Missouri license offices go to bidders tied to auditor

JEFFERSON CITY, Mo. -- A friend and the ex-husband of Missouri Auditor Susan Montee have amassed millions of dollars of contracts from Gov. Jay Nixon's administration under a new competitive bidding system that was supposed to eliminate political favoritism in awarding state license offices.

Attorney James Montee and business associate James Ryan Williams won several of the lucrative contracts despite scaling back initial promises to pay the state sizable chunks of their profits. The difference to their pocketbooks could be an extra $360,000 they otherwise would have paid to the state.

The state auditor, her ex-husband and their friend all deny political connections provided an inside track for Williams and James Montee to land the license contracts, which allow agents to collect a fee from every customer getting a driver's license, registering a vehicle or paying vehicle sales taxes.

But some losing bidders and former license office operators claim the bid process was fixed so Williams and Montee could prevail.

"There's no question about it," said David Peironnet, who bid on the Gladstone license office awarded to Williams. "It was as rigged as it can get."

Nixon's Department of Revenue, which oversees Missouri's motor vehicle bureau, denies any impropriety.

"To say (the bidding process) was somehow used to favor one candidate over another is ridiculous, it is groundless, it is baseless," said department spokesman Ted Farnen. "Politics used to be the main determination in who got an office. Now it plays no role."

For decades, Missouri governors awarded fee offices as political patronage plums. But after reports that the FBI was investigating Missouri's license office arrangements, Republican Gov. Matt Blunt's administration began seeking competitive bids for some offices in September 2006. A couple of months later, the FBI cleared the administration of any wrongdoing.

Nixon, a Democrat, announced after winning November's election that he would seek competitive bids for all 183 Missouri license offices. An FBI spokeswoman in Kansas City said the agency could neither confirm nor deny whether it is investigating this year's license office contracts.

Besides the Gladstone office, Williams also was awarded contracts for the North Kansas City and Liberty license offices and has a bid pending on another Kansas City area office. He and Montee jointly won the Lee's Summit office. And Montee also won the St. Joseph office, which Williams helped launch. Over four years, those offices could generate nearly $9.4 million in fees, based on statistics from 2008, the latest year available. High-volume offices such as those in suburban Kansas City can be some of the most profitable for their operators.

Susan Montee said her ex-husband informed her in advance that he and Williams would seek the offices. Susan Montee is a close friend of Williams. But Montee said she distanced herself from their business and would hire an outside firm when it's time to audit their contracts to avoid any conflict of interest.

"I absolutely had no role in anything to do with the fee offices," Susan Montee said. "They did not have me in the loop, and I did not want to be."

For each office, the Department of Revenue used a team of two or three randomly selected state employees to score the bids based on operational plans, personnel and other factors, such as how much of their profits would go to the state.

When Williams bid in February on the Liberty, Gladstone and North Kansas City offices, he pledged 16 percent of those fees to the state for the contract's first year, with declining amounts in each of the next three years. Montee and Williams pledged in their February bid for the Lee's Summit office to give 18 percent to the state the first year, with declining amounts in subsequent years.

Those percentages were significantly higher than what other bidders offered. Williams said they pledged so much in hopes it would help them win the contracts.

But instead of accepting the bids and picking a winner, the state changed some of its bid specifications a few months later, pointed out deficiencies in initial bids and asked people to submit revised bids. The request for a "best and final offer" is not unusual in state contracting; a second round of bids has been sought on about half of the fee offices this year. The state's revision letter said bidders could include "increases in the return to the state."

Montee and Williams used the second round of bids to lower their proposed payments to the state; most other bidders kept their promised return flat or slightly increased it. When the Gladstone office underwent a third round of bids, Williams lowered his promised payment to the state again -- slicing his initial 16 percent pledge in the first year down to 3 percent. Their final total pledges to the state for the Gladstone, Liberty, Lee's Summit and North Kansas City offices were half their initial amount -- a reduction of about $360,000 over four years.

Montee said he couldn't recall exactly why the numbers were changed but assured: "There's no impropriety." Department spokesman Farnen said Montee's offices still have some of the highest payment rates to the state and that the changed figures are "not indicative of any kind of mischief or malfeasance."

Williams noted a recession-induced decline in vehicle sales and a projected increase in online vehicle registrations were cutting into offices' profits. He also said as the state started awarding contracts for other offices, he realized there wasn't much of a competitive advantage to be gained by promising a high return to the state.

But as Williams piled up win after win, other bidders became increasingly suspicious.

Normally, "if you didn't make the right bid, you're just out. And that's not what happened here," said John Ferguson, a previous Liberty license agent who bid for Liberty and Gladstone. "They gave those who didn't make the right bid a second chance. And it's not because it was going to save the state any money."

Amy Wagner, the office manager for Lee's Summit under former contractor Mike Smith, said Williams tried to recruit her to his team and told her in June that "he thought for sure he'd get six" offices.

Some bidders suggested the scoring system seems manipulated. They noted that former license office operators Lloy Glover and Jane Quick -- the wife of Clay County Presiding Commissioner Ed Quick -- received 28 points for their personnel qualifications and experience in narrowly losing the Liberty bid to Williams. But they received 20 points in that category on their subsequent bid for Gladstone, where their office manager plan was different -- a gap that again allowed the bid to go to Williams.

"I can't believe they even looked at the proposals," Peironnet said. "I think they decided who was going to get it and made up some hocus-pocus numbers to make it look equal."

Williams attributed his success to thorough and finely honed bids, based on his experience running the Liberty office for a dozen years under former Govs. Bob Holden and Mel Carnahan.

Montee and Williams said the perception that political connections helped them get the contracts may be the best proof that it did not.

"I guarantee Jay (Nixon) would not have wanted me to get all these offices, because probably the perception does look bad, and as we all know, Jay's all about perception," Williams said.