Lawmakers file lawsuit against Riley, finance department, Paragon

A legislative committee filed a lawsuit Thursday seeking to stop the administration of Gov. Bob Riley from moving forward with a multi-million-dollar consulting contract.
State Rep. Alvin Holmes, chairman of the legislative contract review committee, and the committee filed the complaint Thursday in Montgomery Circuit Court against Riley, Acting Finance Director Bill Newton, the state finance department, and officials with Paragon Source LLC, the consulting company.
Todd Stacy, press secretary for Riley, said the office is still reviewing the case, "but this lawsuit is a total crock."
"This is nothing but political grandstanding by Alvin Holmes and other Democrats to divert attention away from their shameful record on corruption," he said. "Democrats are going to jail left and right on corruption convictions, so they want to change the subject."
Holmes has said he fought the administration of Gov. Don Siegelman, a fellow Democrat, on computer contracts so his actions are not political.
The finance department requested an amendment to the contract with Paragon that could take the total up to $12.9 million. The state has already paid more than $5 million to Paragon, and Newton wanted to extend the contract to allow the company to help the state update the computer system used for financial functions such as payroll and purchasing.
Holmes, D-Montgomery, wants a judge to cease all work and payments until there is a hearing, and he wants a judge to declare the contract null and void. The legislator said the panel has never filed a lawsuit over the issue before and he wants a ruling on whether no-bid contracts are legal.
The contract review committee members previously approved a contract for $195 an hour up to $200,000 to hire attorney Tyrone Means of Thomas, Means, Gillis & Seay, P.C., to represent them in handling the contract between Paragon and the finance department. Holmes said they did not go out for bids before hiring Means, but said the committee has never asked for bids or requests for proposals for lawyers or doctors.
The committee also voted this month to issue subpoenas, using that authority for the first time, seeking more information from Paragon and the finance department. Holmes and other Democratic members have said they want more information on who was paid through the contract and what work was performed for the money.
Newton said the committee has received all of the documents the finance department has on Paragon.
The Democrats also contend that Paragon did not have the authority to hire subcontractors without the authority of the state, which the administration disputes.
"Neither party may assign this agreement or delegate any duties hereunder without the prior written consent of the other party," according to the contract. Administration officials have said there was no prior written consent before Paragon hired subcontractors, but said the company has not delegated its duties and has supervised the project.
Holmes also questioned why Paragon received a sole source, no-bid contract while the company has found plenty of subcontractors to perform the work.
The review committee did not vote to file the lawsuit, but they did agree to hire the law firm and Holmes said he talked to the other members before moving forward.
Newton has said Paragon has performed well in helping the state. Other administration officials said overhauling the purchasing portion of the system could save $4 million to $6 million a year.
Holmes and other members of the contract review committee have expressed concerns about Paragon, which lists personal residences as its headquarters and has no Web site or listed phone number, receiving a consulting contract for the remainder of the almost $13 million.
The contract review committee held the contract up for 45 days, the maximum allowed by law, but the panel cannot stop a contract. After the 45 days, Holmes delivered the contract to Riley's office as required by law and asked him not to sign it.
Riley signed the contract Oct. 23, Stacy said. The governor will talk to the media about the contract this morning.
Some people have questioned Holmes hiring Means since the law firm's political action committee gave $500 to his campaign in 2006. The firm also gave more than $5,000 to Riley, one of the defendants, during that election cycle.
Holmes said the committee needed representation in the case, the law firm is reputable, many of the law firms in town have contributed to him in his more than 30 years in the Legislature, and that this is the first time he has recommended the hiring of a particular law firm.
The disagreement between the administration of the Republican governor and Democrats on the contract review committee has been ongoing for about two months.
"This is one of the worst contracts since I have been on the contract review committee," Holmes said.
Riley and Newton sent out a memo this month reminding state officials of the governor's policy that they must seek bids before purchasing items.
"The issue of contracts has gotten a lot of attention lately and this is to remind people of what this administration’s policy is," Jeff Emerson, Riley's communications director, told the Associated Press. He said Riley had not changed his policy.

-- posted by Sebastian Kitchen