State contracting watchdog officials say they would lose their power to suspend improper or illegal procurements under Gov. Ned Lamont’s latest budget proposal.
And while key lawmakers hope for a compromise between the administration and the State Contracting Standards Board, an olive branch from the governor — beefing up the state auditors of public accounts — isn’t likely to solve the dispute.
The budget revisions Lamont proposed on Feb. 9 are “a slick way of basically taking away what the core purpose of the contracting standards board was,” Lawrence Fox, a West Hartford Democrat and board chairman, told the CT Mirror this week. “They’re saying to us, ‘You don’t basically investigate anything any more.”
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What Lamont specifically proposed to legislators was budget policy language that would strip the board’s enforcement powers. The watchdog group, which has lacked a full contingent of support staff throughout its 14-year history — and wouldn’t receive funds to hire any under the governor’s proposal — already relies heavily on free work by its volunteer board to get its job done.
The administration has said on several occasions that it believes the contracting standards board largely duplicates watchdog efforts already performed by other agencies.
Some officials also have criticized the contracting board over the years as an ally of labor unions trying to block privatization of state services — a charge Fox denies.
“We look at [a contract] on its merits and based upon the law,” Fox said. “We just follow what the statute says.”
Fox added that about two-thirds of the contracting group’s 13-member board have no ties to organized labor.
But Lamont says the group still should continue its work. And if its research raises concerns, it should refer them to the state auditors, a longstanding agency within the Legislative Branch that periodically reviews the finances and practices of most agencies, quasi-public entities and certain other state programs. The auditors’ office is overseen by one Democrat and one Republican — both appointed by the General Assembly.
“Our state’s auditors are qualified people who conduct oversight over state agencies on behalf of the people of the state while reviewing procurement and contracting process in a non-partisan way,” said Lamont spokesman Anthony Anthony. The governor’s new budget includes funding to add three more auditors to that office to help accommodate new referrals.
But while there are some similarities between the contracting board and the auditors’ office, they aren’t perfect parallels.
The auditors have almost no enforcement authority. Their chief power rests only in shining public light on state agencies. Governors and legislators can — and on many occasions have — disregarded the conclusions of auditors when they report practices that don’t conform to proper procedure.
The contracting standards board, by comparison, has authority to suspend a procurement process underway if it concludes the department or agency in question isn’t in full compliance with state rules.
That authority, and the board itself — the linchpin in the landmark “Clean Contracting” system created in 2007 by the Democrat-controlled legislature and Republican Gov. M. Jodi Rell — was Connecticut’s response to the contracting scandals that drove Republican Gov. John G. Rowland from office amid an impeachment inquiry in July 2004. Rowland later served 10 months in federal prison after admitting he accepted about $100,000 in gifts from state contractors and his staff.
Legislators and Rell envisioned a board that would ask three key questions before major contracts were executed: Was the state purchasing quality goods or services? Was the planned purchase cost-efficient, both in the short-term and over the long haul? And was the process transparent and in compliance with state rules?
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Not long after the board’s creation, though, Connecticut would fall into the Great Recession, and legislators and Rell would siphon away nearly all resources, leaving the volunteer standards board with no staff.
An executive director would eventually be hired, but once the recession had ended, Democrats would take control of the governor’s office — first Dannel P. Malloy, who served from 2011 through 2018, and then Lamont from 2019 to the present.
Neither has shown much need for the contracting board, which has remained fiscally shackled for nearly a decade and a half. But neither would either risk the political backlash of trying outright to repeal the centerpiece of Connecticut’s response to Rowland administration corruption.
Malloy tried in his first six months to suspend contracting board operations for two years so he could more easily privatize state services and cut operating costs.
Lamont, who also has made no secret of his plans to privatize more state services as veteran government employees retire over the next few years, offered a bill in 2019 to make it easier to launch public-private ventures.
The legislature killed Lamont’s proposal, though, after then-AFL-CIO President Salvatore Luciano called it “an alarming attempt to return us to the shadowy Rowland years.”
