Procurement investigation.

WORKING DRAFT
2016
State of Wyoming
16LSO-0418
Introduced
1.3

House

JOINT RESOLUTION
NO.

HJ0010

Procurement investigation.

Sponsored by:
Representative(s) Gay

A JOINT RESOLUTION

for

A JOINT RESOLUTION relating to the state capitol project; calling for an investigation regarding contract bids and the letting of contracts and potential conflicts of interest relating to the project.

WHEREAS, the Governor of the State of Wyoming and the Attorney General hold the statutory responsibility of overseeing compliance with the procurement statutes contained in the Wyoming Statutes. In holding the Office of Governor and the Office of Attorney General, the Governor and Attorney General respectively, are entrusted with the responsibility for ensuring compliance with the
Wyoming Constitution and the statutes relating to procurement.

WHEREAS, SF103 (2014), codified at Wyo. Stat. §§ 9-5-110 – 9-5-113, created a body to oversee procurement and construction relating to the
"
Capitol Square Project.
"
This body is known as the
"
Capitol Building Restoration Oversight Group.
"
Section 9-5-111 provides that the Governor, Matthew H. Mead, President of the Senate, Phillip Nicholas, Speaker of the House, Kermit Brown, Senate Majority Floor Leader, Eli Bebout, Senate Minority Floor Leader, Chris Rothfuss, House Majority Floor Leader, Rosie Burger, House Minority Floor Leader, Mary Throne, and at will members Representative Tim Stubson and Senator Tony Ross shall comprise the oversight body. Pursuant to W.S. § 9-5-111, as Governor
Matt Mead
is responsible for ensuring compliance with the Wyoming Constitution and the procurement statutes of Wyoming as pertaining to the Capitol Square Project. As President of the Senate
, Phil Nicholas
pursuant to W.S. § 9-5-111, is responsible for ensuring compliance with the Wyoming Constitution and the procurement statutes of Wyoming as pertaining to the Capitol Square Project. As Speaker of the House
, Kermit
Brown
pursuant to W.S. § 9-5-111, is responsible for ensuring compliance with the Wyoming Constitution and the procurement statutes of Wyoming as pertaining to the Capitol Square Project. As Majority Floor Leader in the Senate
, Eli Bebout
under W.S. § 9-5-111, is responsible for ensuring compliance with the Wyoming Constitution and the procurement statutes of Wyoming as pertaining to the Capitol Square Project. As Majority Floor Leader for House of Representatives
, Tim Stubson
pursuant to W.S. § 9-5-111, is responsible for ensuring compliance with the Wyoming Constitution and the procurement statutes of Wyoming as pertaining to the Capitol Square Project. As Minority Floor Leader in the Senate
, Chris Rothfuss
pursuant to W.S. § 9-5-111, is responsible for ensuring compliance with the Wyoming Constitution and the procurement statutes of Wyoming as pertaining to the Capitol Square Project. The
House
Minority Floor Leader,
Mary Throne
is responsible for ensuring compliance with the Wyoming Constitution and the procurement statutes of Wyoming as pertaining to the Capitol Square Project. A Senator is a member of the Capitol Building Restoration Oversight Group, as selected by the President of the Senate, pursuant to W.S. § 9-5-111, and is responsible for ensuring compliance with the Wyoming
Constitution and the procurement statutes of Wyoming as pertaining to the Capitol Square Project. A Representative is a member of the Capitol Building Restoration Oversight Group, as selected by the Speaker of the House, and is responsible for ensuring compliance with the Wyoming Constitution and the procurement statutes of Wyoming as pertaining to the Capitol Square Project.

WHEREAS, members of the House of Representatives, through independent investigation, are in possession of information relating to potential violations of the Wyoming Constitution and the procurement statutes of the State of Wyoming and have brought these matters to the attention of the House of Representatives. These potential violations of the Wyoming Constitution and the procurement statutes include the letting of contracts without utilization of the competitive bidding process, as required.

