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Now and then: Assembly mulls $1M contract with past in mind

Posted: Thursday, July 08, 2010

The sole source contract controversy involving the borough mayor's former chief of staff still resonates inside the Kenai Peninsula Borough's assembly chambers.

The body made that clear when dealing with two issues on Tuesday night with the mention of the "tire machine" that was at the center of former Chief of Staff Hugh Chumley's paperwork blunder.

This week, the body had to decide whether to accept a $986,000 sole source contract with a firm ready to work on South Peninsula Hospital's proposed Magnetic Resonance Imaging facility.

Sole source contracting is when the borough enters into a business deal with a firm without competitively bidding the project.

The mayor's former chief of staff got into trouble when he did not fill out the necessary forms before a company in which he had a significant share completed an $18,000 sole source contract with the borough last August.

That mistake alerted the assembly to holes in borough code and ultimately led to shoring-up ordinances. One such ordinance, enacted in February, requires that the assembly approve by resolution most sole source contracts exceeding $20,000.

Given their action in February, many assembly members were troubled by a possible million-dollar sole source contract, even though approval would not have violated code.

Some assembly members argued that a project as large as an MRI facility should be competitively bid, while others argued the assembly shouldn't stand in the way of a project ready to move forward. The body decided to postpone a decision on the deal, delaying construction of the facility by at least a month.

"It hasn't been that long since we sat here and haggled over a tire machine," Assemblyman Charlie Pierce, Sterling, reminded the body. He said he didn't want to halt the MRI project, but he said it is unfair to scrutinize the rules in one circumstance and not be stringent in another.

Assemblyman Gary Superman, Nikiski, disagreed.

"This is a modern hospital enterprise. It is a completely different animal than a tire machine. I don't think it's fair to make that comparison in sole sourcing these kinds of projects," Superman said.

Assembly President Pete Sprague, who sponsored February's sole-source ordinance, was conflicted on the MRI issue.

"I want to be very clear that I support the project, but I also support the process," Sprague said. "I am uncomfortable circumventing the process for a million-dollar project."

Sprague threw out the suggestion of opening up the project to competitive bidding despite the fact that one firm's numbers are already public.

"It's a difficult question," Sprague said. "But we're in a tough spot here."

South Peninsula Hospital's CEO Robert Letson said his facility is in need of a new MRI facility.

"I'm disappointed because delaying the project will certainly add some additional cost to the hospital and to the community and patients. But I do understand some of the assembly's concerns," Letson said Wednesday. "My focus is to keep the project moving forward and to provide additional information to the assembly."

Because of a lease agreement, every additional month that the project is ongoing adds $30,000 to the overall price of the project, according to Letson.

Assemblyman Mako Haggerty, South Peninsula, co-sponsored the MRI machine ordinance.

"The hospital needs an MRI. We have the money to finish the building. We have the contractor on site. Any delay is going to raise the price up and indefinitely delay the MRI building and quite possibly leave the hospital without an MRI," Haggerty said.

Earlier in the evening, the body unanimously passed a resolution appropriating supplemental funding for the MRI project.

"This is nothing more than a change order," Haggerty added, suggesting the potential sole source contract was incorrectly labeled.

The borough's legal department is looking into whether the contract could qualify as a change order, and that will assuredly be part of the discussion when the body resumes its conversation on the MRI topic at its Aug. 3 meeting.

On the heels of Tuesday night's sole source MRI discussion, the body voted down a separate resolution that the majority believed would prevent competition.

The resolution would have allowed the borough to standardize its Direct Digital Control systems to the Siemens system. Basically, the standardization would have streamlined the operation of those systems, Mark Fowler, the borough's purchasing director, explained.

But the assembly thought the resolution was setting up a monopoly.

"You said this resolution is not meant to be exclusive, but Siemens is mentioned throughout," Sprague said.

Assemblywoman Sue McClure, Seward, echoed Sprague's words.

"Passage of this would create a mini monopoly of Siemens," McClure said.

The assembly voted the resolution down, 7-2.

Andrew Waite can be reached at andrew.waite@peninsulaclarion.com.



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