CSU Fired High-Level Whistleblowers Block and Verellen

Three CSU Chancellor's Office employees, including Joel Block and Paul Verellen, were forced out of their jobs after questioning the way Chancellor Charles Reed hired and paid a high-profile labor consulting firm, reports the San Francisco Chronicle. The CSU hired Georgia consulting firm C. Richard Barnes & Associates, LLC, in a series of no-bid contracts to assist with labor issues including negotiations and arbitrations. The contracts began in November 2005 and run through the end of the year, for a total of about $2.45 million. The contracts far exceed the amount allowed for no-bid contracts.

Paul Verellen called the arrangement a sweetheart contract and has filed a complaint with the Bureau of State Audits. Joel Block says Barnes & Associates were not qualified. Block was fired after contacting a member of the Board of Trustees with his concerns. Verellen and Block both worked in Labor Relations at the Chancellor's Office. CSUEU has dealt with both of them in various contexts, including contract negotiations with Block.

Chancellor Charles Reed says he got tired of all of the labor-relations problems and asked somebody who the very best labor person was, and that led him to Barnes & Associates. The first contract signed with the firm was under the $50,000 cap for contracts awarded without competitive bids. After that, the size of the contracts climbed, but the no-bid approach didn't change:

Six weeks later, on Dec. 29, 2005, the CSU procurement director signed a $496,000 contract for Barnes' next phase. That was followed by a $610,500 contract extension in September 2006 and a $1.3 million extension in April 2007. All were handed to Barnes without competing bids, documents show.

Legal and policy requirements were brushed aside:

Under state law and CSU policy, university officials must produce a written justification prior to issuing a no-bid contract or deciding not to request proposals from potential bidders.

In January 2008, the CSU's chief of procurements acknowledged violating the requirements, and created a retroactive justification for the no-bid contract.

The article notes:

A related CSU policy requires officials to evaluate at least three other vendors and explain why they were rejected before awarding a no-bid contract. The Chronicle review of documents found no record that other vendors had been considered. There is no shortage of such consultants. Professional directories list scores of labor-relations experts with experience in dispute resolution, management representation and higher education.

Payments made under the contract include consulting fees of $4,000-$5,000 per day, first-class travel, valet laundry service, limousine service, and expensive dinners for up to four guests, and entertainment expenses - at times without any notation of who was being entertained or the purported business purpose.

State Senator Leland Yee said All of this undermines the integrity of our government and how dollars should be used efficiently and effectively.

The California Whistleblower Protection Act states The Legislature finds and declares that state employees should be free to report waste, fraud, abuse of authority, violation of law, or threat to public health without fear of retribution. The Legislature further finds and declares that public servants best serve the citizenry when they can be candid and honest without reservation in conducting the people's business.

Links

• Whistle-blowers accuse CSU over contracts (San Francisco Chronicle)
• Bureau of State Audits (BSA)
  • About the California Whistleblower Protection Act (BSA)
  • How to file a complaint (BSA)
  • Laws Governing the Investigative Function (BSA)
• California State University Policy Manual For Contracting & Procurement (CSU)
• CSU Systemwide Human Resources Org Chart dated February 21, 2008 and showing Paul Verellen [PDF] (CSU)
  • Backup copy of CSU Systemwide Human Resources Org Chart dated February 21, 2008 [PDF]

Update

The Chronicle for Higher Education has picked up the story:

• Whistle-Blowers Say California State U. Fired Them for Questioning No-Bid Contracts (Chronicle for Higher Education)