Posted on 07/24/2002 6:50:35 AM PDT by GailA
NewsChannel 5 Investigates: Friends in High Places Governor's friends land big contracts (Original Date: July 2002.)
There are serious questions about how the Sundquist administration has handled millions of dollars in state contracts.
Our exclusive NewsChannel 5 investigation has put the spotlight on the value of friends in high places.
For some of Don Sundquist's supporters, having their man in the governor's office has been as good as having your money in the bank.
Investigative reporter Phil Williams says the question is: were the governor's friends the best for the job?
As Don Sundquist took the helm of state government, he promised Tennesseans an era of expanding opportunity.
But for some of his closest supporters, those opportunities would come right from the state's treasury.
For example, Workforce Strategists -- a Chattanooga company with a state contract to provide intensive counseling and coaching to help the unemployed get back to work.
The company was started in 1999 by Monteagle insurance agent John Stamps -- a longtime friend of the governor's and a former business partner.
That same year, the Sundquist administration gave Stamps' company an exclusive contract that would eventually be worth almost $2 million.
Sundquist's labor commissioner, Michael Magill, justified not allowing any other business to compete for the contract in this memo dated June 2, 1999.
He wrote that Stamps' company was "the only company in Tennessee that has experience" for the job.
That was just 6 days after Workforce Strategists, LLC was incorporated.
"Obviously, with six days, their experience is rather limited," observes veteran state Representative Frank Buck. Buck emerged during this year's budget battle as a vocal critic of how state government spends your money.
He says he doesn't understand how Workforce Strategists could be considered the "sole source" for such services.
"These kinds of things are provided all across Tennessee. There's nothing unique about that for this particular company."
But our investigation discovered Workforce Strategists' connections to the Sundquist administration run even deeper:
John Stamps also controls another corporation, Privatization Strategies, that is part owner in the business.
The registered agent for Privatization Strategies is Billy Stokes, who formerly served as special assistant to Sundquist. Stokes says he only set up the corporation as an attorney and has no knowledge of its business dealings.
Another Sundquist Labor Department appointee, Joanna Ediger, helped secure approval for the Workforce contract, then quit -- becoming a consultant and part owner of the company a short time later.
"It's rather convenient that are benefiting from the ownership of this LLC," Buck adds. "In the country, in common parlance, it stinks."
In addition, Stamps' company -- Privatization Strategies -- once shared a Chattanooga mailing address with a business called comtraining.net -- that's partly owned by deputy governor Alex Fischer, his wife and the wife of Economic and Community Development Commissioner Tony Grande.
Fischer did not return phone calls seeking an explanation. Grande's wife, Mary Belle Grande, says Stamps financed the company -- which provides online job training -- but she would not discuss its business dealings.
So how close is John Stamps to the Sundquists? Well, every year he hosts a golf tournament in honor of the first lady, at a small 9-hole course near Monteagle.
But Stamps isn't the only Sundquist insider who has cashed in.
Al Ganier served as chairman of Sundquist's inaugural committee in 1995. Then, when the Sundquist administration decided in 1996 it wanted to connect all Tennessee schools to the Internet, it gave an exclusive $128,000 management contract to a new company formed by Ganier -- called Technology Partner, LLC.
That corporation would later become Education Networks of America.
One of ENA's key officers and its lobbyist: John Stamps. At the time, Sundquist's education commissioner Jane Walters justified not considering any competitors, writing in a memo that Ganier alone had "the right mix of business, government, technological and financial expertise [to] accomplish these goals."
Rep. Buck questions whether that was another sweetheart deal. "There's nothing unique about hooking up a school to the Internet system -- and there's no reason why you can't competitively bid that and go on." Even when the state did take bids for the schools' Internet services, ENA used its experience in setting up the network to win two huge contracts -- even though it wasn't the lowest bidder. Those two contracts would be worth more than 180 million dollars.
The first was a three-year $74.3 million contract awarded in 1998-- even though it was $23 million more than the bid submitted by the Arizona-based ISIS 2000. That company filed a complaint with the Federal Communications Commission, alleging that the state did not give enough weight to cost in deciding who would receive the contract. The FCC rejected that argument.
The second was a five-year, $110 million contract awarded earlier this year -- even though it was $35 million higher than the low bid submitted by Qwest Communications. State officials note that Qwest recently pulled out of a school Internet project in Arizona.
Still, Rep. Buck says the fact that ENA gained its experience through a sole-source contract makes it look "as though they've frankly set them up an insider deal." The governor refused to talk about his friends' contracts, but in a written statement, his office insisted "the governor's friendship with Al Ganier and John Stamps was not a factor in the contract decisions.... The governor's policy has been to treat every contractor -- friend, foe or stranger -- equally."
