State tells jobs agencies to stop doing business with board members

Aug 23, 2011

The following article was published in the Orlando Sentinel on August 23, 2011:

State tells job agencies to stop doing business with board members

By Jim Stratton

Florida’s 24 regional workforce boards are now prohibited from awarding business contracts to companies controlled by or tied to agency board members.

Directors of Workforce Florida, the statewide overseer of the regional boards, voted quietly last week to ban the practice at the urging of Gov. Rick Scott, who blasted a system that allowed board members to profit from the agencies they governed.

Scott’s office said Tuesday it was just learning of the move but called it “a step in the right direction.”

Last week, the governor told regional workforce executives, “You must get your house in order.” He said if agency board members “are in an position that holds a conflict of interest, then they need to resign.”

The policy change follows a series of Orlando Sentinel stories that described how for-profit companies tied to workforce board members had been awarded millions in contracts during the past few years.

Statewide, such companies were paid at least $7.7 million from July 2008 to April 2010. The money paid for everything from office space to web videos to promotional water bottles, according to state auditors.

In some instances, contracts were approved without competitive bids. In others, it’s not clear that board members who profited disclosed their interest in the deals and abstained from voting. And in many, regional agencies overlooked a state law — since revised — that required such contracts to receive two-thirds approval from their full board.

State Sen. Mike Fasano, R-New Port Richey, a critic of the old policy, applauded the decision, calling the change “great news.”

“I’m happy they took it on themselves to do that,” Fasano said.

The U.S. Department of Labor is now investigating the regional boards, which receive more than $250 million a year in federal funding and are governed by local business and civic leaders. The boards are charged with helping Floridians find work and helping businesses find qualified employees.

The federal investigation began with Workforce Central Florida, the agency serving a five-county area around Orlando. During the past six years, the agency funneled more than $1 million in contracts to companies tied to or controlled by its board members, the Sentinel found. Among the items purchased were software, office furniture and promotional materials.

Workforce Central Florida officials, like their colleagues around the state, have defended the contracts, saying the money represented a tiny portion of their spending. They insisted that board members’ companies received no special treatment and that jobs were given to the lowest bidders who met the agency’s needs.

In a letter to community leaders, board Chairman Lawrence Haber said outside auditors have found no evidence of wrongdoing in the past six years.

“No questions or disallowed costs,” he wrote. “No findings of noncompliance with applicable statutes or regulations. Again, we do take our fiduciary responsibilities very seriously.”

Nevertheless, the agency voted in June to stop doing business with for-profit companies tied to its board members. A handful of other regional boards said they were headed in the same direction.

The decision by Workforce Florida imposes the policy immediately on a statewide basis. It does, however, allow for a few exceptions.

Agencies and organizations such as community colleges can compete for contracts, provided the workforce board member representing them doesn’t personally benefit. Companies tied to board members can continue receiving training grants from regional workforce boards.

There’s also an exemption for “exceptional circumstances.” In such cases, the board member must not personally benefit from the deal, and the agreement must be reviewed and approved by the Florida Agency for Workforce Innovation.

When the issue surfaced in May, then-Workforce Central Florida Chairman Owen Wentworth warned that preventing board members from bidding on contracts would make it difficult “to recruit the people we really want.”

Former board member Pete Barr echoed his concerns, saying Orlando is “not that big.”

Tuesday, Haber downplayed those worries, saying, “I’m confident we will be able to find board members from both the private and public sectors who will be willing to serve on our board.”

Haber said he was unfamiliar with the details of the new policy. Workforce Central Florida staff is reviewing it to determine how it compares with the new rules his agency approved in June.

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