contact the Attorney General and the State Ethics Commission."

Chris Freind can be reached at [email protected]