THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Thursday, August 10, 1995 TAG: 9508100513
SECTION: LOCAL PAGE: B3 EDITION: FINAL
SOURCE: BY DAVID M. POOLE, STAFF WRITER
DATELINE: RICHMOND LENGTH: Medium: 78 lines
Gov. George F. Allen said on Wednesday that he would search for new ethics rules to lead him out of the murky legal waters created by one of his administration's first efforts to privatize state services.
But Allen refused to recommend - as he did three months ago - that the General Assembly consider prohibiting all state employees from contracting with their former agencies for up to a year after leaving state service.
``While such a rule would, of course, eliminate any potential conflicts of interest, it would do so by placing the burden almost entirely on state employees,'' Allen said in a letter released Wednesday.
Allen's shift came as his administration released an internal audit of a recent privatization contract that the state attorney general's office said had the ``smell'' of a conflict of interest.
The investigation found no violation of state ethics laws in the payroll contract between the state Department of Accounts and a company affiliated with G.G. ``John'' Crump III, a former high-ranking official with the agency.
Joseph D. Freiburger, the state's acting internal auditor, said the most troublesome aspect of the contract was that the five-member bid review panel included two Department of Accounts employees who had once worked under Crump.
Freiburger said the two former subordinates helped tilt the bid in favor of Crump's company, Employers Resource Inc., because they were confident that Crump knew the state's payroll process better than anyone who worked for three other companies vying for the contract.
``They felt that Employers Resource had a better understanding of what is necessary,'' Freiburger said.
State Comptroller William Landsidle - Crump's old boss - put it this way: ``He was a known quantity, and they knew he could deliver.''
The audit report left unanswered the central question raised by the Crump contract: Is it fair that former state employees can have the edge in winning contracts because of their ``insider'' knowledge of state government?
Allen turned that question over to the Commonwealth Competition Panel, a privatization advisory board that held its first meeting Wednesday.
``I urge you to focus on measures that will assure the public of the integrity and fairness of the procurement process, while at the same time preserving the opportunity for departing state employees to use their expertise to compete in the private sector,'' Allen wrote to the panel chairman, state Sen. Walter A. Stosch of Henrico County.
In May, Allen responded to a Virginian-Pilot and Ledger-Star article on the Crump contract by saying the state may have to broaden existing state ``revolving door'' laws, which place a one-year moratorium on lobbying by former state workers.
``Let's make sure the laws are changed in a way (that) there is again that confidence that the decision was made on the merits of the applicant, rather than on favoritism or cronyism,'' he said.
In an interview Wednesday, Allen backed away from advocating a ban on all state employees seeking contracts from the state or getting hired by companies that do business with the state.
Allen, a former state legislator from the Charlottesville area, recalled the anguish felt by food service workers several years ago when the University of Virginia privatized its dining facilities.
Many of those employees later were hired by the company that won the food service contract.
``When you privatize, do you deny that person who loses their job the right to work for that (private) employer?'' Allen asked.
``On the other hand, you certainly don't want them somehow influencing the decision on who the contract would go to.''
The trick, he said, would be to craft language so that the revolving-door ban came into effect only if the former state worker took an active role in the bid process or had ``unique'' knowledge that resulted from his or her state service.
``I'm not sure that that's necessarily fair,'' Allen said, ``but that may be the only way to do it.''
KEYWORDS: PRIVATIZATION by CNB