The lobbying firm that advocates for the Kenai Peninsula Borough's issues in Washington and Juneau undercharged the borough for its services over the past two years, and now it wants all of its money.
The Kenai Peninsula Borough Assembly agreed Tuesday evening to pay the Hoffman Silver Gilman & Blasco lobbying firm all of the $19,000 for which the firm initially failed to bill.
The decision was made even after some assembly members expressed skepticism regarding firm's ability to truly benefit the Kenai Peninsula.
Assembly President Pete Sprague, who said he believes the lobbying firm does excellent work on the borough's behalf, proposed that the borough only pay $9,500 of the $19,000 because the firm had made the billing mistake -- a mistake that lasted for two years.
"Over the course of one year I don't have a problem making up the difference," Sprague said Tuesday night. "But over two years I think we ought to split the difference, and that's what I'm attempting to do with this amendment."
The borough's contract with the firm, a copy of which was received by the Peninsula Clarion Wednesday, requires the borough pay "a total sum for all services and expenses not exceeding $50,000" to the lobbying group per year at a rate of $4,166.67 per month.
But over the past two years, the firm only billed the borough $3,375 per month, meaning the borough still owed $19,000 to pay off the agreed-upon maximum total.
The contract states that the lobbying firm does not need to submit a document of its expenses with its monthly bills to the borough, but it requires the firm to keep a record of the expenditures in case the borough requests documentation.
The contract says that the borough's finance department receives a copy of each bill's invoice, which begs the question of why the billing mistake was not noticed earlier. Finance Director Craig Chapman said it was a simple transaction, rooted in history two years old, and the borough employees processing the invoices had no reason to question their accuracy.
"We pay the invoices that come in," Chapman said Wednesday.
When the lobby firm realized its own error and informed the borough of the mistake, Chapman said the lobbying group was "very apologetic."
"They were very surprised that they had made a mistake in their billing, and they realized that we would have to ask the assembly to approve more funding."
The $19,000 will be appropriated from the borough's general fund.
Kasilof Assemblyman Paul Fischer was one of the assembly members to question the lobbying firm's value to the borough, but he said a contract is a contract.
"I don't think we got $50,000 worth of value. We don't know how hard they worked on it or even if they worked on it at all," Fischer said. "But I've got to go along with paying it."
Nikiski representative Gary Superman had similar sentiments.
"I like the idea of not having to pay these guys because they are late with the bill, but my understanding of a contract is that it is just that," Superman said. "I suggest to the maker of the amendment (Sprague) that maybe we should dig the contract out to see if there's any way for us to fudge what they want back from us."
Assistant Borough Attorney Scott Bloom said he did not see anything in the contract that could excuse the borough from paying the full $50,000, even after the firm's billing mistake.
"I don't know of any specific clause in this contract that would give us an out because of their failure to bill," Bloom said Tuesday night.
Sprague said he has never had an issue with the lobbyist's work ethic and hopes to see the borough continue its relationship with the firm.
"Those of us that do work with the lobbying group realize how important it is to negotiate with the right people and to be specific with what we're trying to accomplish," Sprague said Wednesday. He cited consistent federal funding to the Spruce Bark Beetle Mitigation Program as one of the lobbyists' accomplishments.
The contract requires the firm to submit monthly reports to the Kenai Peninsula Borough Mayor. Mayor Dave Carey said he does not receive written reports from the firm, but he does talk or exchange emails with the lobbyist group on a fairly regular basis, he said.
"I certainly get phone calls and reports," Carey said Wednesday. "We are in communication with each other often."
Carey said the firm has kept him apprised of many issues, including $1.8 million available for a maritime traffic study in Cook Inlet, a transportation bill that could improve roads on the peninsula, possible improvements to the Cooper Landing bypass and updates on dredging in local watersheds.
Still, Carey said, the borough must continue to hold the lobbying firm accountable.
"I have not received written reports in terms of the work they are doing," he said. "We need to substantiate that they are working the number of hours that the contracts are for."
Reporter Andrew Waite can be reached at email@example.com
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