Advertising Contract Controversy a Similar Scene - Business, Government Legal News from throughout WV

Advertising Contract Controversy a Similar Scene

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It's often said history repeats itself, and if you observe West Virginia politics long enough, the same people (or their relatives) and the same situations replay.

"The old saying is ‘victory has many fathers and deceit is an orphan,' but in this case, scandal is an orphan," said West Virginia Wesleyan College history Professor Robert Rupp. "Everything is politics, except in West Virginia politics, and that's personal."

More details have emerged about three West Virginia Department of Health and Human Resources employees placed on leave in mid-July, presumably for a dispute over the agency's recent advertising contract bid.

But long-time gadflies of the Mountain State might be suffering from déjà vu.


Same Agencies, Different Dispute


In September 1993, former West Virginia Lottery Director Elton "Butch" Bryan was convicted of two counts of mail fraud, one count of wire fraud, one count of securities fraud and perjury.

A Charleston Gazette article from April 28, 1993, by Fanny Seiler detailed Bryan's indictment, saying he directed Deputy Director of Marketing Tammy Gunnoe to surrender the evaluation tally sheets from the lottery's 1991 advertising contract.

Those tally sheets gave Charleston advertising firm The Arnold Agency the highest score, but Bryan had told Gunnoe to tell the Lottery Commission that Parkersburg advertising firm Fahlgren Martin had the highest score.

"In 1989, Scott said, the scores of Fahlgren Martin and the Arnold Agency were so close that the evaluation committee didn't feel comfortable in awarding the contract," Seiler's article states. "The two firms were invited to make additional presentations."

Fahlgren-Martin underwent several mergers, becoming Fahlgren Mortine in 2011. Falhgren Mortine is headquartered in Columbus, Ohio.


Current Contract Details


As for the DHHR's 2012 advertising campaign, a Sept. 11 search warrant for the computers, cell phones, offices and electronic storage devices for employees John Law, Susan Perry and Jennifer Taylor claims the trio broke the law by trying to twist the outcome of state purchasing.

The Charleston Daily Mail reported Sept. 4 that it reviewed some of those bid documents and found "a number of judgment calls made by the evaluation committee helped Fahlgren or hurt the other three companies. Two of the three losing companies — The Arnold Agency and The Manahan Group — said their own analysis found similar issues."

Law, assistant secretary for communications and legislative affairs; Perry, deputy secretary for legal services; and Taylor, DHHR's general counsel, were not members of the evaluation committee.

The Sept. 11 search warrant states that when the bids were opened, Fahlgren Mortine had the highest point total and The Arnold Agency came in second place.

The search warrant states that Law "deduced that The Arnold Agency was not going to receive the award," and instructed a halt to the final scoring memo because he was "going to make some calls."


A New Lineup


The Sunday Gazette-Mail printed on Jan. 26, 1997 a condensed chapter of a book by Bob Brunner, former television reporter who still performs work for West Virginia Public Broadcasting and was communications chief for Gov. Gaston Caperton.

Brunner recounted the former lottery commissioner Bryan was a former legislator and had been a "key political operative" for Clyde See during the 1984 and 1988 elections for governor.

"Following See's upset primary loss to Caperton in 1988, Caperton took the advice of experienced politicos and expanded his general election team to include those who supported his opponents in the primary," Brunner wrote. "Chief among Caperton's new ‘star recruits' were Gus Douglass' operative John Perdue and Bryan."

Brunner then wrote that in Bryan's position at the Lottery Commission, he "decided to flex his new muscle a little," and said the state's $2.8 million lottery advertising contract should be re-examined.

"Bryan had long despised H. Smoot Fahlgren, who headed the Parkersburg agency that had the lottery business," Brunner wrote. "In the 1984 campaign, Fahlgren was credited with developing some ads for Republican Arch Moore which helped defeat Bryan's patron, Clyde See."

Brunner wrote that he didn't think he'd ever know what caused Bryan to direct his subordinates to change their evaluations of the firms seeking the 1991 lottery advertising contract.

"When he became more fully aware that Fahlgren had not only been a friend and contributor to Arch Moore but also to Caperton, I believe Bryan had a sinking feeling that he had stepped into some quicksand that would end his own political career," Brunner wrote.


‘Frenzied' Activity


The Sept. 11, 2012, search warrant relating to the DHHR advertising contract outlines the actions Law took, described in the warrant by one staff member as "frenzied."

According to the search warrant, Law told Taylor and Perry they should perform a "legal review" of the contract bid process, saying an out-of-state vendor being given the contract could "be bad for the governor in an election year."

Perry and Taylor obtained the bid documents, and according to the search warrant, never discussed the issues with evaluation committee members, the chairwoman or members of the DHHR purchasing staff.

The search warrant claims that the trio's attempts to illegally interfere with the contract "caused the advertising and marketing vendor, The Arnold Agency, to be preferred over the successful bidder Fahlgren Mortine due to a contract extension granted to The Arnold Agency."


Executive Branch Answers


As former reporter and Caperton communications chief, Bob Brunner wrote that he and George Manahan, Caperton's press secretary, approached the governor when they heard things with the 1991 lottery advertising contract had reached the level of scandal.

"As I recall, Caperton said almost nothing," Brunner wrote. "He reflected briefly that was not a matter for the governor's office, and if we were queried, we'd just refer inquiries back to the lottery."

The search warrant related to the 2012 DHHR advertising contract details a July 10 phone call from Gov. Earl Ray Tomblin's Deputy Chief of Staff Erica Mani to Taylor.

"Ms. Mani called Ms. Taylor back that same day and told Ms. Taylor the governor's office was not getting involved and Department of Administration Purchasing Division could assist her with any concerns she may have relating to the procurement process," the search warrant reads.

The search warrant also states that Taylor told DHHR Secretary Rocco Fucillo she had been contacted by the governor's office, and the office expects the advertising request to be pulled because there were no lawyers involved in the bid scoring.

According to the search warrant, Fucillo contacted Mani himself and was told "there were no expectations by the governor's office to pull the award of the contract, and they were waiting on the Department of Health and Human Resources to determine the appropriate course of action."


Unanswered Questions


A Charleston Gazette editorial from May 14, 1993, indicated a lack of reasoning, even after reviewing a federal indictment, for former lottery commissioner Bryan's actions to falsify documents.

"There is no indication Bryan stood to gain financially from the contract," the editorial read. "At least one source has suggested that Bryan may have been trying to please Gov. Caperton, who has some ties to Fahlgren Martin."

An April 27, 1993, Gazette article included a statement from Smoot Fahlgren who said "he was surprised the indictment accused Bryan of tampering with the selection process. ‘I hardly know Butch,' he said."

Sen. Ron Stollings, D-Boone, the current chairman of the Senate Health and Human Resources Community along with the Health and Human Resources Accountability interim committee, said the present situation at DHHR "will have to work itself out."

Accountability committee member Sen. Mike Hall, R-Putnam, said this week during a committee meeting that he had known the three staff members in question for a long time and could not figure out what had gone wrong.

Fucillo answered that when the process would allow for comments, he would be happy to share information with the Legislature, but until then, Fucillo said it would be inappropriate to speak to issues of personnel.

"That's a fair answer, but I wanted you to get the opportunity to speak publicly about it," Hall said. "We're the oversight committee … and any answer is better than dead silence."

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