Evidence emerges tying governor's office to no-bid Penney contract

In a legislative hearing on Feb. 4, the executive director of the Alaska Industrial Development and Export Authority, Tom Boutin, gave a half-answer when asked if Gov. Mike Dunleavy or someone else in the administration had directed the creation of the Clark Penney no-bid contract.

Under questioning by Rep. Zack Fields, AIDEA executive Boutin said he never talked to the governor about Penney or the contract.

Boutin had quickly interrupted Fields as the question was being asked, however. Boutin was already into his denial when Fields inquired if someone else in the administration directed him to pay $8,000-a-month to the grandson of a major Dunleavy benefactor.

It was the second time that Boutin had been asked at the hearing if he had made the decision to hire Penney, at a cost of up to $441,000 through mid-2022.

“My name is on both the contract and the sole-source finding,” replied Boutin, deflecting the question.

“Did you make the decision to make a sole-source contract with Clark Penney or were you directed to do so by the governor or someone in his administration?” Fields asked.

"I certainly wasn't directed to do so by the governor. I've never talked with the governor about either Clark Penney or the Clark Penney, Penney services contract, not once, not ever,” said Boutin.

For months, it has been obvious that someone in the governor’s office came up with the plan to bestow a no-bid consulting deal on Penney.

Published documents make it clear that approving or rejecting the contract was not up to Boutin, despite his claims to legislators.

He boasted that the buck stopped with him, but he didn’t admit that the bucks started with the commerce department and that he had been instructed to give work to Penney. Here is some of the evidence of him saying it wasn’t his decision to make.

Like Boutin, Commerce Commissioner Julie Anderson was almost certainly not acting on her own.

In a Jan. 30 hearing, Fields asked Anderson, “Did you, commissioner, choose Clark Penney for this contract and if not, do you know who did and how he was chosen?”

“So, on contract matters, I would have to defer to Tom Boutin on that,” she said.

Anderson played a central role in negotiating the contract and creating it, and the money was from her budget, so her refusal to answer legislative questions is inexcusable.

The behavior by Boutin and Anderson suggests that they are hiding the real reason why the no-bid deal went to Bob Penney’s grandson.

The real reason is the connection to the governor’s office.

On Friday, the Alaska Landmine reported on the first tangible evidence that connects the governor’s office to the Penney contract. Jeff Landfield wrote that he had obtained a copy of an internal AIDEA document that claimed the statutory or regulatory authority for the no-bid contract was “by governor’s request.”

This is an important document.

The reference to the governor was on an early version of a document used to justify the decision to go with a no-bid contract, evading the state laws that require competition to avoid the appearance of corruption. The final version of the no-bid waiver did not say it was “by governor’s request,” but was “within AIDEA’s mission.”

The sole-source justification for the Penney contract was created after the decision had been made to give Penney a contract.

It was only after I talked with and corresponded with an expert in the history of state contracting that I began to understand that the sole-source justification used by AIDEA in this case shows that state law and state regulations have been violated.

Anchorage resident Barry Jackson, a retired state employee, was contracting and facilities manager for the administration department for many years.

His long history in state government includes his work during the Sheffield administration when he balked at what he called a “fishy” process in which the governor was aiming to direct a sole-source lease contract to a Fairbanks project in which a Sheffield supporter had an interest. In a document that ended up in a grand jury report, Jackson wrote about being pressured to take a “decided hat-in-hand posture” in dealing with the owners of the building.

Sheffield survived an impeachment inquiry, but the incident was a major factor in his 1986 primary loss to Steve Cowper. In the end, the Alaska Supreme Court rejected the sole-source lease. The court said “the state cannot be allowed to use the sole-source process to circumvent competitive bidding requirements.”

Jackson supervised the Anchorage office for about 25 years and played a key role in evaluating and monitoring state procurement practices.

“The largest project I managed had a budget expectation of more than $100 million,” he said. “One of my last projects was the procurement of the Atwood Building in downtown Anchorage for slightly over $25 million, which by the way, was a sole source purchase,” he said.

There is a place in state government for sole-source contracts, he says, but the rules have to be followed. That didn’t happen in this case.

Jackson has made a good case that the waiver document created by AIDEA is deficient. Since this is a document that is the most important justification for the contract, he and I are writing an analysis of its clear deficiencies, to be published here in the next few days.

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