County bid process ‘hijacked’ for political payback, audit firm exec says

Sedgwick County’s longtime auditing firm says the county’s bid board process was manipulated as “Chicago-style” political payback for a partner’s role in contentious zoo negotiations.

County Commission Chairman Jim Howell called the firm’s statements “utterly ridiculous.”

The county staff had recommended to the bid board that Allen, Gibbs and Houlik continue to perform auditing services.

But County Manager Michael Scholes told the bid board last week that he wanted a new firm, BKD, to provide auditing services and to produce a separate report examining the county’s internal financial policies and vulnerability to fraud.

“I didn’t make that clear. For me, BKD is probably the logical choice for both services,” Scholes said during the bid board meeting Thursday.

Bid board members voted 4-0 to contract with BKD shortly after Scholes spoke. BKD had bid $776,009 for auditing services – nearly $91,000 more than Allen, Gibbs and Houlik.

Paul Allen, the chief executive for Allen, Gibbs and Houlik, said Monday that Scholes’ presentation amounted to an order because some bid board members report directly to Scholes.

“If my boss told me ‘Let me make it clear,’ I don’t see that as a suggestion,” Allen said. “In all our years of experience, we’ve never seen a city or county manager instruct a bid board as to the outcome they wanted.”

Scholes said Friday that bid board members were free to vote how they chose and that he wanted to emphasize the value of a “fresh perspective” a new auditor could bring after 15 years of the same auditor.

“I just wanted to make sure the bid board knew … there is always a good contrast,” Scholes said.

Late Monday, the county issued this statement: “The County Manager expressed his opinion as to how he would like to move forward, giving deference to something other than only cost of the contract,” public information officer Kate Flavin wrote in an e-mail. “The Manager’s comments during the meeting were in regards to best practices for organizational auditing and what, in light of recent events is in the best interest of Sedgwick County.”

The county finance department lost more than $566,000 to fraud in October, setting off an investigation that includes the FBI.

‘This is political payback’

Allen said the desire for a new auditor was not in the county’s formal request for proposals.

“At no time were we told that we were disqualified for … criteria that was never stated,” Allen said. “It kind of defeats the purpose of the bid board and the process the county has.”

One of the firm’s vice presidents, Steven Houlik, is the treasurer of the Sedgwick County Zoological Society. The society is in contract negotiations with the county manager’s office.

Allen said Houlik has been in several contentious negotiating meetings with county officials over new agreements for the Sedgwick County Zoo. He suggested that created some “animosity” and was used against the firm.

“We don’t believe that that’s unrelated,” Allen said. “This is political payback.”

“This is just so unusual and so foreign to anything that we’ve observed,” Allen said. “We can’t help but feel the dots connect pretty well.”

‘Connecting dots that don’t exist’

Howell said Allen’s statements “sound like paranoia to me.”

“I think that’s utterly ridiculous,” Howell said. “There’s absolutely no connection whatsoever. They’re connecting dots that don’t exist.

“That’s an unfounded assumption that basically needs to be put to bed,” he said. “They can’t connect everything to everything else.”

Howell said he doesn’t think it’s ideal to use the same auditor year after year.

“This is a business decision. It has nothing to do with anything else,” he said. “I felt like it’s not smart to use the same auditors for long periods of time. … Having a fresh set of eyes on this is preferable.”

Howell said he has nothing negative to say about Allen, Gibbs and Houlik and that he has worked well with zoo board members.

“I don’t know why they’d feel that way,” he said. “Steve Houlik’s a nice guy. I have the greatest respect for him.”

Howell also said he did not feel Scholes was pressuring bid board members on how to vote. He pointed out that one bid board member, County Treasurer Linda Kizzire, is an elected official not appointed by Scholes.

“He (Scholes) just wanted to give them perspective to do their job,” Howell said.

“Don’t read between the lines. He meant exactly what he said, and he said what he meant.”

‘Chicago-style county government’

Allen said he didn’t expect to change the vote on the auditing services contract, which is set to be awarded by commissioners on Wednesday.

“I’m concerned that there’s a pattern that’s starting to unfold,” Allen said.

Allen pointed to an incident last spring when a public relations firm, Bothner and Bradley, was temporarily removed from a county road study after Howell expressed concerns about the firm’s partners. “I personally don’t care for them,” he told The Eagle. The firm was later added back to the project.

“I don’t think that citizens that do business with a county should have to fear the loss of that business simply because they find themselves in conflict with (the county),” Allen said.

“There’s a procedure that will give us a fair and nonpolitical outcome,” he said. “We never dreamed that the purchasing process could be hijacked in this way.”

Allen said he was concerned about the integrity of the county’s bid board and purchasing process moving forward.

“We don’t want a Chicago-style county government,” Allen said. “We don’t want it to be a bunch of ‘Who likes who?’

“This isn’t going to make us popular (with county officials). We get it,” he said. “But I think the truth has a way of tumbling out.”

This story was originally published December 12, 2016 at 8:42 PM with the headline "County bid process ‘hijacked’ for political payback, audit firm exec says."