Philadelphia officials could throw out the newly minted $29 million city contract for a new voting system over similar issues that led to the city’s largest Black-owned company losing the most lucrative contract for a minority-owned business.
Election System & Software (ES&S) violated the city’s anti-pay-to-play laws in the run up to a vote by the city commissioners to award the contract to the Omaha-based company in February, according to City Controller Rebecca Rhynhart.
Rhynhart laid out her findings in a letter this week to Common Pleas Court Judge Giovanni Campbell, chairman of the commission. Rhynhart wrote the company’s violations warranted the contact was voidable, citing a determination from the city’s Law Department.
“Our initial findings show violations of the procurement process and warrant serious pause,” she wrote.
The violations by ES&S were comparable to the issues that led the Kenney administration to disqualify the minority-owned company U.S. Facilities from bidding on a $17 million contract this year.
In a hint that more is to come, Rhynhart called on city commissioners in her letter to hold off voting on whether to void or let the contract stand, saying that “ensuring the integrity of the City’s procurement system and that a fair process for selecting new voting technology happened is of the utmost importance.”
The city commissioners will hold a special meeting at 11 a.m. Thursday in Room 246 in City Hall over the voting machine issue.
Nick Custodio, spokesperson for the Board of Elections, declined to comment on Rhynhart’s letter until after Thursday’s meeting.
The city’s anti-pay-to-play law disqualifies bidders from competing on contracts if their violations are discovered before a contact is awarded, as in the case of U.S. Facilities.
However, if the contract has already been awarded when the violations are discovered, the city “has the discretion to void the contract or maintain it,” according to a letter City Solicitor Marcel Pratt sent to the city commissioners this week.
Pratt wrote that the “decision rests with the Board of Elections because the Board has the responsibility and sole authority to select the voting machines that are used for elections in Philadelphia.”
Mike Dunn, a spokesman for Mayor Jim Kenney, declined to comment on the new developments until after the city commissioners vote on the issue.
Katina Granger, a spokeswoman for ES&S, said in an email that the violations were due to a “mistaken interpretation of Philadelphia’s contracting provisions” and were “immediately addressed.”
“We appreciate the city’s thorough review of applications and are eager to continue with implementation of the City’s new voting equipment that will be in place for the November 2019 election,” Granger said.
Mustafa Rashed, a spokesman for U.S. Facilities, declined to comment. The company is a subsidiary of Philadelphia-based PRWT Services.
The city will slap ES&S with a $2.9 million fine over the violations, or 10% percent of the contract. ES&S also is on the hook for the penalty whether the company retains or loses the contact, according to Pratt’s letter.
City Commissioner Chairwoman Lisa Deeley, a Democrat, and City Commissioner Al Schmidt, a Republican, voted to award ES&S the contract to provide the new voting system, and KNOWiNK LLC to provide electronic poll books. Anthony Clark, a Democrat, did not cast a vote.
Both Deeley and Schmidt stepped down as city commissioners while they run for re-election. Clark is not running for another term and remains a city commissioner.
Campbell and Vincent Furlong, another judge, were appointed as city commissioners. Rhynhart sent her letter to both Campbell and Furlong, as well as Kenney, City Council President Darrell Clarke and others.
ES&S failed to reveal in its mandatory contributions disclosure form that the company used a lobbyist and engaged in lobbying activities in 2017 and 2018, according to Rhynhart’s findings.
The lobbying activities included direct communication with Schmidt.
ES&S did not disclose campaign contributions by consultants to Deeley and Schmidt.
Registered lobbying firms Duane Morris and Triad Strategies, who lobbied for ES&S, contributed $1,000 and $250, respectively, to a political action committee supporting Schmidt, Rhynhart found.
A $500 contribution by Triad Strategies also went undisclosed to a political action committee supporting Deeley.
In her letter, Rhynhart specifically mentioned the disqualification of U.S. Facilities over failing to disclose political campaign contributions totaling less than $500.
"The Kenney administration, at the time, stated that the value of the contribution is not relevant and that the City had little discretion to overlook these kinds of violations," she wrote.
Pratt, in his letter, said ES&S would not have been disqualified from bidding on the contract if the company had made the disclosures on its application.
The city continues to withhold payment to ES&S while Rhynhart’s investigation continues. ES&S has already delivered 3,200 ExpressVote XL voting machines to the city in anticipation of using the new system in the November election.
Gov. Tom Wolf mandated all state counties select a new, certified voting machine vendor by the end of this year.
The new voting systems must be put into place by the 2020 general election to comply with the governor’s order to provide a paper record of votes cast. Pennsylvania was one of 21 states targeted ahead of the 2016 election by Russian government operatives.