Tuesday, July 10, 2012

Contract Controversy Taints Florida Governor's Jobs Campaign

MELBOURNE, Florida -- A local government contracting controversy with lucrative upfront payments to a Michigan business that Florida Governor Rick Scott took credit for bringing to Florida has drawn greater financial scrutiny on the Florida Governor's mufti-faceted initiatives that he has undertaken to woo out-of-state companies to Florida.

The Michigan business is often referred to as BlueWare - a company that digitizes business records and develops software such as BestBond for the management of those records.  However, the business entity is actually comprised of a group of at least ten different affiliated companies with names like Roseware and BlueGem - many of which were incorporated in Florida in recent months ahead of its transition from Michigan to Florida.

This group of companies stands to benefit from various government program payouts such as Florida's State Qualified Target Industry Tax Refund, Quick Action Closing Fund, Brownfield Redevelopment Jobs Bonus Tax Refund Program, and other "workforce incentives" that total at least $1.31 million, plus a local match of somewhere between $250k to $350k from the City of Melbourne and Brevard County.  In return for these taxpayer dollars, elected officials touted in widely-circulated press releases that:

"The company expects to hire 190 employees with an average wage of $69,000 over the next four years in a leased facility in downtown Melbourne.  The company will invest over $1 million in tangible property and equipment to support operations.  At full employment, the company’s total economic impact is estimated to be over $22.4 million."

However, what was not mentioned in the press releases was that, coinciding with the anticipated businesses' move from Michigan to Florida, the Brevard County Clerk of Court coincidentally had an immediate need to image out-dated files that have been stored for decades in a former gymnasium in Titusville, and to upgrade its record management system.  

Rather than issue an Request for Proposals or Invitation to Bid for this document imaging and records management need, Brevard County Clerk of Court Mitch Needelman issued an Invitation to Negotiate on May 3 for the digitizing of the Clerk's records, one day before Florida Governor Rick Scott issued his press release announcing BlueWare's move to Florida.  

An Invitation to Negotiate is statutorily the least preferred method for governments to solicit contracts from outside vendors.  In fact, Florida Statute Section 287.057(1)(c)(1) requires that "Before issuing an invitation to negotiate, the head of an agency must determine and specify in writing the reasons that the procurement by an invitation to bid or request for proposal is not practicable." 

But because Needelman did not make readily available to the public the Fla. Stat. Sec. 287.057(1)(c)(1) written justification for the Invitation to Negotiate, a competing vendor who was not awarded the contract submitted a public information request for the document.  

Although Needelman had cited a budgetary crisis in the Clerk's office as the reason to outsource Clerk employees last year, Needelman awarded one of BlueWare's affiliated companies, BlueGem, L.L.C., a five-year, $8.52 million digitizing contract on May 23 with a $500k up-front payment  which was wired to BlueGem that same day even though a final contract had not been signed until June 29.  An additional 90k signing payment was wired from the Clerk to BlueGem on June 29.  

It is not clear yet whether this $590k in upfront payments make up the substantial portion of the over $1 million BlueWare is expected "to invest in tangible property and equipment" highlighted in the press release.

Before the May 3 Invitation to Negotiate was issued and a contract later awarded to BlueGem, Needelman had separately contracted on April 6 with yet another BlueWare-affiliated company, RoseWare, L.L.C., to "Review all outside vendor contracts on behalf of the Brevard County Clerk's Office."  

Whether RoseWare was quarantined from the digitizing contract formulation and negotiation process that ultimately ended in the award to affiliated BlueGem, or was actually paid for being involved in the process has yet to be revealed.  Florida Statute Section 287.057(17)(a) requires that a governmental agency avoid such conflicts of interest while subsection (b) bars a contract award if an unfair competitive advantage has been given to one vendor over another.

Brevard Times asked Needelman's office over 24 hours before publication of this article to explain the issues surrounding these contracts, and to include the Fla. Stat. Sec. 287.057(1)(c)(1) written justification for the Invitation To Negotiate.  However, Needelman's office did not respond our inquiry.

