Controller Finds Flawed Procurement Process & Official Conflicts of Interest, But Won't Hold Up $29 Million Voting Machines Purchase

By Ralph Cipriano
for BigTrial.net

City Controller Rebecca Rhynhart has concluded that the procurement process that led to the purchase of $29 million in new voting machines for Philadelphia was flawed, slanted to favor the winning vendor, and marred by official conflicts of interest.

But because the flaws were the fault of the city, Rhynhart says, she has "no legal justification to hold up this payment." So last week, the controller approved the first $7 million payment by the city to ES&S of Omaha, Nebraska, maker of the ExpressVoteXL. Rhynhart added that she will not block any remaining payments to the vendor on the $29 million deal.

"I'm really frustrated at this point," she said at the conclusion of a press conference today to announce the findings of a seven-month investigation into the purchase of the new voting machines, a deal that she had repeatedly threatened to block payment on.

"I'm frustrated with a process that wasn't done well," she said about the way the city purchased its new voting machines.

Today's report from the controller amounts to another defeat for the proponents of good government, and another victory for "corrupt and contented" Philadelphia.

In purchasing new voting machines, the city was supposed to be transparent, and avoid "favoritism and ethical misconduct," the controller said. But "this process did the opposite -- it was opaque, showed favoritism toward one vendor, and raised conflict of interest concerns."

In addition, members of the committee who reviewed the bids told the controller's investigators that they felt rushed and pressured by the city commissioners to award the contract to ES&S. During the procurement process, the identity of the officials who reviewed bids were not disclosed, and the officials were required to sign confidentiality agreements.

It was a process influenced by outside money. The controller's investigation found that ES&S spent more than $425,000 since 2014 on lobbying expenses related to Philadelphia, including $27,856 in expenses related to City Commissioner Al Schmidt.

Schmidt and Commissioner Lisa Deeley voted in favor of awarding the contract to ES&S. In Rhynhart's opinion, the two commissioners should have recused themselves from voting on the machines purchase because of the appearance of a conflict of interest.

That's because the controller found that ES&S had "engaged with city commissioners as early as 2013 regarding the procurement of a new voting system." That same year Schmidt flew out to Omaha to visit ES&S. Schmidt claimed he paid for the trip but was unable to produce any records to support his claim, the controller said.

Schmidt, who was interviewed by the controller's investigators after he was hit with a subpoena, "could not recall any details regarding the trip, including who he talked to, who he met with, or who arranged the trip," the controller wrote.

ES&S was the only vendor Schmidt visited. No other commissioner visited any other vendor. When it came time to view voting machines in the field, the only visits made by the commissioners were to  jurisdictions that purchased ES&S machines.

The year before they voted to buy the new machines, Commissioners Schmidt and Deeley took undisclosed campaign contributions from ES&S lobbyists. The controller also found that before he had approved the purchase of new voting machines, Schmidt had been the recipient of "direct communications with ES&S's lobbyists."

Another problem for Commissioners Schmidt and Deeley: as part of the procurement process, they signed confidentiality and conflict of interest forms agreeing not to "take official action including but not limited to participation in the proposal review and selection process, that impacts [his] financial interests."

If any relationship "exists with an applicant who submitted a response to this request for proposals," according to the forms signed by Schmidt and Deeley, the two commissioners were supposed to disclose the relationship and disqualify themselves from reviewing and evaluating any proposals.

Instead, the two commissioners disclosed nothing and voted in favor of buying ES&S's new machines, the controller said.

Previously, the controller found that ES&S did not disclose its use of lobbyists in dealing with Philadelphia, nor contributions by those lobbyists to Commissioners Schmidt and Deeley. Because of those infractions, ES&S paid the city a fine of $2.9 million, the largest in the city's history.

Rhynhart reported the violations to the city law department, which determined that the infractions were serious enough to void the contract with ES&S. But in a letter to the Board of Elections, the city's Procurement Commissioner, Monique Nesmith-Joyner, declared that as far as the purchase of new voting machines was concerned, the train had already left the station. And it was too late to turn back.

"As of today, ES&S has delivered, and the city has accepted, over 3,200 voting machines," Nesmith-Joyner wrote last month. At present, the city owes ES&S more than $18 million, and has at least one outstanding invoice of $7.1 million. Further, she wrote, "In anticipation of accepting these machines, the city has entered into a one-year lease for a [climate controlled] warehouse facility for $777,000, and has spent over $87,000 to rent and purchase vehicles to transport the machines between city facilities."

The city also has spent an additional $1.5 million with an unnamed consultant to "provide project management guidance on this roll-out," Nesmith-Joyner wrote. "To date, there has been over $20 million of direct and indirect costs incurred."

"Lastly, restarting the procurement process at this time would make it impossible to acquire and roll-out new machines, schedule public demonstrations, and train election workers by the November 2019 election and unlikely to do so in time for the May 2020 presidential primary election," Nesmith-Joyner wrote. "Consequently, the city would be at risk of failing to comply with the Commonwealth's mandate to have voting machines with a voter-verifiable paper ballot in place for 2020."

After she released her preliminary findings, the controller made a personal appeal to the city commissioners, asking them to delay their vote until her investigation was finished.

But the Elections Board decided it couldn't wait for any further revelations.

"I do not believe that this process should be overturned," declared Judge Giovanni Campbell, one of two elections commissioners appointed to replace Schmidt and Deeley, who were running for reelection after taking money from ES&S lobbyists.

"My vote is to maintain the contract," agreed Judge Vincent Furlong, the other appointed elections commissioner.

That's what passes for democracy in Philadelphia.

So at yesterday's press conference, Rhynhart said she has been reduced to passing on the results of her investigation detailing the ethical lapses of Schmidt and Deeley to appropriate "local, state and federal" authorities who often collaborate with her office.

She declined to elaborate which agencies she was talking about.