A newly staffed-up State Contracting Standards Board (SCSB) held its first meeting of the year with continuing questions related to the Connecticut Port Authority’s (CPA) handling of contracts to redevelop the State Pier into a hub for an offshore wind farm and say they are extending their review to include the procurement practices for all of Connecticut’s quasi-public agencies.
Lauren Gauthier said they found a “gap in the enabling statutes for the Port Authority that allows for them to move forward without utilizing standard procurement practices that the rest of the state does.”
Gauthier said they developed a list of questions to examine the issue more closely, including legislative history and legislative intent in creating the Port Authority “and going a little bit deeper into quasi-publics and their enabling statutes and seeing if this issue persistent or if it’s just localized with the Connecticut Port Authority.”
“We also want to look that legislative intent behind establishing these quasi-publics, specifically the Connecticut Port Authority, because ultimately we’re going to addressing this issue with the legislature,” said board member Bruce Buff, adding they want to prevent these kinds of problems in the future.
The SCSB previously found the Port Authority had entered into the Harbor Development Agreement outside the timeframe allotted under state statute and that CPA had awarded a “success fee” of more than $500,000 to Seabury Maritime Capital for securing a contractor.
A board member of the CPA, Henry Juan, resigned in February 2018, several months before Seabury was selected in April 2018. The payment was paid in July 2020. Seabury Capital was fined $10,000 by the Office of State Ethics for providing gifts to CPA board members and employees, but there has been no determination made yet on the legality of the success fee.
The success fee is also reportedly being investigated by the Federal Bureau of Investigation, possibly part of their ongoing investigation into former Office of Policy and Management Deputy Director Kosta Diamantis, who resigned amid a nepotism and school construction scandal.
The Connecticut Attorney General’s Office is also examining whether the “success” fee is actually a “finder’s fee,” which is illegal in Connecticut, however, members of the SCSB indicated the AG’s Office has not been forthcoming in addressing their questions.
“We’ve been trying to work with the Attorney General’s Office regarding questions we’ve had and we’ve spent months in discussion and, one thing or another, we’ve not been able to get any indication from them on certain legal issues regarding finders fees and things like that,” Stuart Mahler said. “There’s been continuing discussions with the AG’s office but nothing definitive.”
Buff said the AG’s Office wasn’t able to discuss the finder’s fee matter because the federal government is looking into the matter, but board members indicated the secrecy of an FBI investigation can be “frustrating.”
“What comes from us is the issues of public policy,” Robert Rinker said. “The question is if the Attorney General says that a success fee is not a finder’s fee and that it was appropriate then we may want to take a position as a policy of the board that we want to ban success fees.”
“We’re going to see whether or not this quasi-public agency and other agencies have exempted them from any oversight in terms of procurement,” Rinker said. “We know that Kiewit, the construction project manager at risk, has chosen itself, with some alleged oversight, to do $80 million worth of work; we know that if this was a project that was done by [the Department of Administrative Services] through their construction services division then that would not be appropriate.”
“That ends up being an intense policy discussion amongst members of the board in terms of what recommendations we would make,” Rinker continued, adding that quasi-publics are supposed to be “nimble” but also should be safe-guarding public money.
The CPA has been embroiled in controversy since 2019 related to a lack of spending controls, board members resigning following media reports and an escalating price tag for redevelopment of the State Pier, which has grown from $93 million to $255.5 million.
During the public comment period, Kevin Blacker, who has been an out-spoken activist and opponent against the State Pier project, said he was glad the SCSB now had more staff and media attention on their proceedings.
“The legislative intent behind creating the Port Authority cannot have been, it should not have been, to create an organization that was able to hire friends for no-bid consulting jobs, pay $523,000 finder’s fees or tell the public a deal was going to cost $93 million and have it go to $255.5, give control of the only two deep water ports to one operator and have a manager award $87 million in contracts to itself, at times over the low bidder,” Blacker said.
“Any person on the street can see that there’s a problem,” Blacker said.