Davis' Oracle deal: Corrupt, or incompetent?
By Daniel Weintraub -- Bee Columnist
Published 2:15 a.m. PDT Thursday, May 23, 2002
Gov. Gray Davis has been forced to admit that his administration is either corrupt or incompetent. He has chosen incompetence. And he and his people are doing a pretty good job proving their case.
The question is why the administration signed a $95 million contract with the Oracle Corp. last year for computer software the state didn't need and still hasn't used.
The corruption charge stems from the fact that an Oracle lobbyist delivered a $25,000 campaign contribution to the governor's technology adviser a few days after the contract was signed.
If someone could prove that the donation was linked to the deal, everything would be neat, if not clean.That's a story anyone can understand.
On the other hand, the level of incompetence that the governor's own advisers are describing as the alternative explanation for the contract's execution is almost beyond belief. But the evidence is mounting.
This was a contract that sped its way through a normally recalcitrant bureaucracy in record time. Every top official who might have questioned its value miraculously concluded that doing so was someone else's job. When two lower-level employees raised red flags, they were either shrugged off or lost in the rush to get the thing approved.
By the time the matter reached the governor's office late in the day of May 31, five top administration officials had signed their names to a "governor's action request" seeking approval for the deal. The directors of the Departments of General Service, Finance, and Information Technology, along with the secretary of the State and Consumer Services Agency and the director of Planning and Research, were unanimous in recommending the deal.
Barry Keene, the since-deposed director of General Services, hand-carried the document from office to office, gathering the signatures. Keene and Aileen Adams, the agency secretary, left repeated messages for Susan Kennedy, the governor's deputy chief of staff, frantically asking Kennedy to sign the request so they could execute the contract that day.
Why the hurry? Oracle wanted to book the contract as an asset on a financial report to Wall Street for a fiscal period ending that day. If the deal wasn't signed by the close of business, the company said, the great terms the government was getting would be pulled from the table.
Kennedy, testifying Tuesday before a legislative committee investigating the contract, said she has a "rule of thumb" in her office to avoid making dumb decisions in haste. "If someone says it has to be done right away, the answer is no," Kennedy said. But, she added, "There are exceptions."
There were also exceptions, she said, to the governor's rule against sole-source contracts, deals that don't go out for competitive bidding. Kennedy knew that this contract was one of those. But she signed off on it anyway, she said, because everyone she relied on for advice told her it was a no-brainer. It would, they said, allow the state to save $100 million by buying in bulk the same computer database programs that the government would be buying anyway in dribs and drabs, at much higher prices.
An audit has since concluded that the contract is likely to cost the state $41 million more than if it never existed at all. The estimates of savings, it turns out, were produced by Oracle and a middleman -- Logicon -- and were based on bad numbers and faulty assumptions. Logicon had a financial stake in the deal that might have eventually netted the firm $28 million. But its calculations were accepted without question by state officials and passed up the chain of command as if they had been verified.
A survey of state agencies done by the Department of Information Technology found that hardly anyone used or needed the computer programs the state was going to buy. But that information wasn't included in the four-page background briefing forwarded to Kennedy.
Kennedy rebuffed the suggestion of most of the committee's Republicans and at least one Democrat that the contract was greased from the start, that it could not have risen up as the brainchild of some low-level techy and moved through the system like a whirlwind.
"Who masterminded the deal?" pleaded Sen. Jackie Speier, D-Hillsborough.
"I'm not sure," Kennedy replied.
She did say that she never heard anyone mention campaign contributions in connection to the contract, nor did she have a conversation with the governor's campaign advisers before approving the deal. Kennedy said she never discussed it with Davis until much later when, in the face of the independent audit, the whole thing began to unravel.
Other Davis staffers, in a further attempt to distance the governor from this mess, have said that Larry Ellison, the billionaire CEO of California-based Oracle Corp., called the governor twice while the contract was pending, but neither Davis nor anyone else on his senior staff returned the call.
Kennedy said she didn't know the details but wasn't surprised. A lot of CEOs call the governor's office, she said. Sometimes messages get lost, or people are simply too busy to respond.
"It happens," she said.
Incompetence, in other words. Not corruption.
sacbee.com
I vote for both. Of course, the mainstream democrats will say, it is a conspiracy. lol. |