The answer to this and several other questions surrounding these contracts will ultimately be revealed in the Clerk's responses to a series of public information requests that Needelman's political opponent, Scott Ellis, has made in recent months.  Last week, Brevard Times reported that Ellis sued Needelman to produce the documents related to the contract awards.

Also prior to publication of this article, Brevard Times sent a media request to Rose Harr, who has been involved in the contracting process with the Clerk of Court's office on behalf of both RoseWare and BlueGem, to explain the role of RoseWare and its affiliated companies in the determination of the digitizing contract award to BlueGem.

In response, Ms. Harr stated that, "Because public interest in BlueWare is being generated by contentious remarks in the Brevard County Clerk of Court race, we will be inviting representatives from local media sources to a press conference.  At this conference, we will provide information on BlueWare and BlueGEM, discuss details on the recently signed contract with the Brevard County Clerk of Court, and answer questions addressing the aforementioned remarks."

Brevard Times also contacted the Economic Development Commission of Florida's Space Coast, the organization heavily involved in bringing BlueWare to Florida, to find out whether it was involved in the deal between the BlueWare-affiliated companies and the Brevard County Clerk of Court.  Dina A. Reider-Hicks, Senior Director, Marketing & Policy Development for the Space Coast EDC, responded succinctly, "No."

And finally, Brevard Times contacted Florida Governor Rick Scott's office to find out what role his office played in the lucrative Clerk of Court contract given to the BlueWare-affiliated companies.  His office did not respond.

JULY 11, 2012 UPDATE:

Brevard Times has acquired another public document which is an invoice dated March 20, 2012 from BlueGem to the Brevard County Clerk of Courts.  The description of the work, which was performed in the invoice prior to the issuance of the May 3 Invitation to Negotiate, includes the following:

a. Evaluate and audit scanning capabilities and efficiencies
b. Evaluate and audit redaction and IT hardware and software available to meet digitizing demands
c. Evaluate current scanning and redaction capacities and demands
d. Appraise software and hardware inputting and output to Industry "best practices" standards
e. Assess personnel time and efficiency requirements for current demand
f. Present oral report of audits and activities
  i. Outline current staff and technologies abilities compare to industry "best practices"
  ii. Analyze software and hardware needs to increase efficiences and reduce costs
  iii. Suggest software/hardware/personnel deployment strategies for improved performance.
  iv. Suggest improvements for improving current and back compliance with record digitizing "best standards"

Florida Statute Section 287.057(17) provides that:

(a)1. Each agency must avoid, neutralize, or mitigate significant potential organizational conflicts of interest before a contract is awarded. If the agency elects to mitigate the significant potential organizational conflict or conflicts of interest, an adequate mitigation plan, including organizational, physical, and electronic barriers, shall be developed.
2. If a conflict cannot be avoided or mitigated, an agency may proceed with the contract award if the agency head certifies that the award is in the best interests of the state. The agency head must specify in writing the basis for the certification.
(b)1. An agency head may not proceed with a contract award under subparagraph (a)2. if a conflict of interest is based upon the vendor gaining an unfair competitive advantage.
2. An unfair competitive advantage exists when the vendor competing for the award of a contract obtained:
a. Access to information that is not available to the public and would assist the vendor in obtaining the contract; or
b. Source selection information that is relevant to the contract but is not available to all competitors and that would assist the vendor in obtaining the contract.
(c) A person who receives a contract that has not been procured pursuant to subsections (1)-(3) to perform a feasibility study of the potential implementation of a subsequent contract, who participates in the drafting of a solicitation or who develops a program for future implementation, is not eligible to contract with the agency for any other contracts dealing with that specific subject matter, and any firm in which such person has any interest is not eligible to receive such contract. However, this prohibition does not prevent a vendor who responds to a request for information from being eligible to contract with an agency.