State announces it’ll pay vendors $3.4 million in IEN settlement
Gov. Butch Otter and legislative leaders today announced a $3.4 million settlement with Education Networks of America and CenturyLink over the now-defunct Idaho Education Network, a broadband network that sought to link all the state’s high schools. In return for the state payment, the firms agreed to drop all claims against the state and its agencies, including Idaho school districts; the firms claimed they were owed $11 million by the state and nearly $2 million from school districts for unpaid bills.
“It was very important for the state of Idaho to get this issue taken care of so we can stay focused on our efforts to build and maintain the kind of school system that our students, parents, communities and employers need,” House Speaker Scott Bedke said in a statement. “We feel like this settlement is in the best interest of the state’s reputation, our school districts and everyone who benefits from the Idaho Education Network.”
The $60 million contract for the IEN went to two politically connected vendors who had been big givers to Otter's campaigns. It was a lawsuit from another firm, Syringa Networks, which was cut out of the project when the state awarded it, that got the contract declared illegal. Since then, Idaho school districts have contracted for their own broadband services at millions in savings.
After the two vendors sued the state in federal court last year seeking payment of unpaid bills from the IEN, the state filed a counter-suit in state court against the vendors, seeking a judgment from the court that the state didn’t have to pay up – because the contract was illegal and is void – and actually is owed back all payments it made under the now-void contract.
The state’s lawsuit quoted a 1916 Idaho Supreme Court case that stated “there is a strong public policy against the enforcement of governmental contracts that violate competitive bidding laws,” and that to allow a vendor to be paid for work done under an illegally issued contract “would emasculate this public policy.”
The settlement funds will come out of a little-known account called the Legislative Legal Defense Fund, the AP reports. Legislative leaders put $8 million the fund last year in anticipation of a possible broadband settlement.
Otter called today’s settlement “welcome progress.”
Senate President Pro-Tem Brent Hill, R-Rexburg, said, “The capabilities developed through the IEN remain a valuable tool for improving education throughout Idaho. This isn’t about the quality or importance of the product; it’s about the importance of our procurement process and our responsibility to ensure that it meets not only the letter of the law but the perception of propriety.”
