Emails: Legislative staff blocked senator's initial request for controversial contract

A week before state Sen. Jason Ellsworth inked a contract with a longtime business associate now under question by Republican leadership, he sought to get the state to sign off on two contracts that would keep the business deal out of view.

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Senate President Matt Regier said he has “very, very serious concerns” about the contract arrangement. "The more you look at it, the deeper it's getting.”

Emails between Ellsworth, businessman Bryce Eggleston, the Legislative Services Division and the Department of Administration lay out the week before Ellsworth signed a state-funded, $170,100 contract with Eggleston’s Agile Analytics, a company registered less than three weeks earlier with no digital footprint or available information about its qualifications to conduct the work mentioned in the contract. Those communications show legislative staff and Department of Administration staff coordinating until the final hours to get the contract signed quickly before the spending authority expired on Dec. 31.

Ellsworth, a Republican from Hamilton, previously employed Eggleston at his telemarking company in the Bitterroot Valley. Eggleston also did background legislative work for the senator, but until the Dec. 31 contract had never received payment, Ellsworth previously told the Montana State News Bureau.

The funding from the contract came from a tranche of leftover money from a committee Ellsworth, who was Senate President at the time, formed last year as Republican lawmakers were gearing up their judicial reform agenda for the state Legislature that gaveled in two weeks ago. That committee produced 27 bills, and Eggleston’s contract requires him to analyze the implementation of the ones that become law in the coming months.

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Ellsworth had proposed the contract late in that committee’s work, but his colleagues turned it down, believing legislative staff largely conducts that work already.

"We said, 'No we shouldn't do this.' So whose choice is it to just spend our money? One person's? No, that's why we have a committee," said Sen. Mark Noland, R-Bigfork, who sat on the judicial oversight committee. "We all assumed we weren't doing it. He's saying a little different tune now. So, he's gotta explain it and own it because we didn't want to spend the money."

On Friday, Ellsworth denied that he split the work into two contracts in order to skirt government notice requirements.

Current Republican Senate President Matt Regier of Kalispell said he only recently learned of the contract. He said on Friday he was working out a way to cancel it and terminate any payments to Eggleston’s company.

Before the current, single contract came together, Ellsworth brought two invoices and two contracts to legislative staff that split the 27 bills between the two nearly identical contracts. Together, those two invoices added up to $170,100, but separately appeared as two expenses below $100,000. Any expense above $100,000 is required to go through the state bidding process with the Department of Administration.

Legislative staff rejected the two-contract request, according to emails obtained by the Montana State News Bureau.

"Long story short, (Ellsworth) attempted to enter into 2 contracts without our support the day after Christmas. They are missing multiple elements that make them problematic," legislative attorney Jaret Coles told a state department head in an email on Dec. 27. "We advised that LSD cannot pay on the contracts and that he use procurement procedures, including looking at sole source justification."

Department of Administration Director Misty Ann Giles responded three days later, saying, "It needs to just be one, if possible."

The Department of Administration traditionally runs the state procurement process in which the state solicits bids with private, third-party contractors, and its attorneys and staff review multiple offers in order to select the best deal for the state. But there are exemptions to that process, particularly for lower-cost contract work, called delegation agreements. In the Legislature’s delegation agreement with the Department of Administration, anything below the $100,000 mark does not have to go through the DOA procurement process.

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Internal emails from the Department of Administration and legislative staff show they were questioning why Ellsworth would split the contract into two separate items, but in an email, one DOA employee said they were "under the impression" that it was because of the $100,000 limit that triggers the DOA procurement process.

"That’s what I thought I had to do," Ellsworth said, when asked why he split the contract into two parts in his first attempt to contract with Eggleston. "… Because I was under the impression that there was a certain dollar amount I had to be under, so that’s why I split it up into two."

Pushed on why it would make logical sense to split a single contract into two, Ellsworth said, "It was just a lot of bills. So I thought (putting it) under two made a lot more sense."

Ultimately, Ellsworth returned to the table with a single contract for $170,100 for Eggleston to conduct an analysis of the downstream effects of the Legislature’s judicial reform bills. Legislative legal services and the Department of Administration signed off on the contract on Dec. 31.

No work is officially required of Eggleston until the legislative session adjourns in roughly four months, although email records show he has already submitted his first $7,087.50 invoice on Jan. 10.

The state has 30 days to pay the bill, but Regier, the Senate President, is exploring options for canceling the contract.

"As far as I’m concerned, the articulated deliverables … are not something I’m interested in," Regier said.

The money to fund the special select committee came from the Governor’s Office of Budget and Program Planning. On Dec. 27, as DOA and legislative staff were scrambling to get Ellsworth’s arrangement together, the deputy budget director emailed legislative staff notifying them about the upcoming deadline to return the unspent funds. In emails among legislative staff, they acknowledged the impending $170,100 deal that would spend down those funds and asked if they should "hold back funding for those contracts or send the entire balance back to OBPP."

The rush to get the contract inked in time came down to the last few hours of the year. On the Dec. 31 deadline, Eggleston still did not meet the state’s insurance requirements, but they entered into the agreement anyway, assuming he would check that box with the state in the coming days. A DOA procurement manager called it a "one-off."

DOA did not respond to an email late Friday asking whether Eggleston is now properly insured.