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Thursday, May 04, 2006

Ind. Gov't. - Even more on: State FSSA exec goes from public to private at twice the price

Niki Kelly reports today on in the Fort Wayne Journal Gazette in the continuing story of the $180,000 per year FSSA contract (see most recent ILB entry here):

INDIANAPOLIS – The Indiana Democratic Party on Wednesday asked Indiana’s government corruption watchdog to investigate a state contract with a Fort Wayne businessman who they claim outsourced his state job to himself to nearly double his pay.

The move came just days after The Journal Gazette reported the agreement between Richard E. Rhoad and the Family and Social Services Administration.

“I believe that this contract may be in violation of at least one state ethics law and possibly a criminal statute that prohibits public servants from profiting from government contracts,” Democratic Party Chairman Dan Parker said in his request to Inspector General David Thomas.

“Moreover, I believe this agreement is in violation of the public trust and the spirit of government.” * * *

Rhoad even signed the contract on his last day as a state employee Jan. 13. * * *

Family and Social Services Administration officials also claimed the Indiana State Ethics Commission rendered a favorable informal advisory opinion on the issue but refused to provide it to The Journal Gazette on Monday.

Late Wednesday – after growing statewide media pressure – officials released the document, which said Rhoad should be screened from any involvement in the agency’s decision to accept the terms of his employment contract.

State Ethics Director Mary Lee Comer also said Rhoad’s contract should not be executed by the agency until after his date of termination as a state employee.

It doesn’t appear this caveat was met. Rhoad’s resignation letter was given Jan. 12 but was “effective as of the close of business Friday, January 13, 2006.”

Rhoad entered into the contract with the state as president of Allied on Jan. 13, the same day other state officials also signed off on the contract.

Several of Comer’s responses were directed to Steve Schultz, Daniels’ former legal counsel.

The Family and Social Services Administration also released an opinion from its ethics officer, John Davis, who said the arrangement where the agency paid for Rhoad’s expenses was “satisfactory for a period of time, but has now been determined impermissible by the Indiana State Budget Agency.”

In several sections of the document, Davis said Rhoad isn’t violating the state’s one-year restriction on contracts or conflict-of-interest law because “the CFO was not involved in the negotiation of the contract between his company and FSSA.”

Also this week, a second contract surfaced that was signed by Rhoad and Roob in November 2005 but was not fully executed by other state officials.

The payment for that contract was to be $2 million over two years.

FSSA spokesman Dennis Rosebrough said that proposed contract was higher because Roob was considering having Rhoad supervise a major accounting system change, which would have required him to hire several employees at his company.

But the eight paragraphs of job duties in both contracts are exactly the same.

Eventually that task was outsourced to another vendor, and Rhoad signed the smaller $540,000 contract instead. * * *

The Rhoad contract is similar to one given last year by Attorney General Steve Carter, who awarded a $1.3 million contract to one of his deputies who bid on and won the job while he was still working for Carter.

According to the Indianapolis Star, that contract was held up when officials under then-Gov. Joe Kernan raised ethical questions. Only when Daniels took office a few months later did Carter receive all the necessary signatures to execute the agreement.

See this March 12, 2005 ILB entry re the Attorney General's contract.

Michelle McNeil of the Indianapolis Star also has a story today on the FSSA contract.

The ILB is attempting to obtain from the Ethics Commission copies of its informal opinion on the contract.

Posted by Marcia Oddi on May 4, 2006 09:33 AM
Posted to Indiana Government