To the Editor:
Alaska Statute AS 36.30.930 Civil and criminal Penalties, reads:
“(1) a person who contracts for or purchases supplies, equipment for the state fleet, services, professional services, or construction in a manner the person knows to be contrary to the requirements of this chapter or the regulations adopted under this chapter is liable for all costs and damages to the state arising out of the violation;
(2) a person who intentionally or knowingly contracts for or purchases supplies, equipment for the state fleet, services, professional services, or construction under a scheme or artifice to avoid the requirements of this chapter is guilty of a class C felony”.
All of this former Alaska Department of Administration Commissioner Kelly Tshibaka has inadvertently admitted, in writing, to having violated, though it’s probably safe to assume the Dunleavy Administration won’t be opening up an investigation into her actions anytime soon; especially given her support from the Alaska GOP and Donald Trump in her bid to unseat Lisa Murkowski.
The procurement in question was for $5 million in professional services for consolidating Information Technology and other administrative functions, to be re-located solely into the Department of Administration. The contract was ultimately awarded to her preferred contractor, Alvarez & Marsal, a company known among conservative political circles for consulting in preparation for decisions to privatize portions of governmental services.
What did Tshibaka do to violate the criminal portions of the Alaska Procurement Code? Well, the answer is many things on many different procurements, but there’s one particularly egregious example where she attempted to defend herself and her actions in writing to the Legislature, but instead inadvertently admitted to having violated the criminal portions of the Code.
Keep in mind that the Commissioner of Administration is the highest-level procurement official in Alaska’s State government. It is her job to know the Procurement Code and enforce it across all Departments, so she cannot claim ignorance. Her actions with regard to any and all procurement transactions, especially those that personally and directly involve her are “knowing” by the very definition of her duties as Commissioner.
Also, bear in mind that all of this was done long before the COVID-19 pandemic was a factor. There is no “emergency card” to be played here.
In the case of this Alaska State procurement for consolidation services awarded to Alvarez & Marsal:
She created uniquely limiting, irrelevant, undefined, and illegal qualifying requirements to eliminate all but one potential qualified competitor from competing.
From the Request for Proposals Prior experience clause; quote: “Offerors must have experience in strategy, planning, and implementation of large-scale government shared services or Information Technology consolidations. All Offerors must be a member of the National Governors Association Partners (NGA Partners), or a firm that offers all the following services in-house (without subcontracting): professional services, audit, assurance services, taxation, management consulting, advisory, actuarial, corporate finance and legal services. Offerors must have been in business as a company in good standing for at least 25 years. An offeror’s failure to meet these minimum prior experience requirements will cause their proposal to be considered non-responsive and their proposal will be rejected.”
One of those irrelevant qualifying requirements, in-house legal services, was included in the specifications in violation of:
• 36.30.015 (c) “An agency may not contract for the services of legal counsel without the approval of the attorney general”, and
• 2 AAC 12.040. Procurement of legal counsel. “An agency may not contract for the services of legal counsel without the prior written approval of the attorney general.”
Commissioner Tshibaka was required unequivocally by Alaska Statutes to obtain the written permission of the Attorney General prior to obtaining any legal services. This she did not do.
Not only did she fail to comply with that Statute and Regulation, during the award process she personally disqualified the only competing offer to Alvarez & Marsal solely for their lack of a clear statement from that competitor that they did indeed offer “in-house legal services.” The competitor was a well-known multi-billion-dollar company with an Alaska-based branch. Does anyone really think they wouldn’t have in-house legal services?
Then later, in her public written explanation of her actions to the Legislature, Tshibaka admitted that at the time of the solicitation she did not expect to use any legal services in the conduct of the scope of work of the contract.
Tshibaka Quote: “Because legal services were not contemplated in the initial phase of the contract, the DOA did not seek Attorney General approval during this initial contract phase.”
So, even though she threw out a lower cost vendor solely for not clearly stating that they offered “in-house legal services,” she admits here that she never contemplated using any legal services.
However, the actual Contract incorporates both Tshibaka’s demand for “in-house legal services,” and Alvarez & Marsal’s compliant offer to provide “in-house legal services.”
So, the actual Tshibaka-signed contract did contemplate using in-house legal services. Either Tshibaka was in error when she wrote to the legislature defending herself, or she did actually sign a contract that included legal services without prior written approval from the Attorney General.
We are compelled to gain our understanding of her real intent by looking at the documents she signed at the time. She violated the subject Statute and Regulation at the time by including “in-house legal services” in the contract she personally signed. Those were services, as she now admits, she never intended to use over the course of the contract.
She then further stated that she had not actually utilized any of the awarded contractor’s “in-house legal services” during the initial defined term of the contract.
Tshibaka Quote: “If, during the course of the contract, it would have become necessary to amend the contract to include legal services from the vendor, the DOA would have requested prior approval from the Attorney General before doing so.”
Despite her quoted statement above, she was untruthful, in writing, to the Legislature. She actually and obviously did contract for the “in-house legal services” without obtaining prior written approval from the Attorney General.
Per her written statement above, she did not expect to be needing any legal services from the vendor, nor did she actually use any vendor legal services. Nevertheless, she used that qualification — SOLELY — to reject an offer that would have saved Alaska taxpayers a half-million dollars.
