BY GREGORY A. HALL
The Cincinnati Enquirer
COVINGTON -- An attorney for Corporex Cos. says a new state attorney general's opinion vindicates the company and the actions of its chairman in a Kenton County bidding controversy.
"It shows (the county's) lawsuit is totally frivolous and without any merit whatsoever," said Corporex attorney Joseph Trauth.
The county is suing Corporex and Chairman Bill Butler to recoup an $850,000 settlement paid to the two losing bidders -- Wessels Construction and Development Corp. and Carroll Properties -- over a 1996 competition for courthouse and parking garage construction contracts worth $35.6 million.
The county also is seeking more than $700,000 in other damages and an unspecified amount as punishment for Mr. Butler's actions, which the county says constituted manipulating the process to win the contracts.
Mark Arnzen, a lawyer for the county, takes an opposite view of the attorney general's opinion, which spelled out when bids may be made public in both traditional sealed bidding and competitive negotiation. "I don't think this speaks to the issue of our case," he said.
The opinion was sought by State Rep. Bob Damron, D-Nicholasville, who heads a capital projects and bond oversight committee. He asked whether a public agency could start a sealed bidding process, reject the bids but keep them private and then start competitive negotiation.
Corporex and Mr. Butler deny any wrongdoing and place blame on the county for failing to follow its own rules.
The main event in the county's case against Corporex is Mr. Butler's meeting at the home of then-Judge-executive Clyde Middleton, the same day bids were presented April 2, 1996. The developer was able to see competitors' bids and later copy them, according to testimony so far.
Corporex and Mr. Butler said there was nothing improper about the meeting because, they maintain, the process was sealed bidding, and therefore, the bids were public records available to anyone. Under sealed bidding, proposals are opened, the lowest and best bid wins and all the information becomes available to the public, according to state law and the county's code.
The county maintains the process used was competitive negotiation, which its lawyers say allows a public agency to negotiate with several bidders without releasing any information until a contract is signed.
Selected details, including base prices, were released at the time the bids were opened in 1996, something County Attorney Garry Edmondson has since admitted violated regulations for the process.
Mr. Edmondson initially said the Kenton Fiscal Court used a hybrid of both processes -- something not provided for under state procurement code or the Kenton County Administrative Code -- in awarding the contracts to Corporex.
Mr. Arnzen said the release of some information in the proposals does not make the remainder of them inspectable public records. "The information he released doesn't convert (the process) to a competitive sealed bid," Mr. Arnzen said. "And I think the statutes entitle him to release that information, and I think he did the proper thing."
Mr. Trauth said the attorney general's opinion, written by assistant attorney general Ross Carter, shows there was nothing wrong with the meeting between Mr. Butler and Mr. Middleton."This is the exact issue in our case," he said.
Mr. Middleton resigned at the time of the settlement, admitting he had to accept responsibility for what happened.
"The competitive sealed bidding process may not be transformed midstream into a competitive negotiation process," Mr. Carter wrote. "On the contrary, the competitive sealed bidding process ends when the bids are opened. The procuring agency may then, if it chooses, invoke a new process of competitive negotiation, but that does not constitute a continuation of the competitive sealed bidding process. The processes do not overlap; they are successive, not simultaneous."
"That totally debunks the theory of the county attorney that there was some sort of a hybrid process," Mr. Trauth said.
The opinion further stated that the attorney general's office could find no interpretation of the state procurement code, which closely resembles the Kenton County code, under which sealed bids remain secret if the agency later decides to begin competitive negotiations.
A spokeswoman for the attorney general's office said no explanations are given on opinions.
Mr. Arnzen said the county engaged only in competitive negotiations, which the opinion said allows some information to be withheld. "Documents generated during the competitive negotiation process may be held in confidence as the statutes and regulation provide, and documents generated during the competitive sealed bidding process must be disclosed as the statute provides," the opinion states.
Mr. Arnzen said that's what the county did.
Kenton County also is suing its former insurer, the Kentucky Association of Counties' All Lines Fund, for not covering the settlement with the losing bidders.