The two-year budget that legislators and Lamont adopted last June included just under $700,000 per year for the contracting board — the same level the board was supposed to have when it was launched 14 years ago. That included $450,000 in each year to fund additional positions.
But shortly after that was passed, legislative leaders, at the request of the Lamont administration, included a provision in a subsequent budget policy bill that barred the board from spending $450,000 of its annual allotment.
The budget revisions Lamont proposed last week for the fiscal year that begins July 1 make no changes to that funding roadblock.
Fox said those funds were to create five new positions to support Executive Director David Guay, whose only assistance currently comes from a college intern. And Guay has since announced his plans to retire in the second half of 2022.
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Lamont and the contracting board have bumped heads since 2019, when the latter took an interest in the Connecticut Port Authority’s efforts to enhance the state pier in New London. The authority wants to make the pier an optimal staging point to help Eversource and its Denmark-based partner, Ørsted North America, develop an off-shore wind-to-energy project ultimately capable of generating 4,000 megawatt hours of electricity.
The contracting board specifically focused on more than $700,000 in fees paid in 2018 to Seabury Capital Group to help with search for a pier operator. The Day of New London first reported that those payments included a $523,000 “success” or reward fee — and that this happened three months after Henry Juan III of Greenwich, who was a managing director with Seabury, resigned from the authority board.
The contracting board wrapped an investigation earlier this month, concluding those “success fees” were eerily similar to the “finder’s fees” scandal that sent a former state Treasurer Paul Silvester to prison in 2001.
The General Assembly banned “finder’s fees” after Silvester admitted he had accepted kickbacks in exchange for steering investment of state-controlled pension funds.
The CT Mirror reported earlier this month that the FBI is investigating projects related for Lamont’s former deputy budget director, Kosta Diamantis, including the state-financed reconstruction of the New London pier and some school construction work.
Given that climate, labor leaders asked Tuesday, why wouldn’t the administration embrace the contracting watchdog?
Connecticut AFL-CIO President Ed Hawthorne said the governor’s budget proposal “is like providing enough funding for a school so you can hire a principal, but not enough for teachers. … It’s clearly set up to fail.”
“What he’s doing this year is completely insidious,” said Travis Woodward, president of CSEA-SEIU, Local 2001, which represents about 4,000 state employees ranging from transportation planners, architects and engineers to information technology specialists and some Department of Education staff.
The bargaining unit has long been one of the most ardent supporters of the contracting board’s mission.
“The board’s doing great work, and now you want to cap them off at the knees?” Woodward added.
Senate Republicans quickly called Wednesday afternoon for lawmakers to reject the governor’s proposal to de-power the contracting standards board.
“Public trust in this administration is already declining. A federal investigation is ongoing allegedly involving state contracts,” Senate Minority Leader Kevin Kelly of Stratford and Sen. Paul Formica of East Lyme, the deputy leader, wrote in a joint statement. “And yet the governor is proposing to further weaken the very watchdog that oversees state contracts, the same watchdog whose budget he has cut from before. The proposal is tone deaf at best.”
Leaders of the legislature’s Appropriations and Transportation committees said last summer it was a mistake to dangle but not deliver resources for the contracting board and predicted many legislators would look to correct that error in the 2022 session.
Democratic Sens. Julie Kushner of Danbury and Mae Flexer of Windham, who lead the Labor & Public Employees and Government Administration & Elections committees, respectively, said Tuesday they hope all sides can find common ground.
But Kushner and Flexer also said they believe Connecticut taxpayers would be better served with a fully-staffed and empowered contracting watchdog.
“If this board had been allowed to fully function” since its enactment in 2007, Flexer said. “It would have done nothing but build the confidence of Connecticut residents over our state contracting process.”
“We’re living in a time when we need to examine every contract and make sure it’s above board,” Kushner said, “and that were doing our best to make sure we’re providing services to the people of Connecticut” in an “efficient and economical” manner.