As for Stamps, he asked us to submit our questions in writing -- so we asked about Workforce Strategists' experience before it got the state contract. His office replied by listing what they've done since they got the contract, but not before.
In addition, despite the fact that the governor has been a frequent guest in Stamps' home and that Stamps is frequently seen around the governor's office -- Stamps says he has NEVER discussed his $2 million state contract with the governor. As for how your tax dollars have ended up in the pockets of the governor's friends, Buck says it's just a little too coincidental.
"They believe that charity begins at home, apparently, for the benefit of themselves."
Sundquist defends vacation trip
By ROB JOHNSON Staff Writer
Gov. Don Sundquist bristled yesterday at televised news reports that he was out golfing and yachting with well-connected businessmen while the state grappled with its fiscal crisis.
The NewsChannel 5 report Monday described how Sundquist and state Transportation Commissioner Bruce Saltsman golfed at no cost in a recent BellSouth Senior ProAm tournament and how both men flew off in January for a brief yachting vacation with Greeneville businessman Scott M. Niswonger, whom the governor calls a longtime personal friend.
NewsChannel 5 described the plight of Niswonger's hometown airport and its out-of-date runway. Bringing the small airport up to Federal Aviation Administration safety standards would benefit Niswonger and his jet airplane, the TV station reported — suggesting that a sweetheart deal for the state to help improve it was in the works during a Caribbean cruise.
The TV station also reported that, ''In fact, there's no evidence that Sundquist or his aides have done anything illegal.''
In his Capitol office yesterday, the governor agreed with that at least.
''The only good part of this story is that Channel 5 did get one thing right, and that is that our administration has done nothing improper or illegal.''
NewsChannel 5 reporter Phil Williams said that he spent two fruitless weeks trying to get Sundquist or a member of his staff to answer questions on camera.
He did say that the administration confirmed to him that the final yachting destination that January weekend was the Virgin Islands.
''It wasn't the Virgin Islands,'' Sundquist said. ''It was the Bahamas.''
The report's thrust was that Sundquist ''imposed an ethics policy on his staff … yet he hasn't disclosed a single trip he's made,'' Williams said, adding that he thinks it's important to show who's giving the governor gifts, especially if it's from someone in position to receive something valuable from the state.
Niswonger could not be reached for comment.
The Greeneville executive is a former corporate pilot for Magnavox who is now chairman and chief executive of the publicly traded Landair Corp. and Forward Air Corp. Both companies specialize in time-sensitive freight deliveries. The Forward Air network includes 75 terminals in cities throughout the U.S. and Canada.
The firms' headquarters remains in Greeneville.
Sundquist said that he's been a close family friend of Niswonger for almost 20 years and that in January, he and his wife got an invitation to join Niswonger for a long weekend getaway.
''So he said, 'Hey we're going to take a trip. You ought to go with us.' In fact, I didn't know where we were going,'' Sundquist said. ''He surprised us.''
The Saltsmans and the Sundquists flew to Naples, Fla., on Niswonger's personal plane, according to TDOT spokeswoman Luanne Grandinetti. She added that Saltsman, also a longtime Niswonger friend, owns shares in Forward Air.
The governor contends that they didn't talk business during the trip and that he did nothing improper.
As for the improvements at the Greeneville airport, Grandinetti said yesterday that the facility had received $346,000 in state and federal money since 1995, mostly for routine maintenance. During that period, Tennessee's 81 public airports have received $119 million in state and federal funds, she said.
The state has funded a $27,000 study to determine the best way to eliminate the ''vertical realignment of the runway'' — shaving the hump in the middle that prevents aircraft on either end of the runway from seeing each other. The FAA won't allow any improvements there until a plan is developed to overcome the safety shortcoming.
TDOT estimates that such a project would cost $7 million, but Greene County officials have not applied for the funds, which probably would be federal, Grandinetti said.
Sundquist also reacted sharply to NewsChannel 5's suggestion that ''Sundquist and Saltsman just puttered around in a golf cart during the budget crisis,'' then jetted off for the Caribbean.
Williams ''implied that I wasn't here working during the budget debate. This is just absolutely inaccurate,'' Sundquist said.
Sundquist contends his administration supplied the television station with all the information it requested during its months-long investigation.
''So for Phil Williams to try to make something ugly about it, to make something look dishonest just makes me as mad as I can be.''
Why didn't the governor say all this directly to Williams and the NewsChannel 5 cameras?
''It doesn't do any good to talk to him,'' Sundquist said. ''Because what he tapes and what he puts on the air are two different things.''
Also on the day the House congress critters were voting for Jimmy Naifeh's 4.5% income tax, Spendquist and his cronies were off playing golf in one the State's multi-million dollar golf courses. They rented the entire golf course for their session. MOST likely at taxpayers expense. HMMM I wonder if barge waggoner's company got the Road contract for that $450M road?
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