NMDOT Documents Leaked To Bidder

By Staff | July 10, 2011

The Quinlan Law Firm in the news: Stories of successful Quinlan Law Firm clients.
Published in the Albequerque Journal, July 10, 2011

NMDOT Documents Leaked To Bidder

By Colleen Heild / Journal Investigative Reporter
PUBLISHED: Sunday, July 10, 2011 at 2:15 am

Former state Transportation Commission Chairman Johnny Cope apparently provided confidential state documents to a bidder seeking a multimillion dollar road contract, according to the state Department of Transportation.

The documents in question, which included internal DOT legal memos, were provided to FNF Construction, which had been the second-lowest bidder in the competition for a $38 million job to reconstruct 18 miles of Interstate 10 south of Las Cruces.

NMDOT under the Richardson administration attempted to award the contract to FNF in 2009, after rejecting the low bidder, but federal officials refused to go along with that decision.

“NMDOT is troubled and concerned to learn that confidential, attorney-client privileged documents were apparently given to FNF Construction by former Chairman Cope during his tenure in office,” DOT spokeswoman Manon Arnett wrote in an email to the Journal last week.

“If true, this would be a clear violation of a commissioner’s statutory duty to treat his position as a public trust.”

A state District Court judge ruled last year that the low bidder, Fisher Sand & Gravel, should have been awarded the contract and found DOT managers violated procurement law by holding improper “closed door discussions” with FNF officials.

That ruling preceded the latest revelations about the internal DOT documents provided to FNF.

FNF New Mexico Vice President Paul Wood, along with Cope, was a major contributor to campaigns of former Gov. Bill Richardson and is a friend of Cope’s.

Cope, a Richardson appointee who left the commission as Republican Gov. Susana Martinez took office, did not respond to requests for comment via email and a call to one of his companies in Hobbs last week.

In a Journal interview in September, Cope was asked about his racehorse partnership with two other construction contractors. He said back then, “I’ve never involved myself in any of the bid work” at the DOT.

Wood could not be reached for comment and did not respond to messages left with FNF’s office in Albuquerque.

In an email to the Journal on Friday, FNF’s attorney at the company headquarters in Arizona didn’t say who originally provided the DOT documents to FNF or to whom they were given.

DOT officials said they were unaware FNF had the documents until the company provided them about five weeks ago.

They were surprised, Arnett said, given the fact the records were clearly confidential in nature.

One set of documents is attached to what appears to be Cope’s personal fax cover sheet. They include an interoffice memo sent to him, and documents to and from his email account.

In lawsuits filed in state and federal court, Fisher is seeking monetary damages against the state and FNF, contending the company lost the contract due to FNF’s improper interference and covert communications with state transportation officials in the previous administration.

“What you have here is you’ve got insiders trying to get the benefits,” said William Quinlan, a Fisher attorney based in Chicago. “Contractors shouldn’t have that kind of access.”

The DOT under Richardson asserted that private discussions with FNF were permissible, as long as they didn’t enter into the decision-making process.

But District Judge Sarah Singleton of Santa Fe ruled in October that DOT’s position on that issue “is contrary to law and contrary to the policy of integrity and transparency in the bidding process.”

“To allow such behind closed-door meetings,” she wrote in an opinion, “would encourage favoritism and corruption.”

Second legal opinion

The Interstate 10 reconstruction job was an attractive one in a down economy.

Fisher Sand & Gravel, a North-Dakota based company with an office in New Mexico, was the low bidder when bids were opened in late May 2009. FNF came in second.

At the time, Fisher and three of its former officers had faced federal prosecution for tax fraud in a case filed in North Dakota, but the company had entered into a deferred prosecution agreement so no conviction would result.

Soon after bids were opened, the DOT Office of Inspector General and DOT lawyers began looking into the details of the federal prosecution and its affect on the contract award in New Mexico.

