PA AG Says PLCB exercised "poor judgment"

Pennsylvania Auditor General Jack Wagner has released his report on the audit of the PLCB's "courtesy contract," a $173,820 training contract that was granted to Solutions 21, a Pittsburgh-based company run by the husband of the PLCB's Western Region manager.

Auditor General Jack Wagner said today that the Pennsylvania Liquor Control Board did not violate state law but that it did exercise poor judgment in awarding a $173,820 employee training contract to the husband of a PLCB regional manager, creating the appearance of a conflict of interest.

"In awarding a contract to the spouse of one of its regional managers, the PLCB should have anticipated the reasonable public questioning that would result over a potential conflict of interest, regardless of whether that conflict was an actual conflict or the appearance of a conflict," Wagner said.

That's right, Chuck Ardo: far from accusing the PLCB of curing cancer, those of us who questioned this contract were actually engaging in "reasonable public questioning." That's from the state auditor general, Chuck, so you can take that to the bank. Wagner wasn't just talking about the awarding of the contract either, according a story in the Pittsburgh Post-Gazette:

Mr. Wagner said training to improve employee courtesy, manners and product knowledge wasn't a worthwhile expense. At the least, he said, it should have been done in-house.

So it was a dopey idea, and we were right about that. But the important thing is that state ethics laws were not broken!

Investigators found no evidence that the Western regional director used the authority of her employment or confidential information to assist her husband's business in obtaining the contract, Wagner said.

How did they determine this? Well, the regional director, Susanne Hobart, told them that the business was started before she married her husband, that she doesn't have any financial interest in the company, and "that she was aware her husband's company was going to submit a proposal in response to the RFP issued by the PLCB but she and her husband had agreed not to discuss it." How about that! They agreed, in the sanctity of their own home, not to discuss it.

What's the Auditor General say about that?

Wagner said his department's review of Solutions 21's corporate documents and the Western regional director's statements of financial interest found no evidence to contradict her statements. The report notes that the investigators' ability to determine the substance of communications between a married couple is obviously limited.

So what we have here is a contract let by the PLCB, to a company run by the husband of a high-level PLCB manager (who has no financial interest in the company, but...she's married to the guy, so you gotta figure she's got a financial interest in that), and that's legal because she told the auditor general that she and her husband had agreed not to discuss the RFP. Great! Good ethics laws we have, and I feel good about that!

Then it turns out that there were other irregularities in the evaluation process -- score-shaving, and one contract proposing to employ a PLCB employee as their on-site representative -- that taken all together raised some real red flags.

"Although this contract was awarded according to the letter of the law, there are several incidents that occurred that raise serious concerns and put the PLCB's procurement procedures in question," Wagner said.

Wagner then "made five recommendations to improve the PLCB's management controls, procurement policy and operational procedures, and three recommendations related to the prevention of conflicts of interest." These fall into the category of increasing paperwork and CYA activities, and some things that sound a lot like the office equivalent of the "courtesy" training:

• Exercise good judgment when awarding contracts to avoid even perceived conflicts of interest.
• Ensure that management and employees understand and comply with laws and policies pertaining to conflicts of interest.
• Require the members of future evaluation committees to properly document changes on their individual scoring sheets (like arbitrarily changing scores?).

Ummm... Duh.

How's the PLCB feel about this? Vindicated, sadly enough, and -- as you might expect -- truculent. Joe "CEO" Conti and PJ Stapleton said that they had received legal advice that if they had rejected the bid from Solutions 21, the PLCB might have been sued. For rejecting a bid from a company owned by the husband of one of their managers. “You could certainly characterize it might have been more difficult to reject bids for that reason,” said Conti. Yes, I suppose you could. Rejecting bids for ethical reasons must be a real bitch, at least for some agencies.

As you might guess, I have a much simpler and much more satisfying proposal than Wagner's for solving this kind of continuing problem. Abolish the PLCB. Get the state out of the retail liquor and wine business, where it has no place. Privatize the sale of spirits and wine. Join the 21st Century. And leave this kind of embarrassment behind.

Let's have a little more "reasonable public questioning" about that, eh?