© Copyright 2012, The Oklahoman
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
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.
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,
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.
Gardenhire said Barresi has tried to be as transparent as possible about how conferences have been financed. In the future, the Oklahoma State Board of Education will be asked to approve all sponsorships, which should make transactions even more transparent, he said.
Garrett says staff members handled fundraising for the conferences in a professional manner and insists taxpayers were the beneficiaries.
“This was taxpayers' money saved,” Garrett said.
Since the money came from donations, state funds didn't have to be used to pay for the conferences, she said.
Disputing ‘slush fund'
Garrett said she made a point of not meeting personally with contractors and could only remember one such meeting — when she became involved in discussions with a contractor that had failed to perform properly.
Garrett objected strongly to the auditor's use of the term “slush fund.”
“There was nothing hidden about those accounts,” she said. “No one ever accused us of using the money for personal purposes. When the term ‘slush fund' is used, I think people think you're talking about stolen money or money used for personal purposes. That did not happen.”
What did happen was high-ranking officials in Garrett's administration solicited donations to the conference accounts from contractors who did a lot of business with her
Representatives of several donor companies were interviewed by The Oklahoman and said they had no concerns about being solicited for donations.
“Vendors donating money for conferences and donating money for other things happens all the time, everywhere. That's how things run,” said Dean Hupp, chief executive officer of Illinois-base Hupp Information Technologies. “We do business in many states and that's very common. ... I don't know about the accounting side of things, but if they asked us to help, we're always going to help, just like most vendors would.”
Hupps' company installed and maintains a teacher credentialing system used to identify and track highly qualified teachers. The information is reported to federal education officials in connection with the No Child Left Behind law. Hupp said his company obtained its first contract through competitive bidding.
Since then, it has received nearly $900,000 in no-bid contracts. Hupp said it would be more expensive to rebid the contract each year because a new system would have to be installed and officials trained to use it if another company won the contract.
“The reality is if they didn't ask vendors to help out, then they would have to use taxpayers' money to do it, but people don't ever think about it like that,” Hupp said.
“I personally think vendors should help out on stuff like that. ... They let you buy a booth and advertise, so you are getting something for your contribution.”
Hupp said his company didn't increase the amount it charged the state in order to donate to the conference.
“That never happened in our case,” he said. “I can't speak for other vendors. ... It's not like they're asking for a ton of money. If they were asking for $50,000, then you've got to recover it somehow. It's just not what it looks like. ... Our hourly rates have been the same the whole time. ... In years and years and years, we've never changed them and they're very low to begin with.”