State work-force agencies gave board members contracts worth millions

Jul 9, 2011

The following article was published in the Orlando Sentinel on July 9, 2011:

State work force agencies gave board members contracts worth millions

By Jim Stratton

Florida’s 24 regional work-force boards pride themselves on helping unemployed Floridians get back on the job.

But they’re also pretty good at finding work for their board members.

From July 2008 to April 2010, the taxpayer-funded agencies awarded at least $7.7 million in contracts to companies controlled by or linked to their board members.

In some instances, contracts were approved without competitive bids. In others, it’s not clear that board members who profited from the deals disclosed their interest and abstained from voting.

Many transactions reviewed by state auditors were not approved by a two-thirds majority of the regional board, as required by law. And most that were — 80 percent — received approval only after a contract

Nonprofit watchdogs have criticized the practice of board members receiving agency contracts, warning that it raises questions of cronyism even when handled carefully. But regional work-force executives defend their agencies, insisting that board members’ companies received no special treatment.

Jobs, they said, were given to the lowest bidder that met an agency’s needs. When there was no formal bid process, they said, agency staff and board members worked to ensure the price was reasonable and the product or service acceptable.

The deals channeled millions of dollars into companies owned by or tied to dozens of executives who serve on work-force boards across the state. From the Panhandle to South Florida, the federally funded agencies became a source of revenue for the people who run them.

The deals, highlighted in a 2010 state report, include:

•A $14,000 consulting contract with a Walton County board member that was not competitively bid.

•A $368,000 office-lease contract with a Clay County board member that received full board approval only after it had been signed.

•A $99,000 contract with a Fort Lauderdale board member to produce an online video.

•A 10-year, $3.4 million deal to lease space from a Highlands County board member.

“We’re talking millions of dollars statewide,” said State Sen. Mike Fasano, a New Port Richey Republican who reviewed work-force spending. “It’s clear that some people view these boards as an opportunity to get contracts.”

The numbers come from a year-old Agency for Workforce Innovation survey. It polled all 24 agencies, at Fasano’s request, after reports of lavish spending at Tampa Bay’s work-force board.

Last year, Fasano proposed legislation that would have limited board members’ ability to do business with work-force agencies. It failed. He said that next year, he would like Gov. Rick Scott to push a similar effort. Scott’s office did not respond to several emails seeking comment.

The regional boards are part of the state’s labor-development network — a system designed to connect businesses to workers and provide training and assistance to out-of-work Floridians. The agencies receive more than $250 million a year in federal funding and are governed by boards filled with business and civic leaders.

The boards, which attract little public attention, enjoy broad autonomy, but the Agency for Workforce Innovation has some oversight on spending. Its survey found 574 contracts valued at $55.4 million for a 21-month period from July 2008 to April 2010.

At least $7 million of that went to private, for-profit businesses linked to board members. In some instances, that money paid for worker-training programs at board-member companies. In others, it bought services or products — everything from promotional water bottles to office space.

State law at the time required that contracts with board members be approved by two-thirds of the agency’s full board, but that often didn’t happen. In a few instances, auditors were unable to verify that board members who profited from a deal disclosed a conflict or abstained from voting.

And although the survey tried to identify all deals involving work-force board members, some went unreported.

Workforce Central Florida made payments to at least three companies tied to current or former board members during the survey period. It paid a small marketing company more than $50,000; a software company almost $7,000, part of a three-year deal worth almost $50,000; and an office-furniture company more than $145,000.

But Workforce Central Florida concluded those transactions did not fit AWI’s parameters, so it did not reveal them.

Regional work-force executives said there was confusion about the requirement that board-member contracts be approved by a two-thirds majority of each regional board. Some took that to mean two-thirds of board members attending a meeting, not two-thirds of the full board.

Brevard Workforce President Lisa Rice said agencies asked repeatedly for a clarification but received none. Her agency stopped doing business with for-profit companies tied to board members after AWI completed its report. It’s not a formal policy, Rice said, “but that’s the way we run it.”

Workforce Central Florida adopted a similar approach last month, after the Orlando Sentinel revealed that board members’ companies had received more than $1 million in contracts during the past six years. And recently, the head of First Coast Workforce, which serves the Jacksonville area, said he would raise the issue at his board’s next meeting.

First Coast awarded contracts worth almost $370,000 for office space to a development company led by an agency board member. First Coast President and CEO Bruce Ferguson said that deal was handled appropriately, but he acknowledged the potential for trouble.

Roger Hood, who leads the work-force board in Highlands, Hardee and DeSoto counties, agreed, but he worried small, rural agencies would lose board members if they could not do business with the organization.

In December 2009, Heartland Workforce signed a 10-year lease with a company owned by the family of a board member. The deal, worth almost $3.8 million, got its start when the board member told Hood his company was building 27,000 feet of office space in Sebring.

At the time, the agency was looking for a new office — it was losing its lease — but it had not found a suitable location. In October 2009, an agency committee heard presentations from the board member and a representative from a competing property. The committee ultimately chose the board member’s building.

Hood said he’s “very comfortable” with the outcome.

“Everything was done in the public,” he said. “It wasn’t in the shadows.”

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