THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Saturday, July 22, 1995 TAG: 9507220288
SECTION: LOCAL PAGE: B3 EDITION: FINAL
SOURCE: BY DAVID M. POOLE, STAFF WRITER
DATELINE: RICHMOND LENGTH: Medium: 74 lines
Democratic lawmakers said Friday they plan an investigation into a state contract awarded earlier this year that has raised ethical questions about Republican Gov. George F. Allen's push to privatize state services.
Senate Privileges and Elections Chairman Joseph V. Gartlan Jr. said the meeting would look into the circumstances surrounding the $270,000 contract and determine whether the deal actually will save taxpayer money.
``We will invite administration officials to give us an explanation,'' the Fairfax County Democrat said.
Allen said the proposed hearing would be nothing more than Democrats' attempt to score political points a few months before General Assembly elections in November.
``I think they just want to have political fun with it, instead of something constructive,'' he said.
News reports in May disclosed that a payroll services contract went to an Allen privatization adviser, despite a warning from the state Attorney General's Office that the deal had the ``smell'' of a conflict of interest.
The advisor, G.G. ``John'' Crump III, broke no laws. But his experience in state government and ties to the Allen administration gave him the inside track for a contract to administer payroll deductions for supplemental insurance policies held by state employees.
Crump had multiple - often overlapping - roles. He was an assistant state comptroller whose duties included managing the insurance deductions. He also staffed an Allen-appointed panel that recommended privatizing various state services, including the insurance deductions.
News reports prompted Allen to order an internal audit to determine if Crump received favorable treatment. The probe, initially expected to take a few days, is nearing the end of its second month.
Allen reiterated Friday that he may seek to stiffen state ethics laws to avoid a repeat of the Crump episode as the Republican chief executive moves forward with plans to privatize state services ranging from prisons to bridge inspections.
State laws bar certain state workers from lobbying their former agencies, but there is no prohibition against former employees contracting with the state.
``Maybe that law can be toughened or further guidance can be put in the law,'' Allen said.
Crump's company, Employers Resource Management Co., will not be paid from taxpayer funds. The contract, however, gives the firm the exclusive right to collect fees from insurance companies that provide supplemental coverage to state workers.
Some Democrats have seized upon the Crump contract as an opportunity to question the direction and pace of Allen's bid to downsize state government.
No date has been set for a joint hearing, which is being arranged by Gartlan and Norfolk Sen. Stanley C. Walker, chairman of the Senate Finance subcommittee on general government.
Gartlan said he would like it to take place before the General Assembly elections, in which Democrats are seeking to hold onto their traditional majorities in both chambers against onrushing Allen-led Republicans.
In a letter to Walker, Gartlan said the hearings would address these questions:
Why was the contract awarded in the face of concerns by the attorney general?
Was there a conflict in the fact that panel that chose Crump's bid over the nearest competitor included state workers he had supervised?
Will shifting the cost of the payroll deductions to insurance providers cause other companies to cancel state workers' policies, as Jefferson-Pilot Life Insurance Co. has done?
Walker said it was unfortunate that the hearing would come during the election season. He insisted that the investigation was prompted by policy questions with sweeping ramifications, not politics. by CNB