DOT records show Cope was sent a 28-page fax dated June 16, 2009, dealing with the prosecution and whether Fisher could be ruled ineligible for the New Mexico contract. The cover letter was signed only “Paul,” and DOT officials believe the communication came from Paul Wood.

A six-page DOT legal memo generated the next day concluded that Fisher wasn’t subject to disqualification at that time.

By June 22, 2009, other FNF representatives had contacted DOT managers and attorneys about the issue, and records show a 23-page fax with Cope’s letterhead was sent to DOT officials showing how other states responded to the Fisher prosecution.

A second DOT legal opinion followed, this time concluding there was sufficient basis to reject Fisher’s bid.

By July 10, 2009, DOT officials had decided to award the contract to FNF instead of Fisher.

Because federal stimulus money was to be used, Federal Highway Administration officials had to concur but they found no reason to reject Fisher.

The DOT then canceled all bids and re-advertised the project, saying it was in the public interest.

In the end, a third construction company won the widening contract at a lower cost of $36 million. Fisher filed suit, seeking records to prove its case.

FNF attorney Kevin Harris said in an email to the Journal on Friday that, “FNF received the documents from NMDOT in the course of NMDOT’s communications with multiple parties as NMDOT was conducting an investigation into the prosecution of Fisher Sand & Gravel.”

Several weeks ago, the DOT informed Fisher about the confidential documents from FNF.

According to a June 30 letter from a Fisher attorney, DOT deputy general counsel Dan Gershon learned during a meeting with FNF attorneys that Germaine Chappelle, who was DOT’s top lawyer under Richardson, “provided certain documents to Johnny Cope around the time of the procurement of the Las Cruces Project, and that Cope had in turn provided those documents to FNF, including documents that the NMDOT claims were privileged communications.”

The letter goes on to say that Gershon “stated that the NMDOT’s position was that Cope’s decision to provide the documents to FNF was unlawful.”

A recent DOT email obtained by the Journal states, “The privileged documents were apparently transmitted from former State Transportation Commission Chairman Johnny Cope to Paul Wood of FNF.”

Wood has been a FNF vice president since early 2009. He, his family and former company, W.W. Construction, contributed at least $50,000 to Richardson’s campaigns and his Moving America Forward political action committee.

Chappelle left the transportation agency in August 2009 to become chief general counsel of the state Department of Public Safety. She now works for a Santa Fe law firm.

Chappelle told the Journal last week that she gave confidential records to Cope because the commission is “part of the client.”

“I remember we had to brief him on that (Fisher disqualification issue),” she added.

She said she had no knowledge of anyone giving confidential DOT documents to FNF.

“I was never told or asked about whether that could be given,” she said.

Chappelle said, “Attorney-client privilege is obviously extremely serious and especially on something like that where you’ve got a procurement.”

State law bars current or former state employees from knowingly using “confidential information for actual or anticipated personal gain or for the actual or anticipated personal gain of any other person.”

She said Cope never gave her the impression he was going to act on the confidential information or exert any influence over the bidding.

“With respect to him talking to me, I never ever felt like he was trying to put me in a bad position, and I always kind of respected him for that, actually.”

‘Their hospitality’

Typically, members of the transportation commission are appointed by the governor to set policy, not to become involved in day-to-day DOT operations or the awarding of contracts.

“It is not the commission’s role to intervene on behalf of a contractor in a dispute over a project,” said Pete Rahn, transportation commission chairman under Gov. Susana Martinez.

Fisher attorneys have also asked the DOT for records about events FNF may have sponsored for transportation commissioners.

At a final commission meeting of Richardson appointees in December in Ruidoso, Cope thanked FNF Construction “for their hospitality,” meeting minutes show.

It was unclear what FNF provided. DOT officials say that typically public, not private, entities host receptions before monthly commission meetings.

Read more at the Albuquerque Journal: http://www.abqjournal.com/42361/news/nmdot-documents-leaked-to-bidder.html