BOISE - Leery lawmakers grilled Otter Administration officials Thursday on how they plan to resolve the legal and financial mess surrounding the Idaho Education Network, the statewide broadband network linking Idaho high schools, and didn’t like the answers they got.
Former Senate Education Chairman John Goedde, now an aide to Otter working on the IEN problem, said, “We have not paid our vendors since September. We have a moral obligation to pay them. We have to find a way.”
Rep. John Gannon, D-Boise, countered, “I was concerned about your statement that there’s a moral obligation to pay, because this is the public’s money, and we have to deal with legal obligations.”
A judge in November declared the state’s $60 million contract with Education Networks of America and Century Link for the IEN illegal and void. An unsuccessful bidder, Syringa Networks, sued, and the court found that the state illegally altered the contract after it was awarded to cut Syringa out of the work, and give its portion of the work instead to Century Link. State Department of Administration Director Teresa Luna said that’s why the state’s stopped paying.
“There is a state statute that says that you may not pay against invalid contracts,” Luna told the Legislature’s joint budget committee. “We’ve been working to clarify that with the judge,” she said. “We are concerned about paying our vendors on an invalid contract. … It’s been a Catch-22. The vendors are antsy, of course, we want to pay them, but we also have a concern about the statutes as written, as to whether those contracts are actually invalid today.”
Goedde said the Otter administration wants lawmakers to authorize $1.6 million right away to keep the network going for the rest of the current year, “with intent language that would allow us to pay our vendors for these services that they’ve rendered to this state.” He said the vendors are now threatening to shut off the service Feb. 22 if they’re not paid. “I’d hate to see the service turned off to our students,” Goedde said.
The Otter Administration also is seeking $10.5 million in state taxpayer for the IEN next year. That’s the full cost, and assumes that federal “e-rate” funds that were supposed to cover three-quarters of the cost of the service won’t be forthcoming. The feds stopped the payments in March of 2013 amid concerns about the legal status of the contract.
“Should e-rate funding be realized, there would be an opportunity to reduce that,” Goedde told the Joint Finance-Appropriations Committee. “However, the very best-case timeline, we won’t know until November. So the recommendation is to fund the IEN for a full year with general funds.”
Goedde said the administration’s plan is to get a “bridge contractor” to run the service for a year, and is seeking bidders for a new one-year contract to provide exactly the same service the state contracted for in the voided contract. Lawmakers questioned that.
Senate Education Chairman Dean Mortimer, R-Idaho Falls, said that causes him “unease,” and Senate Finance Chairman Dean Cameron, R-Rupert, said, “I think we all recognize that there’s a certain ambience around the current contract, and now issuing an RFP that is identical, now carries that same ambience and lack of confidence.” He said, “Help us with the decision as to why we should go down that road. … Why shouldn’t we be concerned that it will be equally as tainted?”
Luna said an identical service “was an appropriate vehicle moving forward for the short term.” The longer-term contract could be different, she said.
Goedde said the one-year “bridge” contract would “address the intermediate challenge that we’ve got,” saying, it has to be signed by March 26 to give the bidder a shot at possibly qualifying for e-rate funds. Longer term, he said, the contract would be re-bid, and could change in nature.
“I see this as the real opportunity for the state of Idaho,” Goedde said. “We’ve asked potential vendors to provide their vision of what the Idaho Education Network might look like in the future. And think about this, it was put together seven years ago, and technology has changed tremendously in that period of time. When we first looked at the IEN, teachers didn’t allow smartphones in the their classrooms, and iPads were not prevalent. So I think we’re going to see from our vendors something totally different than what we’ve got right now.”
Adding to the controversy about the IEN, ENA and Century Link both are major campaign donors to Gov. Butch Otter’s re-election campaigns; ENA has donated $18,250 to Otter’s campaigns, including $5,000 in September; and Century Link, formerly Qwest Communications, has donated $35,000 since 2006. The original contract award was engineered by former state Department of Administration Director Mike Gwartney, Otter’s best friend, who worked for a $1-a-year salary. He’s since been replaced by Luna.
After the stormy budget hearing, which ran 40 minutes past its scheduled time, causing another budget hearing for the state Capitol Commission to be delayed a day, Otter announced he’s forming a new 22-member working group, headed by Goedde and including 11 lawmakers, to figure out a “path forward” on the IEN. The group held its first meeting late Thursday afternoon; it went behind closed doors for an executive session to discuss legal issues and an open bid.
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