WHEREAS, the potential violations appear to constitute pattern of conduct of violations of the Wyoming Constitution and Wyoming statutes.

WHEREAS, the potential exists that contracts were directed to specific persons and entities including some who had made campaign contributions to the Governor. And,

WHEREAS, the potential violations of the Wyoming Constitution and procurement statutes may consist of misuses of federal money.

Article I—Potential Violations of Article 3, Section 31

(1)

Article 3, Section 31 of the Wyoming Constitution provides that
:

All stationary, printing paper, fuel, and lights using in the legislature and other departments of government shall be furnished, and the printing and binding of the laws, journals and department reports and other printing and binding, and the
repairing and furnishing the halls and rooms used for the meeting of the legislature, and its committees shall be performed under
contract, to be given to the lowest responsible bidder, below such maximum price and under such regulations as may be prescribed by law.
No member or officer of any department of the government shall be in any way
interested in any such contract
; and
all such contracts shall be subject to the approval of the governor and the state treasurer
. (Emphasis added).

(2)

The referenced constitutional provision was adopted by the delegates to the Wyoming Constitutional Convention in 1889 to (a) ensure that the public received competitively priced goods and services, (b) to guard against governmental graft and corruption through the letting of contracts to as furthering the political interests of elected officials, and (c) to maintain the integrity of government.

(3)

Article 3, Section 31 of the Wyoming Constitution requires that competitive bidding to secure the lowest responsible bidder shall be utilized. The section further
requires that contracts set a maximum price. No member of the legislature or elected official may have an interest in such contracts. Finally, all such contracts must be approved by the governor and the state treasurer.

(4)

Questions exist whether the contracts entered into for the Capitol Square Project have complied with Article 3, Section 31 in that (a) contracts for the repairing and furnishing of the halls of the legislature were not let utilizing competitive bidding processing, (b) did not set a maximum price and have been allowed to escalate through change orders and mismanagement, (c) were let in furtherance of the political interest of the political interests of an elected official, and (d) were not approved by the Governor and State Treasurer.

(5)

This Resolution makes no accusations of misconduct but calls for investigation in interest of the proper administration of government.

(6)

The following three lease contracts and associated tenant improvement contracts demonstrate a failure to bid contracts competitively, an interest of a
member or officer of the government and none of the contracts had approval from both the Governor and the State Treasurer.

The Lease for Housing the Legislature during Capitol Renovation
:

(7)

W.S. Section 9-5-1016 (b) (xix) governs the process of leasing buildings and requires a bid and proposal basis with advertising of space needs. The Wyoming Constitution also requires bidding for a lease contract in Article 3, Section 31. That article requires that no member or officer of any department of the government shall in any way interested in such contract. The lease for the housing of the legislature during capitol construction is a contract between Pershing Circle, LLC (Lessor) and the Department of Administration and Information Construction Management Division (Tenant). This building is known informally as the Jonah Business Center.

(8)

The lease was signed on January 30, 2015 by the lessor Neil A. McMurry also known as Mick McMurry, Managing
Member of Pershing Circle LLC. The contract was witnessed by Richard J. Bratton, Registered Agent of Pershing Circle, LLC. Dean Fausset, Director of Department of Administration and Information, signed presumably as the Governor’s designee. Mel Muldrow, Administrator Construction Management Division of Department of Administration and Information also signed presumably as the Governor’s designee. Peter K. Michael signed as the Attorney General for approval as to form. The lease was entered into
without bid
and was
not approved by the State Treasurer.

(9)

The question arises was there any interest of any member or officer of any department of the government and merits investigation. Mark Edward Macy, Chairman of the Wyoming for Matt Mead PAC collected funds for the election of Matt Mead to the office of Governor. The Mead for Governor Campaign Committee was the entity that collected contributions to Matt Mead, the Candidate. The following contributions are relevant to the Jonah Business Center Lease:

Neil A. (
"
Mick
"
) McMurry Contributed $60,000 to Building a Better Wyoming PAC on July 24, 2014. This was the sole contribution to that PAC, controlled by Mr. McMurry
Building a Better Wyoming PAC, a PAC known to be influenced by Mick McMurry, contributed $50,000 to Wyoming for Matt Mead PAC on July 24, 2014. Wyoming for Mead PAC is controlled by Mark Macy.
Building a Better Wyoming PAC contributed $2,500 to Mead for Governor Candidate Committee on June 19, 2014.

