By Tom Humphrey
Knoxville News-Sentinel, Tenn.
NASHVILLE — A board composed of three state officials has upheld the Department of Correction’s award of a $241 million contract to a company that employs Correction Commissioner Derrick Schofield’s wife and which submitted a bid more than $15 million higher than a competitor.
The decision of the state Procurement Office’s “protests board” was announced to members of the Legislature’s Fiscal Review Committee, some of whom have separately raised questions about the contract for providing medical services to inmates in the state prison system.
But because of what Chairman Bill Ketron described as “a squirrely situation,” no questions were asked at the panel’s meetings this week and the committee instead approved a temporary extension of the current contract, which is scheduled to expire at the end of this month.
The panel also put off inquiries into two other state contracts that Ketron, a Republican state senator from Murfreesboro, said have at least the appearance of a “common thread” in that they were awarded to companies that have some connection to government insiders.
Centurion Managed Care was awarded the contract earlier this year despite the lower bid of Corizon Inc., which holds the expiring contract. As initially reported by The Tennessean, there was no mention in the company’s bid that Schofield’s wife, Latrese, works for Centurion in Georgia.
Dorinda Carter, spokeswoman for the department, said Mrs. Schofield is “not in an executive decision-making position” and has no involvement in the contract.
“We are confident this process was appropriate and fair and resulted in the selection of the best qualified bidder. Our position is the Department of Correction and General Services have conducted a fair and appropriately managed procurement for health services, and the best qualified team was selected,” Carter said.
Ketron and other members of the committee that serves as a legislative watchdog of state government spending said they were told in advance by department officials that questions could not be answered about the Centurion situation because of the possibility that Corizon will sue.
Corizon appealed the department’s award of the contract to Centurion to the protests board, the first step required by state law. After losing there in a unanimous vote of the three board members, Corizon now has 60 days to file a lawsuit challenging the contract award.
The 60-day extension of Corizon’s contract, approved by the Fiscal Review Committee, assures that the department will be able to continue providing “constitutionally-required” care to prisoners, said Wes Landers, chief financial officer for the department, in a brief presentation to the committee.
He said the department hopes to make a final award of a new contract in August but is also developing “contingency plans” in case that doesn’t happen.
Ketron said after Tuesday’s meeting that there is a “commitment to make them come in and justify that contract” to the committee later, perhaps at a July meeting. But the senator said he understood the department’s desire to avoid comment with potential litigation looming and the need to keep some contracts in place for now.
“There were a lot of things they couldn’t tell us now,” said Rep. Charles Curtiss, D-Sparta. “It could hurt their negotiations in a court case.
Ketron said he wants the panel to explore whether there is “a common thread running through some of these single-source contracts... relationships with people on the inside getting contracts to people on the outside.”
Ketron also said he considered conducting an inquiry this week into two other contracts that have drawn media attention — a contract for providing rental vehicles to state employees with Enterprise Rent-a-Car and a contract for repair of state-owned vehicles with Bridgestone/Firestone.
Instead, Ketron said he decided to “let the dust settle” and have hearings next month on both and perhaps on a contract for management of state buildings as well.
All three of those contracts are part of a push by
Gov. Bill Haslam’s administration’s push to reduce the number of state employees and turn more of their work over to private contractors. All three have at least raised some question of insider connections.
Mark Emkes, who retired June 1 as state finance commissioner, was formerly CEO of Bridgestone. He has said he had nothing to do with the award of the car repair contract, which Nashville’s WTVF-TV has reported bills the state for parts at a higher rate than they are available to the public in auto parts stores.
Ketron said he believes the contract is still a good deal for the state because it includes installation of the parts, when many consumers would have to pay labor costs at a repair shop, making a comparison based simply on the cost of parts questionable. Instances cited by the TV report included a $1.74 headlight bulb costing taxpayers $12 and a $4 air filter billed to the state at $19.
State Chief Procurement Officer Mike Perry, who appeared before the committee Monday to give an overview of his work, was asked briefly about the contract, which is about to expire after two years. He said the contract will not be renewed and the state will instead have separate regional contracts, which will give smaller businesses a chance to seek the state’s business.
The car rental contract was awarded by the state Department of General Services, without bidding, to Enterprise in 2011 after former Enterprise executive Kathleen Hansen became head of the department’s motor vehicle management division. WTVF reported cases where the state is paying more for a rental vehicle than a typical consumer would pay if he or she shopped for discounts. In one case, the state pays $31 per day for a car that can be rented for $26. And Oklahoma had a contract with Enterprise for the same car at a weekly rate of $160 while Tennessee pays $184.
The contract for management of state buildings, valued at up to $330 million, is held by Jones Lang Lasalle, a multinational corporation that Haslam reported as one of his many business investment while running for governor in 2010. He did not disclose the amount of any investment. After his election, the governor placed his investments, with the exception of family-controlled Pilot Flying J, into a blind trust.