Senate panel to review purchasing laws Public distrust prompts Miller to investigate contracts

THE BALTIMORE SUN

The president of the Maryland Senate ordered a comprehensive review of state procurement laws yesterday, saying citizens have lost confidence in the state's ability to buy goods and services without interference from special interest lobbyists, legislators or others.

"I think the current law, as it exists, only needs to be sharpened," said Senate President Thomas V. Mike Miller Jr., D-Prince George's. "It was a reform law, but there appears to be some backsliding from what was put in place, and what we once felt had teeth."

"Apparently, the teeth have become dull."

To demonstrate the importance he is attaching to the probe, Senator Miller named the Senate's majority and minority leaders, Clarence W. Blount, D-Baltimore, and John A. Cade, R-Anne Arundel, to chair the task force. He also appointed the chairmen and vice chairmen of the Senate's four standing committees as members, meaning the matter will be handled by the entire leadership of the Senate.

Mr. Miller said the panel will evaluate a series of controversial contracts the state has awarded since William Donald Schaefer became governor in 1987, including heavily lobbied, multimillion dollar deals involving the purchase of a fleet of MedEvac helicopters, a new system of lottery computers and planned new vehicle emissions testing stations.

Critics complained of legislative interference in all three contracts. There also were charges of administration mishandling of the bidding process and of heavy handed, politically charged lobbying by well-financed firms that were trying to steer the outcome their way.

The lottery contract, awarded to the Rhode Island firm GTECH Corp., is the subject of an investigation by the U.S. attorney for Maryland.

Mr. Miller said the panel also will review whether "all appropriate procedures and requirements of law were correctly followed" with regard to other recent contracts. They include a controversial 1992 contract to administer a retirement savings program for state employees and the recent purchase of home detention devices by state prison officials without seeking bids.

He said the panel also should look at whether a recently announced agreement with the Chesapeake and Potomac Telephone Co. to set up a fiber optics network throughout Maryland should have been competitively bid.

Page W. Boinest, the governor's press secretary, said Mr. Schaefer had no advance notice of the inquiry. She added, "The governor has gone on record inviting a review of the procurement process. If there is a problem there, then that needs to be turned up. But he hasn't seen one."

Ms. Boinest also said that neither the governor nor the other two members of the state's Board of Public Works, which approves all major state contracts, have expressed any concerns about procurement decisions.

"All three maintain the procurement process has been followed in each instance. They have taken extra precautions in contracts such as the lottery, and they have stood by the process that is in place," she said.

Neither of the other board members, Comptroller Louis L. Goldstein and Treasurer Lucille Maurer, could be reached yesterday for comment.

The House of Delegates is not involved, although it would have to act on any subsequent legislation passed by the Senate. House Speaker R. Clayton Mitchell Jr., D-Kent, also could not be reached.

Ever since Vice President Spiro T. Agnew was forced out of office in 1973 as a result of a procurement kickback scam when he was governor of Maryland in the late 1960s, the state has made several attempts to depoliticize purchasing practices.

The last major reform of procurement laws came in 1981, although a modest revision also was enacted in 1985. The arcane laws basically govern how the state must solicit and evaluate bids for goods and services and award contracts. They spell out exceptions, tell what procedures may be bypassed to permit "emergency" procurements, and say when "sole source" procurements from a single vendor are allowed.

The timing of this latest review comes on the eve of the 1994 election year, when Marylanders will pick a new governor and a new General Assembly. The task force's initial recommendations are expected in time for the 1994 legislative session in January, a session in which lawmakers may be looking for "good government" issues to back.

It also comes at the beginning of Governor Schaefer's eighth and final legislative session -- late enough to lessen the worries of lawmakers about potential gubernatorial retaliation if the inquiry should reflect badly on the administration.

"Unfortunately," said Mr. Miller in his letter to Senators Blount and Cade, "recent questions have left an appearance that the procurement system is not impartial, and that the independent judgment of public officials can be influenced."

"Whether or not this is an accurate assessment, the very existence of that perception tends to erode the confidence and trust of Maryland citizens in the public officials and officers," he said.

John R. Stierhoff, counsel to the Senate, said there are no plans at present to seek subpoena power for the committee.

EXAMPLES OF PROCUREMENT CONTROVERSIES

In calling for an examination of the state's procurement law yesterday, Senate President Thomas V. Mike Miller Jr. said the following transactions are among those that strike him as

troublesome:

Shock Trauma helicopters The state's purchase in 1988 of six MedEvac helicopters for its emergency medical evacuation system sparked a full-blown battle of lobbyists, blue ribbon procurement panels and others. Gov. William Donald Schaefer appointed a panel chaired by Lt. Gov. Melvin A. Steinberg to handle the selection. But the controversy raged on, spurred by letter-writing campaignsand the involvement of former Rep. Jim Wright of Texas, then speaker of the U.S. House of Representatives. Aerospatiale, a French firm that assembled its copters in Texas, won the $25.9 million battle with Bell Helicopter Textron Inc. and several other

competitors.

Lottery Equipment In a similarly contentious atmosphere, the state Lottery Agency bought computers in 1990 from the GTECH Corp. When the state later bought equipment for its new keno game from GTECH without seeking other bids, the U.S. Attorney for Maryland announced an investigation. State officials argued that any vendor other than GTECH "would have to invest a significant amount of time and money to duplicate part or all of the (existing GTECH) system." The costs of that duplication, officials contended, would have been passed on to the state.

Emissions control The state on July 7 awarded a $96.9 million contract for building and equipping 19 emissions inspection stations to MARTA, a subsidiary of the Ohio-based Allen Group Inc. MARTA was judged the best contender by a panel appointed by Governor Schaefer last fall to oversee a procurement in which most of the applicants had political connections and all but one had hired a lobbyist. The state contends it defused the political pressure. But as part of MARTA's proposal, it picked Whiting-Turner Contracting Co., headed by longtime Schaefer ally Willard Hackerman, to build the stations. While the award decision was being made, two black Baltimore legislators, Del. Howard P. Rawlings and Sen. Clarence W. Blount, were urging the Department of Transportation to keep the incumbent company, Envirotest, a minority-owned firm.

Deferred compensation The 401(k) retirement savings plan for state workers was awarded to Public Employees Benefit Services Corp. in 1990 without competitive bids. The state did seek bids for the contract in 1992, but only PEBSCO submitted a proposal. One potential competitor, the Copeland Companies, said the bid specifications made it impossible for a firm other than PEBSCO to make a profit.

Home detention A company owned by lobbyist Maurice R. "Mo" Wyatt has an exclusive contract for selling home-detention equipment manufactured by Vorec Corp., which recently sold the state $1.2 million worth of the devices. No other bids were sought. The equipment is used to keep track of prisoners who are confined in their homes. Mr. Wyatt, 51, is the one-time patronage chief for former Gov. Marvin Mandel.

Fiber optics

This summer, C&P; Telephone Co. of Maryland announced it had secretly negotiated an agreement with the state to build a high technology, fiber optics network connecting every high school and college in the state. The high-capacity cables linking the schools would permit them to use interactive video to broadcast classes, performances or other events in one part of the state to students in several locations in other parts of the state. Although the agreement was sanctioned by the governor's office and the Public Service Commission, the cable television industry and some legislators have questioned whether the cable network should have been put out for competitive bids. Schaefer administration officials have said no bidding was necessary because no contract exists: The schools are not required to participate, and so must pay fees to tap into the network only if they choose.

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