(10)

Mr. McMurry using the Building a Better Wyoming PAC and contributing to the Wyoming for Mead PAC made
one of the largest contributions in a political campaign outside of the candidate or immediate family of a candidate in Wyoming history
by a single individual. In return, the McMurry entity benefitted from the lease agreement with rent of $872,336 annually not to exceed $2,617,008 providing that tenant improvements up to $750,000 are payable at lessor’s expense (later amended in Amendment 1 and 2 to the lease). The Wyoming for Mead PAC appears to
pay expenses of the governor’s campaign committee. Expenses such as the website and the strategy consultant appear to be shared by the PAC and the campaign committee. There is no documentation of contributions or in-kind contributions from the PAC to the campaign committee to account for sharing expenses.

2020 Carey Avenue Lease

(11)

W.S. 9-5-1016 (b) (xix) governs the process of leasing buildings and requires a bid and proposal basis with advertising of space needs. The Wyoming Constitution also requires bidding for a lease contract in Article 3, Section 31. That article requires that no member or officer of any department of the government shall in any way interested in such contract. The lease for the housing of the Wyoming State Treasurer, Wyoming State Auditor and the Wyoming Secretary of State during capitol construction is a contract between Voss Family Limited Partnership (Lessor) and the Department of Administration and Information Construction Management Division (Tenant). This building is known informally as 2020 Carey Avenue.

(12)

The lease was signed on January 30, 2015 by the lessor Wayne T. Voss. The contract was witnessed by Tina M. Ortiz. Dean Fausset, Director of Department of Administration and Information, signed presumably as the Governor’s designee. Mel Muldrow, Administrator Construction Management Division of Department of Administration and Information also signed presumably as the Governor’s designee. Kristin M. Nuss signed as Senior Assistant Attorney General for approval as to form. The lease was entered into
without competitive bid
.
The lease was not approved by the State Treasurer.

(13)

The language of the contract requires use of contractors determined by the State of Wyoming for all improvements to the building regardless of whether the cost is to be applied to the owner or the tenant. Therefore, the procurement of those contractors would be subject to the constitution and the statutes that govern procurement.

(14)

There are a number of contracts that were entered into by the State of Wyoming to bring the building into compliance with building codes as well as improving the spaces for occupancy.

(15)

JE Dunn was contracted in amendment 4 ($1,708,477) and 6 ($53,853) of their CMAR contract to provide improvements to 2020 Carey Avenue for a total amount of $1,762,330.
There was no competitive bidding for this contract
. The amendments are specifically separate from the Construction Cost Limit and therefore represent a different type of contract than the Construction Manager at Risk contract represented by the original contract. These facts merit investigation why the work not competitively bid?
This may constitute a violation of the Wyoming Constitution and the procurement statutes
. Amendment 3 of the JE Dunn Contract delays setting the Guaranteed Maximum Price for the contract. Article 3, Section 31 of the Wyoming constitution requires that contracts be given below a maximum price.
The State Treasurer did not approve this contract or amendments to the contract.

(16)

Kone Inc. provided a bid and was a sole source contract to bring 2020 Carey Avenue elevators into compliance with building codes. A bid waiver was issued. The owner rejected this contractor and a new bid was obtained from Thyssen Krupp for $409,552 and awarded
without competitive bidding
. A bid waiver was also issued for this contract.
The State Treasurer did not approve this contract
.

(17)

Honeywell was contracted without competitive bidding for bringing the fire alarms into compliance with code. Later the contract was modified to include security upgrades without competitive bidding. The contract totaled $568,355 after the original contract, three change orders and two bid waivers.
The State Treasurer did not approve the contract, amendments or change orders.