She concluded by stating that had she needed any in-house legal services from the awarded contractor, she would have instead looked to the Department of Law to provide them.
Tshibaka Quote: “In the end, the Department of Law was able to provide the necessary legal support for the AAPEX project.”
Note that she didn’t actually say whether any legal support was actually necessary and was actually provided by the Department of Law.
Thus, Tshibaka demanded insertion of a knowingly illegal qualification that she also knew in advance was not going to be utilized in the work of the contract, and that arbitrary requirement was used as the sole basis for rejecting the only competitor to her favored proposer, Alvarez & Marsal.
This is classic suppression of competition “by scheme or artifice” to favor one competitor over all others, no matter how you look at it.
Oh, and by the way, the winner, Alvarez & Marsal, did not have an Alaska Business License at the time Tshibaka signed the contract, and they did not obtain one until about a month after the contract was signed, violating another Alaska law prohibiting a company from conducting business in Alaska without an Alaska Business License. It’s worth noting that no State Contracting Officer signed the contract; they know better and will always require an Alaska Business License to be stated on the contract before they will sign it.
As another weird and unheard-of alternative, If the proposer had been in business in good standing for 25 years, there was a path to becoming qualified that required only one test: she required a paid membership in an organization that is irrelevant to the work specified in the solicitation. That organization was the National Governor’s Association.
If any business making a proposal was a paid member of the NGA, the proposer automatically became a qualified bidder no matter what business line they had been in, nor whether they offered any of the 9 undefined qualifications (including “in-house legal services”) that she required of everybody else. If the bidding company was a paid member of the NGA, they were allowed to proceed to evaluation, no questions asked.
Then the optional need for an NGA paid membership was never explained, defined, or connected to anything, nor was it ever mentioned again in relation to any of the actual work requirements listed in the solicitation.
When a potential proposer requested a short extension to the Request For Proposals (RFP) opening date so they could join the NGA and become an automatically qualified proposer, her answer was short and to the point; it was “No.” Once again, her action favored and protected the ensconced competitive position of Alvarez & Marsal.
This inclusion of an irrelevant qualification mandating a paid membership (at a minimum cost of $5,000) in the National Governor’s Association was for the purpose of suppression of competition, plain and simple.
In the end, one and only one proposer, Alvarez & Marsal, actually met each and every one of Tshibaka’s nine ambiguous, undefined, and intentionally suppressive in-house business qualifications; and also held a paid membership in the National Governor’s Association.
During the time when public records show that her staff knew of no potential proposers at all and publicly sought to find any bidders, she silently withheld the names of at least 6 potential proposers (all NGA members) whom she later stated in writing that, prior to the issuance of the solicitation, she knew would qualify for acceptance and evaluation. That’s “knowing” suppression of competition.
Tshibaka Quote: “The following six other NGA Partners would have qualified for the project if they had submitted an offer: KPMG, Accenture, Ernst & Young, Deloitte, McKinsey & Company, and Maximus.”
In the end Tshibaka:
• knew what she was doing by knowingly creating a set of irrelevant, undefined, unconnected, and illegal qualifying requirements for bidders to meet
• admitted in writing that she knowingly withheld from her staff the names of potential competitors she knew would qualify, as that same staff publicly sought to find competitors
• allowed no changes in the responsiveness requirements in spite of potential proposers suggesting a more reasonable, rational, and related set of qualifying in-house services during the pre-proposal conference
• refused other competitors sufficient time to join the NGA, an irrelevant organization, in order to qualify for evaluation
• knowingly and illegally disqualified the one and only competitor to Alvarez & Marsal, and whose offer was nearly a half million dollars less costly than the offer put forth by Alvarez & Marsal.
• prevented the disqualified proposer from obtaining a hearing of their protest appeal by having her subordinate Deputy Commissioner falsely claim that no issues of fact existed in the award process.
Multiple factual issues were obvious. For instance; were in-house legal services necessary to the conduct of the work of the contract? We now know the answer was an unequivocal “no”.
Had that fact been uncovered under examination by an Administrative Hearing Officer, the RFP award would have been vacated and a new RFP would have had to be re-solicited with the “in-house legal services” and any other irrelevant qualifications removed.
This is only a single instance of Tshibaka’s violation of Alaska Procurement Code statutes. There are multiple others where she manipulated processes to ensure her favored competitors would win.
Included among those other actions was an instance where Tshibaka herself personally initiated a procurement proposal requiring letters of recommendation, and then she personally provided her own letter of recommendation on State of Alaska letterhead for use in her favored competitor’s proposal for a contract award. Indeed, she even solicited additional letters of recommendations from her subordinate staff and other Commissioners, also on State letterhead. Tshibaka not only initiated the contract, she recommended the winning bidder as part of that bidder’s official experience submittal to the solicitation, and then served on the evaluation committee, along with her selected subordinates. Unsurprisingly, the Proposal Evaluation Committee she headed up chose Tshibaka’s recommended bidder for award.
The list is long and the evidence is compelling that Tshibaka abused her office and blatantly violated Alaska’s Procurement laws, including laws that carry both a monetary and criminal penalty. Nothing happened.
Barry Jackson was contracting and facilities manager of the Alaska Division of General Services until 1999, spoke to the the House State Affairs Committee last October on this subject.