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Funny business:
contracts under Murphy
"may not have been at arm's length"

By Nick Maxwell
October 22, 2016 Press Release
Published on October 24, 2016 by NMPolitics.net
Republished on December 29, 2016

Hobbs, N.M. -- The State Auditor's official findings align with my concerns.

In July, I filed a complaint with the State Auditor’s office asking for the probe into two contracts championed by Hobbs’ City Manager, John Joseph (J.J.) Murphy. These two contracts were awarded to the Medico Consulting Group, LLC, a waste and recycling consultant, and Pennsylvania attorney Alan Wohlstetter, a $475-per-hour-consultant retained for legal services related to the police department’s video surveillance network.

After conducting a fact finding investigation, the office mailed a letter dated October 17, 2016 to the City of Hobbs stating that these two contracts “were handled in a manner that raises significant uncertainty as to whether the City received competitive prices. Additionally, the fact that both firms are from Pennsylvania and have connections to the City Manager’s prior employer raises the appearance that the contracts may not have been at arm’s length.”

The investigation revealed that “price was not part of the evaluation criteria for the proposal” submitted by the Medico Consulting Group, LLC in 2014. The office reminded the City of Hobbs that “we believe it is crucial to consider price in the evaluation process to ensure a fair and reasonable price is obtained.”

The office discovered that “the City did not seek any additional proposals or quotes from any other firms” before approving Alan Wohlstetter’s contract in 2014. The office explained to the City of Hobbs that the state’s “procurement regulations relating to small purchases of professional services (1.4.1.52 NMAC), which are incorporated into the City’s procurement policy by reference, encourage agencies to contact at least three businesses for written offers before selecting a contractor.” The office further explained “these provisions require [the City of Hobbs] to “negotiate a contract for the required services at a fair and reasonable price…” The office noted in their findings “Nothing in the supporting documentation reviewed by the OSA indicates the City took any steps to negotiate the law firm’s contract, and the lack of other quotes makes it difficult to assess whether the $475/hour billing rate was reasonable.”

$475/hour was not reasonable. To compare, in 2014 the City of Hobbs approved a contract valued at $100/hour with local attorney Tara Wood for professional legal services on an as needed basis.

Although the office recognized “that Hobbs does not have to follow the state procurement code in these matters”, the office asserted their recommendation to the City of Hobbs “that a “home-rule” entity’s procurement code should meet or exceed the basic protections provided for in state law and regulations for ensuring that the costs entities incur are reasonable and that the process is fair.” 

The office concluded that “it would be in the best interest of the City to review its procurement code and operating procedures, and make any changes that may be necessary, to avoid these types of situations going forward.”

Did these “types of situations” pass the reasonable person's litmus test for ethical behavior?

In early August, Byron Marshall uncovered the city's questionable agreements approved by J.J. Murphy in an investigative column published on wethefourth.org, “Funny Business: contracts under Murphy too strange to ignore". Marshall’s column gives an accurate rundown of what these contracts are all about.

At the very least, the State Auditor's findings affirm our city commission's decision during the October 3 public meeting to reject a questionable contract proposal for J.J. Murphy.

The latest proposal for Murphy would have benefited him with large and fancy legal perks at the expense of Hobbs taxpayers: indemnification and litigation expenses, in addition to the standard D&O insurance policy he already enjoys. Our city commission nearly bestowed upon Murphy a frightening amount of legal immunity from accountability for his official dealings, and that only scratches the surface of the undiscussed contract changes. 

The City’s official press release regarding the State Auditor’s findings was a study in misdirection and flim-flammery, showing yet again the arrogance of the city administration and its disdain for any spirit of accountability or transparency, much less any institutional regard for the sanctity of taxpayer dollars.

Cronyism and conflicts of interest in the public trust carry a hefty price. The official findings of the State Auditor’s office reveal that contracts approved under Murphy’s tenure “may not have been at arm’s length.” Is it any wonder why Murphy is demanding additional legal benefits as he expedites his departure from Hobbs?

Read part 1: "Funny business: contracts under Murphy too strange to ignore"

Nick Maxwell Courtesy Photo

Nick Maxwell

Nick Maxwell is a technology consultant, writer, and analyst. Maxwell advocates for government transparency and operates the watchdog website wethefourth.org.

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