Office should review contracts


Two recent media reports have cast a spotlight on the potential “pay to play” problem with government contractors who are also donors to political campaigns.

Liberal pols and activists were obviously hoping the stories would do great political damage to their respective subjects, Gov. Pat McCrory and state Rep. David Lewis. In this, the Left has thus far been disappointed. But that doesn’t mean the stories had no value. In my view, they strengthen the case for an important reform of state government that the John Locke Foundation, among others, has long advocated.

The McCrory story, reported by the Raleigh News & Observer, concerned a state contract with a private company to perform maintenance at three state prisons. Company owner Charlotte developer Graeme Keith made contributions to the McCrory campaign. On several occasions, according to state officials, Keith said that it was time to “get something in return” for his donations.

While the prison-maintenance contract predated the McCrory administration, Keith’s ties to the governor became an issue when he sought to expand the contract statewide at the same time that Public Safety Secretary Frank Perry was seeking to have his employees take over maintenance at the three prisons at the end of 2014. It was during discussions on these matters, including one meeting at which McCrory was present, that Keith allegedly made the comments about his political donations entitling him to consideration.

The governor says he didn’t hear Keith utter those words, but that he doesn’t dispute the accounts of his subordinates. Keith, for his part, denies saying them at all. There is no evidence that McCrory is dissembling about this, or that he subsequently directed administration officials to renew contract as a quid pro quo for Keith’s political support.

Instead, McCrory asked his budget director, Lee Roberts, to examine Keith’s claim that the contract was saving money and Perry’s counterclaim that taking the function in-house would be more efficient. Roberts conducted an analysis and recommended that the contract be renewed for one more year. Perry didn’t agree with the decision, but told state lawmakers last week that he didn’t believe it was politically motivated.

The David Lewis story, reported by The Insider newsletter (owned by the same company as the N&O), concerned a state contract with a private company to tow, store, and sell vehicles seized in drunk-driving cases in Eastern North Carolina. A state agency within the N.C. Department of Administration has been seeking to take that function in-house, as well, arguing that it could handle and dispose of the vehicles more efficiently, thus generating more net revenue to local school systems (which receive the proceeds from fines and forfeitures).

Rep. Lewis, head of the House Rules Committee, helped scuttle a bill earlier this year that would have ended the private contracts. When the same provision ended up in the state budget, Lewis had it removed in a subsequent technical-corrections bill. It turned out that the owner of the company in question, Rickie Day, contributed to the campaign fund for Lewis.

Again, there is no evidence of a quid pro quo. Day points out that even after he made the contribution to Lewis, he hired a lobbyist to fight against the budget provision. That suggests that he hardly thought he had “bought” a legislative outcome by supporting the Lewis campaign.

Rather than jump to conclusions about the pay-to-play allegations, I will say at this point that North Carolina clearly needs a formal privatization office, perhaps located within the state budget office, that does nothing but assess, manage, and review current and prospective state contracts with private service providers. Public officials and departments that seek to take services in-house are hardly disinterested parties here. Neither are vendors.

Private contracting for public services has been going on for centuries. It will always exist in some form. What North Carolinians deserve is the assurance that such “make or buy” decisions will be based on substantive analysis, not best guesses or political pull. A formal competitive-contracting office would help.

John Locke Foundation chairman John Hood is the author of Catalyst: Jim Martin and the Rise of North Carolina Republicans.

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