(18)

A company called
"
Elements
"
provided a quote for wall trim, ceiling trim and parts for $8,066.67. No contract was issued, but because there was
no competitive bidding
a bid waiver was issued.
The State Treasurer did not approve this contract.

(19)

Total amount of contracts issued without competitive bidding for 2020 Carey is $2,748,303.67 which exceeds the lease amount not to exceed $2,696,400. Wayne Voss made a $1,000 Campaign contribution to the Mead for Governor campaign committee on October 29, 2010.

Maurice Brown Shopping Center Lease

(20)

W.S. Section 9-5-1016 (b) (xix) governs the process of leasing buildings and requires a bid and proposal basis with advertising of space needs. The Wyoming Constitution also requires bidding for a lease contract in Article 3, Section 31. That article requires that no member or officer of any department of the government shall in any way interested in such contract. The lease for the housing of various agencies of state government during capitol construction and is a contract between Maurice W. Brown (Lessor) and the Department of Administration and Information Construction Management Division (Tenant). This building is known informally as 516 S. Greeley Highway.

(21)

The lease was signed on May 28, 2015 by the lessor Maurice W. Brown. The contract was witnessed by Sharon L. Bailey. Dean Fausset, Director of Department of Administration and Information, signed presumably as the Governor’s designee. Mel Muldrow, Administrator Construction Management Division of Department of
Administration and Information also signed presumably as the Governor’s designee. Kristin M. Nuss signed as Senior Assistant Attorney General for approval as to form.
The lease was entered into without bid.

The State Treasurer did not approve the lease.

(22)

Maurice Brown contributed $1,000 to Mead for Governor campaign committee on March 26, 2014.

(23)

Examples of contracting for services in the Capitol Square Project are outlined below. There is
a pattern
of
not performing competitive bidding
in the examples. Some contracts are let without a maximum price.
There is no contract in the entire project that has been approved by the State Treasurer as required by the Wyoming Constitution.

Bidding of JE Dunn Contract

(24)

The Construction Manager at Risk (CMAR) contract for the Capitol Square Project was bid based on pre-construction costs.
No competitive bidding was performed for the vast majority of the money to be spent on the
Capitol Square Project
. While pre-construction services were competitively bid, the actual construction activities were not. The original contract was signed on March 9, 2015. The contract had a Construction Cost Limitation (CCL) of $199 million but was not executed with a maximum price as required by Article 3, Section 31 of the Wyoming Constitution.

(25)

On May 26, 2015 the contract was amended (amendment 1) for additional work.

(26)

On June 11, 2015 the contract was amended again (amendment 2) to simply raise the Construction Cost Limitation (CCL) from $199,000,000 to $219,382,000. There was no explanation given for the $20.382 million increase. Also on June 11, Additional work was added to the contract in (amendment 3).

(27)

The next day, on June 12, 2015, work was added to the contract for tenant improvements at 2020 Carey Avenue. The amendment (amendment 4) was for $1,708,477 and it was agreed that this would stand apart from the Guaranteed Maximum Price and the Construction Cost Limit.
Essentially, this is a separate project added onto the contract by amendment. It was anticipated in the original contract but not required, thereby giving rise to the question why was this not bid. There was no bid waiver for tenant improvements at 2020 Carey.

(28)

On September 8, 2015 more additional work, (amendment 5). One week later on September 15, 2015, another $53,853 was added to the contract for work at 2020 Carey Avenue separate from the GMP and CCL.

(29)

In summary, this contract was not set below a maximum price as required by Article 3, section 31 of the Wyoming Constitution. Bidding became completely non-competitive with amendment 2 which raised the CCL and the construction fee. No bidding was done for work on 2020 Carey Avenue contrary to Article 3, Section 31 and WS 9-2-1016.

(30)

The following contract displays the failure to obtain bids from multiple vendors for common services. The contract was
not
approved by the governor and the treasurer per the Wyoming constitution.

