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No-bid deals prove too popular

As the state sought to speed computer purchases, contracts tied to powerful lobbyists poured in. Now, the rules will be tightened.

By DIANE RADO

© St. Petersburg Times, published July 23, 2000


TALLAHASSEE -- The waning days of 1999 were lucrative ones for Don and Denise Yaeger, the husband-wife team representing the EMC2 computer company.

Don Yaeger was the company's lobbyist in the state capital; his wife, the sales representative. Between Dec. 28 and 30, Denise Yaeger landed $4.3-million in sales at three state agencies without having to go through competitive bidding.

The Yaegers had gone on vacation in Jamaica with the state official who approved one of the sales at the Agency for Health Care Administration. And financing for all three sales was worked out by Roy Cales, the state's chief information officer and a friend of another EMC2 lobbyist, David Rancourt, former deputy chief of staff to Gov. Jeb Bush.

Chalk it up to Florida's loosely written computer purchasing laws.

Competition is supposed to be the heart of Florida's purchasing system. But in the fast-growing area of technology, millions of dollars of purchases are routinely made without a formal process of competitive bidding and with little guidance on whether socializing with lobbyists is appropriate.

A St. Petersburg Times analysis of purchasing records shows that:

The number of no-bid computer contracts has increased dramatically under a law designed to improve government efficiency. "State term" contracts allow agencies to pick from a list of companies without having to compare prices or even document why one company was chosen over another.

The first state term contract for computer consulting was put in place in 1996. Now there are 103 of these contracts, and another 22 contracts cover purchases for computer equipment, software and supplies.

The no-competition contracts have been especially beneficial for a handful of companies.

For example, Image API has done $11.29-million in state business since January 1999 -- 99 percent through state term contracts; Sun Microsystems Federal did $6.51-million worth of business, with $5.53-million coming from state term contracts. Digital Equipment Corp. did $7.86-million in business, with $6.11-million from state term contracts.

In some instances, computer companies that happen to have well-connected lobbyists get the biggest chunk of state business.

For one type of computer equipment, for example, the state has spent $3.2-million since January 1999. The biggest single purchase, for $936,579, was from EMC2, represented by lobbyists Yaeger, Rancourt and Paul Bradshaw, the husband of Bush's chief of staff, Sally Bradshaw.

It wasn't supposed to be like this.

Florida set up the state term contract system to save time, cut down on duplicative bidding and get better prices for large-volume purchases. The state gets proposals from companies to determine which are qualified to go on the state list from which agencies choose.

There have been state term contracts for a variety of state purchases for years. But the number of contracts relating to computers didn't begin to balloon until 1995, when the Legislature passed a law to keep up with breakneck innovations in technology.

One co-sponsor of the legislation, state Sen. Don Sullivan, R-Seminole, said technology and computer prices were changing so fast that the state often would end up paying higher prices by the time officials got through the competitive bidding process. The situation was worse if a company that was passed over filed an appeal.

He didn't realize the number of contracts had ballooned, creating a system where competition is rare.

"We may have created a gorilla," Sullivan said. "It sounds like someone needs to take a look at this."

But now the state is going to tighten the rules.

After a series of disclosures about well-connected lobbyists and their computer contracts, state information officer Cales said he will be implementing policies by the end of the month that will increase competition for computer contracts.

Agencies will be required to obtain bids from at least three companies for purchases more than $25,000 -- even in the case of state term contracts. Any computer-related purchase worth more than $50,000 will be reviewed by his office, Cales said.

"It's not that the agencies are doing anything wrong," Cales said. "The main reason we're doing it is to make absolutely certain we're getting the best price and the best value."

And Cales insisted that when it comes to purchasing decisions, the reputation of a computer company and the quality of its products are far more important than the lobbyists it hires.

The decision to tighten purchasing rules, however, comes after a series of controversies in recent weeks over computer contracts.

The Times reported that EMC2 lobbyist Yaeger went to Jamaica last October with Douglas Russell, an official who was overseeing purchasing at the Agency for Health Care Administration at the time. In December, Russell approved a $936,579 contract for EMC2. Yaeger's wife, Denise, was the sales representative on the deal. And Russell was a fraternity brother of EMC2 lobbyist Rancourt.

Yaeger's wife also sold $1.2-million of equipment to the Department of Labor, and $2.1-million of equipment to the Division of Retirement at the same time. The labor official who worked on the deal, Anthony Carney, said he got advice from a consultant and compared prices and products from IBM before deciding on EMC2.

But there was no formal competition because that isn't required, Carney said.

At the Division of Retirement, EMC2 was working on a project with another company, Image API.

The governor's office said information officer Cales' work arranging the financing for the deals with the three state agencies saved the state more than $1.6-million dollars. But Bud Savary, who worked on the deal for the retirement division, said his price didn't change from the time Denise Yaeger submitted her proposal in June 1999. Carney, at the Labor Department, said he wasn't aware of his price changing either.

The Agency for Health Care Administration has acknowledged that its lacks complete documentation on the EMC2 purchase. But spokesman Bruce Congleton said he understood that the agency had saved hundreds of thousands of dollars because of Cales.

Cales worked in the governor's office with Rancourt, and the two occasionally have lunch. But Cales said the friendship had nothing to do with his work on the EMC deal. He said he is not close to Don Yaeger, who also is a writer for Sports Illustrated and a sports book author.

Cales and his wife recently attended a United Way fundraising reception at the Yaegers' home. Cales said he was invited by someone else because of his work with United Way.

"We didn't know it was Don's house until we got there," Cales said.

Tallahassee is a small town, so it's not difficult to run into people, including lobbyists, at church, charity events or restaurants, Cales said.

At the Agency for Health Care Administration, Don Yaeger also went to lunch and football games with an official who later made key decisions in favor of Yaeger on a $24-million contract. That contract was thrown out after a Missouri health care executive went to the FBI with allegations about improper behavior by Yaeger and another lobbyist, Michael Colodny.

Some say Yaeger's behavior is just business as usual in the state capital.

"What do you think lobbyists do? Do you think Don Yaeger is the only person who has ever taken anyone to a football game, gone to lunch, or tried to befriend someone?" asked State Sen. Jim King, R-Jacksonville, a close friend of Yaeger's.

Others are disturbed by the recent publicity over computer contracts.

"I don't think trips to Jamaica look real good when it comes to vendors and people who make purchasing decisions. That is bad judgment," said Senate Majority Leader Jack Latvala, R-Palm Harbor.

High-tech lobbyists

With the advent of loosely written purchasing laws, computer suppliers and consultants have become especially popular with Tallahassee's best-connected lobbyists:

Andersen Consulting's lobbying team includes Van Poole, former chairman of the state Republican Party.

Cisco Systems has David Rancourt, former deputy chief of staff to Gov. Jeb Bush, and Rich Heffley, former assistant secretary of state.

Hayes Computer Systems has Rancourt and Paul Bradshaw, husband of Bush chief of staff Sally Bradshaw.

IBM has Martha Barnett, president of the American Bar Association, and Curt Kiser, a former Pinellas senator.

Image API's team includes former Attorney General and Secretary of State Jim Smith; his son-in-law, Brian Ballard, former chief of staff to Gov. Bob Martinez; and Mark Logan, the son-in-law of U.S. Sen. Bob Graham.

Maximus has former secretary of Health and Rehabilitative Services Secretary Greg Coler.

Unisys' lobbying team includes David Pingree, another former HRS secretary; Ronald Thomas, former executive director of the Department of General Services; and Guy Spearman, a top aide to former Gov. Reubin Askew.

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