Permanent Fund study contract balloons from $50K to $450K
The no-bid state contract with a giant Washington, D.C. law firm was a joke, but only in the sense that $50,000 was never going to be enough to provide real answers about how the Permanent Fund should be governed in the wake of the Gabrielle Rubenstein debacle.
As I wrote here last week, the contract with WilmerHale promised a lot more than anyone could deliver in four months for $50,000. It would be impossible even for a company that had researched and tracked the history of the fund and Alaska politics.
The law firm, which has 1,100 lawyers and offices from Beijing to Brussels, was supposed to provide “a review of the framework of the Permanent Fund corporation and the board composition, expertise, diversity and succession planning to assess and evaluate the strengths, weaknesses, opportunities, and concerns to make informed strategic decisions . . .”
It will take a great deal more than a cursory Outside legal review to make sure the board overseeing the Permanent Fund is structured and organized in a way that it is up to the task of managing the most important financial institution in Alaska.
It turns out that WilmerHale is not just spending a paltry $50,000.
In an all-too-familiar pattern with the Dunleavy administration, the contract was extended and extended again to $450,000, nine times the amount claimed on August 19 as sufficient.
The first contract claimed the company would be paid “a sum not to exceed $50,000” and the work was to be completed by December 31, 2024.
Dunleavy Chief of Staff Tyson Gallagher signed that contract as “procurement officer” and “project director” on August 28, 2024, one day after WilmerHale partner Alyssa DaCunha signed for her company.
I’m guessing that Gallagher and DaCunha both knew on August 28 that the sum would exceed $50,000, despite the signed statement to the contrary.
Here is the original contract.
A little more than one month later, on October 4, Gallagher signed a $50,000 increase in the contract, pushing the total to $100,000. DaCunha signed it on October 3.
I’m guessing that Gallagher and DaCunha both knew on October 4 that the sum would exceed $100,000, despite their signed assurances to the contrary. “This amended contract shall not exceed a total of $100,000,” the amendment says.
Here is the contract amendment from $50,000 to $100,000.
Under that amendment, the comprehensive review of the governance of the Alaska Permanent Fund was still supposed to be finished by December 31.
Less than a month later, the contract was inflated again, this time by $350,000.
Gallagher and DaCunha signed the second extension on October 28 and October 31. “This amended contract shall not exceed a total of $450,000,” it says.
Here is the contract amendment from $100,000 to $450,000.
This amendment extends the life of the contract by six months, to the end of June 2025.
The amendment also alleges that the scope of work has been expanded to include information uncovered with the first $100,000 of legal expenses. The claim is that this is a “second phase.”
The amendment claims that in reviewing regulations and documents, the law firm uncovered “a number of areas for further review.”
All of this was obvious before anyone signed the first contract.
With the additional money, it will do more research and interviews to create “fulsome recommendations on options” for improving the governance of the fund and avoiding conflicts of interest.
Fulsome means either flattering or comprehensive. I think the contract amendment mean that the law firm will have an abundance of ideas by the end of June.
It should not have taken $100,000 with the D.C. law firm to decide that there are many elements to this task.
I oppose the practice of signing contracts for $50,000, claiming that is the full amount, when both sides know that is not enough to do the job.
But Dunleavy likes to spend state money on contracts hither and yon.
I support an external review of the governance of the Permanent Fund because the current structure, created by the Legislature 45 years ago during a simple time for Alaska investments, is hopelessly out of date. The system gives far too much power to one person—the governor. There are no checks and balances, the board is too small and there should be a public vetting process for its members.
I oppose the idea of doing an external review in secret, with the total project controlled by the governor’s office. The public has to be involved. The Legislature has to be involved.
But that’s not what we have here. In response to a public records request for the contracts and any draft reports and the final report submitted by WilmerHale, the goverrnor’s office said everything about this is secret except for the contracts.
“Please note that Appendix C, Scope of Services, includes the following language: ‘The State of Alaska affirms that any correspondence, communications, and related documents are covered by one or all of the following privileges: the attorney-client communication privilege, attorney work product, and the executive privilege. The state will assert the appropriate privileges if a request under the Alaska Public Records Act is received.”
The desire to keep secrets from the public for political reasons is what this is all about. Claiming that these various privileges apply to this contract by putting that language in the contract does not mean the privileges apply.
State law specifically say that draft reports and other documents are public records.
Dunleavy, who has yet to replace Rubenstein on the Permanent Fund board, hasn’t involved the public in this matter at all. The 2025 Legislature has a chance to lead.
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