This year Governor Ridge has continued to use the awarding of bond contracts as a political fund-raising tool. All law firms that received bond counsel work in 1997 from the Commonwealth and its major bond issuing agencies have close political ties to the Ridge Administration.
When the Commonwealth needs to borrow money it often issues bonds. The Commonwealth must contract with a number of bond professionals such as bond counsel, financial advisors and underwriters. The Governor, along with the Auditor General, State Treasurer and some legislative leaders determine who gets most of these bond contracts. The bulk of these contracts are presently awarded on a no-bid basis to firms who have made substantial political contributions.
The most egregious example of "pay to play" this year involved the law firm of Blank, Rome, Comisky and McCauley. Blank, Rome received over $213,000 in no-bid bond counsel fees from the Pennsylvania Housing Finance Agency this year and over $800,000 in no-bid bond counsel fees over the past three years. Blank, Rome was selected to do this work by the Governor's General Counsel, Paul Tufano who just happens to be a former member of Blank, Rome. David Girard deCarlo, a current partner in Blank, Rome was influential in Tufano's appointment. Girard deCarlo coincidentally was Ridge's 1994 campaign treasurer and chairman of the Ridge Transition Team. Over the past three years Girard deCarlo and Blank, Rome contributed over $200,000 to Ridge's campaign fund. This is nothing less than a taxpayer subsidized political payback.
In fact, all five law firms that received bond counsel work fromthe Commonwealth, the Pennsylvania Higher Education Assistance Agency, the Pennsylvania Housing Finance Agency, and the Pennsylvania Turnpike Commission this year had a firm member who was also on the Board of Directors of Ridge's Governor's Club. The Governor's Club is a fund-raising device of the Ridge campaign whose board membership requires a pledge of $50,000 in contributions over a four-year period.
The five firms that received no-bid bond counsel contracts in 1997 and their Governor's Club members are: Blank, Rome, Comisky and McCauley - David Girard deCarlo; Ballard Spahr - Thomas J. Ellis; Saul, Ewing, Remick and Saul - Timothy J. Carson; Buchannan, Ingersoll - Daniel Beren; and Cohen and Grigsby - Evans Rose.
Admittedly, these firms are qualified and probably would get bond counsel work if it were competitively bid. However, competitive bidding would force these firms to work for a lower price. More importantly, competitive bidding would remove the incentive of these firms to fund political campaigns in order to get bond counsel work.
In August of this year, the American Bar Association condemned the practice of "pay to play". In June, SEC Chairman Arthur Levitt called for a state ban on contributions by bond counsel lawyers which he called "commercial bribery".
The Governor, along with some legislative leaders and other elected officials, can use "pay to play" to raise large sums of money for their campaign war chests. This money allows these officials to make political contributions to candidates for judicial, legislative, municipal and other offices, thus consolidating their political power. It also makes these officials difficult to beat at the polls. A clear example is the upcoming 1998 gubernatorial election. Ridge has amassed an intimidating campaign war chest, much of it from the recipients of state contracts. This sizeable war chest has made it difficult to attract an opponent to run against him.
"Pay to play" also costs taxpayers money. Competitive bidding will drive down the cost of bond services. Maryland, which competitively bids its bond work, pays substantially less in fees than Pennsylvania. For example, in March of 1996 Maryland issued $175,000,000 in general obligation bonds. Maryland paid bond counsel fees of only $7,000. Pennsylvania would have paid $33,750 in bond counsel fees for a comparable issue. Maryland's competitively bid bonds have a AAA (highest) rating.
Other states including New Jersey and Florida, competitively bid their bond work and Pennsylvania currently bids for other professional services such as medical, dental and engineering. There is no substantive reason for Pennsylvania not to competitively bid its bond work.
I have introduced legislation, House Bill 1296, which would require the Commonwealth, its agencies and commissions to competitively bid certain bond service contracts. However, these bond contracts can now be competitively bid without the passage of any legislation. The Governor should direct that this be done immediately. (For more information visit my website at:
State Representative Greg Vitali (D/Delaware) serves on the Pennsylvania House State Government Committee which considers state government reform issues. In 1996, he received the Common Cause/Pennsylvania Champion of Good Government award.