Whistle Blower Says Daniels Administration Rigged Bid To Favor John Bales

The IBJ's Cory Schouten has another great story today detailing the lengths the Daniels administration went to in order to create the impression it was conducting a competitive bidding process to award a contract to handle real estate leasing for state agencies when it had already made an advance decision to award the contract to John Bales' Venture Real Estate. The administration could have simply given the contract to Bales without conducting a public bidding process since it was a contract for services. Instead, it had the Department of Administration put out for bid a 20-page request for services to more than 400 potential bidders with a 65-point scoring process for evaluating proposals. According to a whistle blower, Marsha White, a former BMV employee who served on the selection committee, the DOA changed the scoring not once but twice after the selection committee scored the proposals to make Bales' company the winner.

Venture wound up with 50.82 points, according to an IDOA memorandum obtained through a public records request. Next up was Resource Commercial Real Estate, with 49.2 points, followed by NAI Olympia Partners with 47.78 points.

"They changed the values to make Venture win," said Martha White, a member of the selection committeee who at the time handled leasing for the Bureau of Motor Vehicles. "Not until the third try did Venture actually win."

A second member of the selection committee confirmed White's account of what happened to Schouten but wished to remain anonymous for fear of retaliation. The person's fears seem well-founded. White no longer works for the BMV and Bea Tate, the state's former director of leasing, quit her job after she was demoted for tangling with Bales over the manner in which he was handling state real esate leasing deals according to Schouten. Tate told Schouten that Bales bragged about his close relationship with Daniels and how he had his personal cell phone number. She said Daniels appointees distrusted anyone like her who had worked in state government before they arrived. "They wanted to hand it over without any accountability," Tate told Schouten. "Venture got by with everything--they did whatever they wanted to do."

Ironically, the Daniels administration would have avoided a lot of embarrassment had it simply been willing to listen to people like Tate and White. Tate told Schouten the test she applied to every decision made during her 17 years with the state was "whether a deal could embarrass the commissioner or the governor--was thrown out with Bales." Last month, of course, Bales and his business partners were indicted by federal prosecutors in northern Indiana because of the undisclosed ownership interest Bales had in a commercial real estate property in Elkhart for which he brokered a real estate lease on behalf of the state. Schouten reports that the state continued to do business with Bales firm until the FBI started investigating the Elkhart deal despite the "parade of state officials" who had raised questions about Bales' business practices.

Schouten's efforts to obtain public records from the Daniels administration in support of his latest investigative research was met with stonewalling. The administration cited an exemption from the state's public records law for "deliberative documents" that would have confirmed White's claim that DOA changed the scoring for the bids midstream to ensure the contract was awarded to Bales. Nonetheless, he was able to obtain a memorandum written by then-Deputy Commissioner Rob Wynkoop recommending Bales' firm for the contract that suggested a different scoring process was utilized than what had been outlined in the original request for proposals. Whoops.

In an unrelated story, Schouten reports that Daniels' chief of staff, Earle Goode, who formerly ran DOA when the contract was awarded to Bales' firm, purchased a residential lot from Bales in an upscale Indianapolis subdivision on the city's far north side for $450,000. It doesn't appear Goode got any special treatment in the real estate transaction. Bales had acquired the lot from his former business partner, Samuel Smith, two years earlier for $285,000. Goode and his wife had intended to build a home on the lot according to Schouten, but they instead are now trying to sell it for a substantial loss with an asking price of $399,000.