Sole source contractors helped finance Oklahoma Education Department 'slush fund'

More than $100,000 that went into what auditors have dubbed as Oklahoma Education Department slush funds were solicited by state education officials from 31 companies that had no-bid contracts with that agency, records reveal.
by Randy Ellis Published: April 1, 2012
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© Copyright 2012, The Oklahoman

More than $100,000 that went into what auditors have dubbed as state Education Department slush funds was solicited by state education officials from 31 companies that had no-bid contracts with that agency, records reveal.

The Oklahoman reviewed a sample of 13 contractors and found they had received more than $48.5 million in no-bid Education Department contracts over the last six years. Their combined donations to the controversial accounts used to host educational conferences from 2007 through 2009 totaled $77,000.

Ultimately, the funds were used to host educational conferences, including the purchase of wine, beer and food items like a chocolate fountain, Maryland crabcakes and smoked salmon mousse in a puff pastry, according to a critical state audit released March 7.

Such items could not legally have been purchased directly with state funds, so Education Department officials asked companies they contract with and other businesses to donate money. The donations — obtained through sponsorships and booth sales — were deposited into accounts of a nonprofit organization called the Oklahoma Curriculum Improvement Commission and then used to host the conferences.

The audit covered solicitations and handling of accounts during former state schools Superintendent Sandy Garrett's administration. In 2007, 2008 and 2009, roughly $880,000 was deposited into the accounts through donations and payments.

The practice of soliciting donations from contractors has continued during Janet Barresi's administration, records show.

Compelling donations

State auditors raised concerns about the practice, noting that when contractors are solicited by high-ranking Education Department officials, “they may feel compelled or obligated to make those donations in order to maintain their contracts.”

Executives from some companies with state Education Department contracts also contributed to Garrett's re-election campaign in 2006, the last time she ran for office, records show.

The Oklahoman examined the sponsorship list for the Education Department's 2009 annual Leadership Conference and found that more than a fourth of the 40 donors had no-bid contracts with the agency. That means not only were they contractors, but they didn't have to submit competitive bids to obtain their contracts because Education Department executives certified that they were the only companies that could provide particular services or goods.

Since prices for such contracts are negotiated rather than established through competition, the potential exists for increasing the amounts of the contracts to cover the amounts the companies contribute back to pay for conference expenses.

“I think any time you've got those types of sole source contracts, I think you ought to look at them under more of a microscope,” State Auditor and Inspector Gary Jones told The Oklahoman. “Where you have those relationships where you are actually soliciting contributions, it would definitely bring up a concern.”

“It doesn't necessarily mean there's a quid pro quo there, but it sure makes you wonder,” he said. “That's why you want to make sure you have this degree of separation and that there is transparency with everything that is done with these types of events.”

Damon Gardenhire, spokesman for the Education Department, said Barresi is committed to reducing the number of no-bid contracts used by her agency and has transferred administration for a number of the computer contracts to the Office of State Finance.

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by Randy Ellis
Capitol Bureau Reporter
For the past 30 years, staff writer Randy Ellis has exposed public corruption and government mismanagement in news articles. Ellis has investigated problems in Oklahoma's higher education institutions and wrote stories that ultimately led to two...
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