AIDEA's effort to avoid competition on Penney contract draws more legislative criticism

The Legislature shouldn’t have to remind the Alaska Industrial Development and Export Authority to follow its own regulations to seek competitive bids on contracts, but the awarding of a no-bid multi-year contract to the grandson of a major Dunleavy benefactor demonstrates a serious disconnect.

State law and state regulations require competitive bids in most cases, including on work for AIDEA. No-bid contracts are allowed if they meet certain conditions, but AIDEA did not meet those conditions with the Clark Penney contract, which pays him $8,000 a month.

A House budget subcommittee added “intent” language to the AIDEA budget Tuesday saying the agency should “undergo a public and competitive bid process when awarding contracts. The contract awarding process should provide the opportunity for individuals and firms with similar experience to compete to provide services.”

The proposal will be reviewed by the House Finance Committee. Intent language is not binding and is often ignored by state agencies. In this case, the intent language needs to be followed up with action.

Sitka Rep. Jonathan Kreiss-Tomkins questioned the legality of the Penney deal and said if it faced a court challenge the state would likely lose.

“And I think it’s important that the Legislature make clear to AIDEA that we expect them to operate in a transparent and competitive manner and offer opportunity for all Alaska firms to compete for services,” he said.

Republican Rep. Sara Rasmussen opposed adding the non-binding language to the budget and defended what she called “sole contracts.”

“I think that this intent language is better suited in statute. Currently it is already in the statute in Title 44, Chapter 88, Section 80. Subsection 11 and 17 both cover these, so they’re already in statute and the intent language would conflict with what is in statute,” she said.

Those subsections deal with the power of AIDEA to sign contracts. No one questions that power.

She apparently has not read the AIDEA procurement regulations, which have the force of law. Those regulations show a strong preference for competition and require some evidence to justify no-bid deals.

The regulations on no-bid deals are at AAC 100.490. They allow no-bid deals that below $10,000, if the price is fair. They also allow no-bid deals if the “proposed contractor is in a unique position to be able to meet the authority’s needs.”

It may be that upon reading that section of the regulations, AIDEA executive director Tom Boutin decided to make the preposterous claim that Clark Penney is the only one who would have even been interested in the $8,000-a-month arrangement. When the contract was given to Penney, however, AIDEA did not make this claim. It said merely that it would be “difficult” to find someone else, a clear conflict with the regulation.

The regulations also require “a written explanation with evidence necessary for the independent examination and determination of the material facts of the procurement. The determination by the chief procurement officer that a specific course of action is or is not ‘in the authority's best interest’ means a determination that is reasonable under the circumstances and is not arbitrary, capricious, or prompted by corruption.”

AIDEA has even refused to give the Legislature “a written explanation with evidence necessary for the independent examination and determination of the material facts of the procurement.”

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