UPDATE: Missouri auditor questions attorney general's office contracts

Wednesday, June 27, 2012 | 6:47 p.m. CDT

JEFFERSON CITY — The procurement process that the attorney general's office used for several contracts raises concerns about conflicts of interest, Missouri Auditor Tom Schweich said Wednesday.

A state audit of the attorney general's office pointed to three contingency fee contracts first solicited last year for private lawyers to represent the state.

The attorney general's office is allowed to seek bids itself, or it can use the state Office of Administration to solicit proposals and establish an independent committee to evaluate and award the contract.

But in the cases at issue, the audit found that the attorney general's office retained the right to reject proposals or seek new responses while working through the Office of Administration and an independent committee. In addition, the auditor's office said Democratic Attorney General Chris Koster received a total of more than $170,000 in campaign donations last year from those seeking contracts. The auditor said that of the 28 bidding on the contract, 13 firms or members of firms had contributed to Koster's campaign.

"To us, that's a conflict of interest," said Schweich, a Republican.

"It's OK to accept contributions if you're not part of the procurement process, and it's OK to be part of the procurement process if you don't accept contributions. But to accept contributions in the procurement process is problematic," he said.

Schweich noted that auditors were not saying contracts were being awarded based upon campaign contributions. The audit also recommended that state lawmakers clarify the process for appointing members of the independent panel that evaluates bids and awards the contract.

Attorney general's office spokeswoman Nanci Gonder said all three requests for proposals were withdrawn in May so that Schweich's recommendations could be addressed. She said no contingency fee contracts have been awarded since Koster took office in January 2009.

"The so-called 'right-to-reject' provision is a standard, or boilerplate, clause contained in many (requests for proposals) issued throughout state government," Gonder said. "The auditor's recommendation to forgo this boilerplate provision corresponds with the attorney general's goal of removing the attorney general's office from the contract selection process."

Firms that win contingency fee contracts can generate significant fees from cases they pursue. The three contracts explored in the audit centered on the prescription drug Avandia, average wholesale pricing by the pharmaceutical industry and reimbursements from the state Petroleum Storage Tank Insurance Fund.

Ed Martin, a Republican competing in the Aug. 7 primary, said Koster wrongly controlled contingency fee contracts "in what appears to be a 'pay-to-play' scheme."

Overall, Schweich rated the performance of the attorney general's office as "fair." Besides the contracting process, Schweich also recommended that the attorney general's office document the process and criteria used for selecting outside legal services and expert witnesses in cases.

The attorney general's office said outside legal services and expert witnesses are needed for particularly complex cases or when there is a conflict of interest. It agreed with the auditor's recommendation that criteria for selecting lawyers or witnesses should be documented.

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