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Contracts with IT investigator raise questions


Published: September 27, 2013

CITY ADMINISTRATOR Jason Stilwell signed three separate work agreements with computer expert Mark Alcock over a period of less than four months, at a total cost of $128,500 to taxpayers. Stilwell has said he hired the Southern California specialist to evaluate the city’s vast computer network, as well as to investigate alleged hacking and misuse of computers by IT manager Steve McInchak, whose home was searched by police in June.

McInchak, who has overseen the city’s information technology department for 17 years, has been on paid administrative leave for the past several months and has not yet been charged with committing any crime. The Monterey County District Attorney’s Office is waiting for the police department to submit a file containing the criminal allegations, if any.

Meanwhile, the city has agreed to spend more than $128,500 in taxpayers’ funds for Alcock’s services, according to the agreements provided to the Pine Cone by the city.

The first contract that Alcock and Stilwell signed Feb. 25 — and which was provided to The Pine Cone in June after a search warrant was served at McInchak’s Carmel Valley home — is so heavily redacted that even the very basic declarations stating the city’s needs and that Alcock is qualified to perform the services are whited out, as are the scope of work, the completion date, the ownership of work product and Alcock’s address. The signatures of Alcock and Stilwell, however, are visible. This contract stipulates Alcock will receive $200 per hour, up to $25,000, “and reasonable expenses.”

A second contract with Alcock, dated May 5, also for “an amount not to exceed $25,000,” received by The Pine Cone Friday states the city is “interested in information technology consulting and assessment services,” and needs qualified consultants to “assist in the installation and configuration of network routers and security devices and other general information technology services.” Its scope of work is described as, “installing and configuring network routers and security devices,” “provide security guidance,” and “additional information technology services as necessary.” Alcock’s address, as well as the signatures of the people who signed the contract, are redacted.

Amounts increased

Finally, a third agreement, dated June 19 — two weeks after Alcock accompanied Carmel Police Chief Mike Calhoun, administrative services director Susan Paul and police officers to serve the search warrant — also in “an amount not to exceed $25,000,” indicates the “city is interested in appointing a computer forensic examiner,” who will “assist in the coordination of the investigation related to information technology.” The first two items listed in the “scope of work” are hidden, and the signatures are redacted.

And while the city clerk used to be required to attest to contracts, none of the agreements with Alcock includes a space for her signature.
This month, council members decided to increase the amounts of the second and third contracts, though they didn’t discuss how the money would be spent or their decision to approve the added expenses, which call for increasing the contract for consulting and assessment to $43,500, and the contract covering the McInchak investigation to $60,000.

Stilwell and his lawyer, Heather Coffman, have said the information in the contracts was removed in order to protect Alcock’s privacy and because they involve an active criminal investigation. He said the existence of three separate contracts with the same consultant — which is very unusual — is due to the fact the projects Stilwell asked of Alcock are all different.

With the information redacted, the extent of those differences is difficult to determine.

It’s legal, but is it right?

While the Carmel Municipal Code has strict rules about how contracts are approved, and the checks and balances designed to ensure public funds are being used reasonably, contracts for “professional services” — such as attorneys and consultants — are specifically exempted, according to attorney and former Carmel City Councilman Gerard Rose.

“All purchases of and contracts for supplies, services, with the exception of professional services, materials, or equipment by the city, or by an officer or employee thereof, shall be made only in accordance with and pursuant to the provisions of this chapter,” reads CMC section 3.12.030. The provision is a bit difficult to understand, due to the vagaries of its punctuation, but it basically exempts contracts for “professional services,” from the rules for purchasing.

“This is how they get around the requirements when hiring lawyers and other professional services,” Rose explained.

Therefore, not only did Stilwell not need to obtain council approval for the contracts with Alcock or put the work out to bid, they were not subject to the section that prohibits dividing contracts into amounts less than $25,000 to avoid the higher scrutiny required by the code for more expensive agreements. That section explicitly states, “No undertaking involving amounts in excess of $25,000 shall be split into parts to produce amounts of $25,000 or less for the purpose of avoiding the provisions and restrictions of this article.”

Carmel attorney Stephen Beals reads the code differently, however, and said it applies to professional services, too, though the city administrator is authorized to enter agreements with contractors for amounts up to $25,000 without council approval. As for whether Stilwell violated the code section regarding splitting contracts, he said, that distinction lies in the details.

“The issue hinges upon the following: Did they intentionally split them? They can’t divide the contracts to avoid city council approval, and if they did, it clearly violates that provision,” he said. “Looking at the specifics of the contracts is what’s going to tell you.”

But with the crucial points redacted in the name of the ongoing investigation, it’s difficult to know.

As far as Rose is concerned, regardless of whether the Alcock contracts are covered by the CMC, he said, “I don’t think that’s the end of the inquiry.”
“The reason why we have a 3.12 chapter in the municipal code and a California Public Contract code is because we want accountability, we want fairness, and the public has a right to know,” he said. “That’s obviously the policy not only of the California Legislature, but of the Carmel City Council.”

And this particular council, Rose noted, “was swept into office with a claim of transparency.”

“So why are they inclined to hide the details of these contracts?” he asked. “Are they legally correct in keeping it from you? Yes. But is it wise? No. And is there a defense for keeping it from the public? If there’s a reasonable defense, I’d like to hear it.”

Keeping information about the approval and details of such contracts secret is “an affront to the people of the state and of the city,” since it’s their dollars being used to pay them, according to Rose.

“Frankly, I find this whole tenor where we try to keep things from the public very troubling,” he said. “You can argue that Steve McInchak, whatever the merits of the claims against him, he’s entitled to know what’s going on — and so is the public, especially when they’re paying close to $100,000 to investigate him.”