Bidding of Prestige Corporate Relocation LLC

(31)

There was a single company that bid on the moving of Department of Environmental Quality (DEQ) from the Herschler building. Prestige Corporate Relocation LLC provided pricing matrices on pages 4 and 5 of their proposal. The addition of the four activities listed in the company proposal added to a total of $67,590.74 The company totaled the amount wrongly to $93,852.92. The Department of Administration and Information wrote the contract for the wrong higher amount. There is no explanation for the discrepancy in the mathematics. The bid waiver justification was because of a non-response from the Request for Proposal (RFP). This does not make sense because there are at least 3 other moving companies involved in the moving of people for the project. There are at least ten companies qualified to do the work between within a 125-mile radius. When the work was completed the State Auditor paid $83,256.61. The state treasurer did not approve the contract.

A Potential Pattern of Disregard of Procurement Laws

(32)

A review of bid waivers published by the Department of Administration and Information reveals a pattern of conduct of avoiding the competitive bidding statutes and the requirements under the Wyoming Constitution. This pattern of conduct extends to general contracting within state government. For the current biennium, a total of well over $500,000,000 (one half of a billion dollars) has been expended under contracts that were not competitively bid.

Potential Violation of Separation of Powers

(33)

Article 2, Section 1 of the Wyoming Constitution provides for the separation of powers between branches of government. Powers belonging to one branch of government are not to be exercised by another branch. The power of appropriation resides in the Wyoming Legislature. Administration of expenditures, under the Wyoming Constitution, resides in the Executive Branch.

(34)

In the case of the Capitol Square Project, the Wyoming Legislature appropriated funds to be administered
by a committee that, in turn, performed executive branch functions in making hundreds of day-to-day executive decisions including spending decisions that are not made by the legislative branch. The committee reviewed and approved contractual documents, architectural documents, where to locate people and equipment and even deciding where to put railings on stairways as concerning aesthetics. This illustrates the reason the founders were specific as to who would approve the contractual agreements necessary to maintain the halls and meeting rooms of the legislature under Article 3, section 31 of the Wyoming Constitution to maintain separation of powers in Article 2 of the Wyoming
Constitution.

Article II—Resolution for investigation

(35)

Based on the evidence that Article 3, Section 31 of the Wyoming Constitution has been violated by process and by passage of SEA 43, 2014 session, and based on the evidence that W.S. Section 9-2-1016, was violated as to competitive bidding and procurement of services for the Capitol Square Project,

NOW, THEREFORE, BE IT RESOLVED BY THE MEMBERS OF THE LEGISLATURE OF THE STATE OF WYOMING:

BE IT RESOLVED, there is to be an investigation conducted by an independent investigator to determine whether Article 3, Section 21 of the Wyoming Constitution and the procurement statutes were violated in disregarding competitive bidding and letting of contracts to the lowest responsible bidder under such maximum price in accordance with Article 3, Section 21 of the Wyoming Constitution by the Capitol Building Restoration Oversight Group, the Governor of Wyoming, Department of Enterprise Technology Services, and the Department of Administration and Information.

BE IT FURTHER RESOLVED that the investigator shall determine if any member or officer of any department of the government was in any way interested in any contract associated with the Capitol Square Project. This investigation shall include but not be limited to examination of campaign finances of elected officials associated with the Capitol Square Project, clients of
members of the committee and families of the committee and departments involved with the Capitol Square Project.

BE IT FURTHER RESOLVED that an audit of current expenditures, accounting, procurement processes and contractual processes be performed by an independent auditor working with and reporting to the independent investigator.

BE IT FURTHER RESOLVED that the investigator shall not be restricted in any way to documents associated with the capitol square projects held by any branch of government but shall also extend to the general practices of contracting within state government.

BE IT FURTHER RESOLVED that the investigator generate a report that details any violations of the Constitution of the State of Wyoming and the statutes of Wyoming. The report will provide accounting of the Capitol Square Project expenses and any findings concerning processes contract processes, accounting processes, and procurement processes as well as reporting on any interest by any member or officer of any department of the government.

(END)
1

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