State may have illegally directed $5 million contract, former officials tell Alaska Legislature

Three former state employees told state legislators this week that they believe a $5 million state contract for efficiency planning and technology help was so narrowly written that it was illegal.

“They for sure violated statute. Absolutely violated statute,” said Barry Jackson after a hearing on Tuesday of the House State Affairs Committee, which oversees state procurement.

The Department of Administration, which declined to participate in the hearing, said in a written statement afterward that Jackson is drawing “inaccurate conclusions.”

Jackson, contracting and facilities manager of Alaska’s Division of General Services until 1999, spoke to the committee along with former assistant attorney generals Jim Baldwin and Ross Kopperud.

At issue is a contract awarded last year by the Alaska Department of Administration to Alvarez & Marsal, an international firm that provides a wide variety of services. The contract is separate from a pandemic-preparedness effort by Washington-registered contractor Tandem Motion that has also drawn critics' attention.

In September 2019, the Alaska Department of Administration sought help for the new AAPEX program, which consolidates identical services across state agencies in order to save money. Instead of having separate offices for things like employee travel, printing and bill collection in each state department, there will be one travel office or one collections office.

The department needed advice and issued a request for proposals. Any firm that met the standards would be eligible for a consulting contract worth as much as $5 million.

State law says proposal requests “may not be unduly restrictive,” but the department required companies to either be members of a program operated by the National Governors Association or have 25 years of experience with information technology and expertise in nine different fields.

Jackson obtained a draft document that indicates Commissioner Kelly Tshibaka herself changed the request for proposals to say “25 years.”

That’s an extraordinarily high hurdle, Jackson said.

“It frankly raises my eyebrows — what the heck is going on here?” he said.

“The appearance is not good. It leads one to suspect there was an intent to restrict the number of firms that could qualify to make an offer,” Baldwin said.

The department, invited to speak by the committee’s chairman, refused to attend.

Department officials and its commissioner, Tshibaka, did not answer direct questions emailed after the hearing but provided a written statement:

“The Department of Administration disagrees with the mischaracterization of the state’s procurement process and the inaccurate conclusions drawn by Mr. Barry Jackson during his closed testimony before today’s House Staff Affairs Committee hearing,” the statement said.

“In fact, the department’s dedicated procurement officers follow long-established contracting protocols specifically designed to protect the interests of the state and the public. Over the last several months, we’ve received a number of information requests regarding the AAPEX and pandemic preparedness contracts, including several from Mr. Jackson himself, and have provided timely and transparent responses. To further assist the public’s review of our work, we’ve also posted this background material online at the DOA’s website, “What’s New in DOA” tab.”

According to a timeline compiled by Jackson, only two firms responded to the request for proposals by Oct. 11, 2019, the state’s deadline. Two other companies asked for an extension in order to apply, but the state said no.

The Department of Administration disqualified one firm for failing to list expertise in “legal services,” one of the nine fields it requested. That left Alvarez & Marsal. Six days later, the state issued a formal statement that said it would award the contract.

“All the evidence that I’ve seen indicates a set of circumstances and restraints on bidding that yielded a single contractor who had a perfect ability to meet those restraints, no matter how outlandish they were,” Jackson said after the hearing.

State law allows a 10-day period for losing bidders to protest, but the Department of Administration signed the contract less than a week after its formal statement.

The losing firm protested but was rejected. Its appeal was also denied. Jackson said the denial was incorrect — the state can’t contract for legal services unless it has written permission from the attorney general’s office. He wasn’t able to find that permission.

Rep. Jonathan Kreiss-Tomkins, D-Sitka, asked whether Jackson had seen similar things before.

No, he said, calling it "so far off the normal path that it’s stunning.”

Jackson investigated the contract on his own after speaking with Fairbanks journalist Dermot Cole and learning about it. He submitted several public records requests in the process, he said, but was denied access to others.

After Jackson testified, Rep. Steve Thompson, R-Fairbanks, said, “It’s good information, but it’s one-sided. Are we doing a witch hunt, or what are we up to?”

Committee chairman Zack Fields, D-Anchorage, responded that he invited the Department of Administration to attend.

“They declined to participate at any time. I would certainly welcome their participation at a subsequent hearing,” he said.

Asked afterward whether the hearing was intended to influence the upcoming general election, he said it was not.

“We’ve been having oversight hearings in State Affairs since the Legislature adjourned,” he said. “And I’m sure we’ll have more after the election.”

Correction: The initial version of this story misstated Barry Jackson’s final position with the state of Alaska. He was contracting and facilities manager for the Division of General Services, not the state’s chief procurement officer, before leaving state service in 1999.