State Contracts: It's Who You Know

BARRY RASCOVAR

June 27, 1993|By BARRY RASCOVAR

Maryland's procurement laws -- once a model for other statesseeking integrity in awarding contracts -- are in tatters. Politically connected officials and lobbyists have blown gaping holes in the laws.

It is a throwback to the pre-Watergate years when state contracts got handed out on the basis of who you knew. What's happening now is all too familiar. Influential businessmen with connections in the State House maneuver into position to benefit from contract awards.

It is a corrupt bargain. The biggest losers are the taxpayers, who once again lose faith in government.

Under Gov. Harry Hughes (1978-1986), ethics were paramount. Mr. Hughes was elected in reaction to the corruption under the Agnew and Mandel regimes and a general aura of seamy politics statewide. Mr. Hughes gave impetus to the model procurement laws.

The idea was to set up a system immune to corrupting influences. Contracts would be awarded on technical merit and lowest price.

This system worked well. Mr. Hughes was committed to an honest process. His underlings knew it.

That changed in the Schaefer administration. Friends of the governor insinuated themselves into the procurement process. They got the governor to overturn a lottery contract decision and to set up a new procedure that -- not coincidentally -- favored those with ties to the governor. The new vendor underbid competitors by a giant $18 million.

Since then, that lottery contract has been sweetened several times -- adding $54 million, or 85 percent, to the original contract. Coincidence? Regardless of how it happened, the winner hit a gusher.

More recently, another contract -- for a home-detention system -- was handed out to a company with friends with good State House contacts. Initial agency resistance to the contract award was overridden. Competitive bidding was avoided.

There doesn't seem to be much integrity left in the process. Whenever officials want to intervene, they can. The procurement officer's only goal should be to get the best price for goods and services. Instead, his main concern is pleasing his boss.

Some office holders have personal agendas. But allocating government resources ought to be kept separate from that objective. This was the purpose of the model procurement laws. No longer.

Scott Livingston, a Washington lawyer who drafted Maryland's procurement statute, has some ideas on changing the system so procurement officers do their jobs without interference. He suggests Maryland take a look at how the federal government handles contract awards.

In the federal system, top political job holders cannot influence .. contract awards. They can't even discuss the contracts with procurement officers. Thus, it is hard to reward cronies. There are inspectors general in every department, who take a second look at these deals to see if there has been any abuse. There is also the General Accounting Office, an arm of the Congress, which acts as an additional watchdog.

And there's an added check against abuses -- a qui tam proceeding. This allows citizens to bring actions against the contractor. If the government sues the contractor and wins, the citizen-plaintiff gets a share of the money recovered.

None of this happens in Maryland. Citizens have no legal standing to bring suit; there is no legislative watchdog; there is no agency watchdog; and department officials can countermand the procurement officer at will.

Moreover, the attorney general has a built-in conflict. On one hand, the attorney general is the state's top legal officer, on the lookout for fraud. But he is also the legal representative of every ,, state agency. If questions are raised about a contract award, the attorney general defends the agency.

How can he root out evil when he must also defend the actions of that same agency? It's impossible.

Nor has the Board of Public Works performed a useful role. It is also supposed to act as a check by skeptically examining or rejecting dubious contract awards. Members sometimes raise a few questions, but in the end they let the governor and his officials have their way.

One final check might be the Office of State Prosecutor. But the prosecutor's jurisdiction is extremely limited. It would take an egregious violation of the procurement law before he steps in.

Losing bidders find themselves in no-win situations. They not only feel they are unfairly deprived of contracts, they don't feel free to appeal for fear of angering the very officials who control future contract awards.

The key, Mr. Livingston says, is to diminish the role of politicians. He suggests setting up a People's Counsel for procurement as an independent voice with the power to challenge any contract action. He or she wouldn't have any vested interest or conflicting roles to play.

What are the chances of such a change? Slim. The Schaefer administration and the current legislature are part of the problem, not part of the solution. But the U.S. attorney's office continues to probe into the lottery contract award. A scandal may yet break. And if not over this contract, there are sure to be others that raise questions of impropriety.

The system is broke. It needs fixing. The next governor will have to clean up this mess that his predecessor is leaving behind.

Barry Rascovar is editorial-page director of The Sun.

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