Court system didn't follow contracting rules in hiring lawyer

bmusgrave@herald-leader.comSeptember 10, 2009 

The Kentucky court system failed to follow state contracting rules when it hired a Fort Mitchell lawyer to fix problems with its courthouse construction program.

William Geisen was hired in March by Supreme Court Chief Justice John Minton Jr. to help the state courts untangle a thorny problem. The courts had allowed general contractors to routinely under-insure their work, creating financial risk for taxpayers. The Herald-Leader and national bonding experts had raised questions about the practice in February.

On Tuesday, several state legislators questioned why Geisen's contract, which was formalized in July and could cost as much as $125,000 a year, was never put out for bid and why the Government Contracts Review Committee was being asked to approve the contract after it had already been awarded.

Geisen is being paid $250 an hour, well above the limit of $125 an hour that the committee has set for legal services.

Still, an attempt to halt the contract failed in the committee on Tuesday.

Rep. Brent Yonts, D-Greenville, said after the committee meeting Tuesday that he understands that Minton and the Administrative Office of the Courts were under pressure to rectify a vexing legal problem. Nonetheless, contracting procedures clearly weren't followed.

"The only way I can see to correct this is for the AOC to cancel the contract and put it out to bid," Yonts said.

The AOC, in a written statement, rejected that idea and said the contract will go forward.

"In the interest of being transparent and accountable, the Administrative Office of the Courts submits its contracts for review by the legislature," said Leigh Anne Hiatt. "The committee approved the contract, and the AOC considers this matter to be settled."

Laurie Dudgeon, the newly appointed executive director of the AOC, admitted to the committee Tuesday that the contract for legal services should have been competitively bid and that the contract should have been submitted to the committee before July 1, when it began.

Under the state's procurement rules, any personal-services contract should be bid, according to the Finance and Administration Cabinet, which oversees contracts and purchasing.

"We should have solicited this through the bid process," Dudgeon said.

However, Hiatt said Wednesday that the courts thought they could bypass the bidding process because it was an emergency contract. Emergency or single-source contracts — which can be done by only one vendor — are exceptions to the bidding rules, according to staff at the Finance and Administration Cabinet.

Although Geisen began working for the AOC in March, his contract wasn't formalized until July 1, when it was clear that problems with the state's courthouse construction program were more complex than the court first thought, Dudgeon said Tuesday.

"When we first retained Geisen, we had no idea how big this was going to be," Dudgeon said. "We thought this was going to be a quick review and we were going to move on."

The chief architect of the courthouse program — Garlan VanHook — resigned in February. VanHook's brother worked for Codell Construction, which has built or is building 38 of 65 new courthouses.

Geisen helped the AOC and Codell come to a settlement in August on how much insurance Codell should provide on its construction work.

Geisen also is reviewing all administrative procedures regarding capital construction, Dudgeon said in an Aug. 25 letter to the legislative committee. The contract is for $125,000 a year, but the AOC estimates it probably will cost between $75,000 and $100,000.

Dudgeon said she thinks Geisen's hourly rate of $250 an hour is justified because Geisen has expertise in highly specialized and complex litigation. In the Aug. 25 letter, she said AOC staff had contacted several lawyers in March about representing the courts in the dispute over bonding requirements, and Geisen was the only one who did not have a potential conflict of interest.

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