When a federal grand jury indicted Nashville businessman Al Ganier on two counts of obstruction of justice last week, most people probably figured another white-collar crook was getting his due. That's because for the past two years, Channel 5 investigative reporter Phil Williams has been airing stories about friends of former Gov. Don Sundquist, including Ganier, who allegedly used their high-profile political connections to make tidy personal profits. Other local television and print media have understandably jumped on the story about the Sundquist "pals" and their "underlings."
It makes for good copy. There's John Stamps, the Monteagle businessman and friend of Sundquist who founded a company called Workforce Strategists, which landed an exclusive state contract only days after it had been incorporated. Former Labor Department official Joanna Ediger was convicted in federal court last May of helping rig that contract, and U.S. attorneys indicated their corruption investigation would continue up the chain.
Ganier seems as likely a suspect as any because his state business dealings parallel those of Stamps. A close friend of the governor, and of Stamps, he founded a company, now known as Education Networks of America (ENA), in 1996 that over a six-year period won three contracts to build and maintain a computer network for all K-12 schools in Tennessee. The company's first contract was "sole source," meaning it wasn't open to other bidders. And ENA's bids on subsequent contracts were higher than its next closest competitors, but they got the contracts anyway.
At first glance, Ganier's affairs look pretty shadywhich is why the Channel 5 reports made such a splash when they first aired in 2002. (Williams' stories actually prompted the federal investigation.) But sources close to the contracting process at the time say there are important facts not being aired in the court of public opinion.
Commissioner of Education Jane Walters first contacted Ganier in 1996 as the Sundquist administration developed lofty plans to connect all public schools to the Internet, a project known as ConnecTEN. An official involved with the ConnecTEN contract process tells the Scene that someone in the governor's office did in fact recommend Ganier to state education officials. Walters and ConnecTEN project director Jackie Shrago met with Ganier and decided that his experience building easy-to-use computer networks would be valuable as they sought to assemble a team of experts to accomplish their unprecedented task. But it wasn't just his expertise: "What instigated the relationship was his willingness to work with no pay," says the official, noting that Ganier volunteered his services for the project's first several months.
Then, later in 1996, Ganier's new company was granted the $120,000 sole-source contract to design and manage the "build-out" of the state's network. The company certainly got its foot in the door because of that period of volunteer work, but the official who spoke to the Scene insists Ganier's firm wouldn't have been hired had it not been highly qualified. "We're talking about a period of time when the technology was so brand-new that it was hard to find anybody who could navigate this stuff," the official says. "We were doing something that no one had done before." Besides, the official notes, citing examples from the private and public sector, Ganier "wasn't the only one" who donated time and then got a sole-source consulting contract on the project. He was just the only one who was a friend of the governor.
John Morgan, state comptroller, says someone with hard-to-find knowledge can be valuable in the early stages of a project. "It's not unusual for agencies to contract on a sole source basis with individuals who are uniquely qualified to work in particular areas," he says. "Many of the state's sole- source contracts are awarded on that basis." But he notes that under Gov. Bredesen's more stringent ethics policy, there have been fewer sole-source contracts awarded.
Ganier maintains his original work saved the state nearly $20 million. He says the state expected to pay $24 million to set up the network of 10,000 computers and that he did it for $7 million, $3 million of which he raised from private donors.
Later, in 1997, an Arizona-based company called ISIS 2000 was granted a sole-source contract to run the new network for one year. Then, in 1998, ENA beat them out and won a three-and-a-half-year contract to run it. ISIS 2000 protested, arguing that its bid was lower, but state constitutional officers and the Federal Communications Commission ruled that the ISIS 2000 bid was flawed and thus more expensive. ENA got the contract.
Then, in 2002, a five-year, hundred-million-dollar contract containing federal funds was up for grabs. ENA won the contract again, even though its bid on paper was a good deal higher than the second-place bidder, Qwest Communications. That's because Qwest filled out the bid form wrong, either accidentally or deliberately, to lower its bid. The state comptroller reviewed the deal and ruled that ENA rightfully won the contract.
Sources tell the Scene that ENA has done an exemplary job running the state computer network. The company itself boasts that it has met service levels spelled out in its contract for 76 straight months. It's doubtful friends in high places can make you run a good Internet company.
Moreover, the Bredesen administrationwhich has trumpeted its rigorous ethics policieshas reviewed ENA's contracts top to bottom and determined that they were awarded legitimately. In a letter sent to federal officials last month, a state lawyer certified that "the State through its current Governor and current Administration, and the current Commissioner of Education, has reviewed the selection of ENA and reaffirms that it was the best-evaluated bidder." This from an administration that would sooner hang Ganier out to dry than have him tarnish its reputation.
But what of the joint state and federal investigation? One source who was interviewed by the law enforcement task force in recent weeks says prosecutors seemed to be "fishing" for anything they could find on Ganier and the process through which ENA won its contracts. After two-and-a-half years and tens of thousands of pages of seized documents, the Ganier investigation has so far produced two charges of deleting computer files.
"We're not fishing for anything; we're conducting a grand jury investigation," says assistant U.S. attorney Zach Fardon, who is best known for uncovering corruption in Illinois Gov. George Ryan's administration. "We follow the facts, and the chips fall where they may based on those facts."
Good thing, because so far they haven't caught much. That's not to say that John Stamps, a onetime lobbyist for ENA, isn't currently cutting a deal to produce damning evidence about Ganier's business practices, or that Ganier, who hasn't been interviewed by authorities yet, won't implicate Stamps in high-level crimes to save himself. But it is to say that this investigation has been simplified and made for TVand literally by itdown to the date Ganier was indicted: Nov. 4, the first day of the November sweeps ratings period, when Phil Williams and others reported the development. (Fardon strongly denies timing the indictment intentionally.)
The full story, in other words, is more complicatedand less sexy. It's mostly a lot of mundane facts about state contracting processes and the sausage factory in which government business is done. There may be corruption, back room deals and a smoking gun or two, but it doesn't look like the feds have found them yet.
As they say on TV, stay tuned.
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