City attorney Philip Haggerty says the city is only required to seek competitive bids for public-works contracts, such as street and building construction. Nevertheless, the city follows detailed procurement regulations that normally require bidding on such contracts as the On Cue Systems deal, he says.
In this case, since the contract was signed by a city subcommittee -- Celebration 2000, on behalf of a nonprofit corporation, CCC -- Haggerty says there is little motivation for the city to intervene.
"The question is whether we want to force the corporation to go to public bids when they are using our money," Haggerty says. "They don't legally have to do it, and you can satisfy us with a halfway decent reason not to bid it."
The reason not to bid?
"This was an effort to secure those stages quickly so they wouldn't disappear," says Phoenix city parks official Michael Whiting.
Woods says that in retrospect the On Cue Systems contract raises serious questions, especially since the contract called for four stages and, after several acts were canceled, has since been reduced to three. Despite the reduction in the number of stages, On Cue Systems is still being paid $170,000.
"I don't know why it hasn't been renegotiated," Woods tells New Times. "It looks like it should be."
Woods says he has been contacted by a "couple of people" who said they would have liked to have bid for the contract.
"I think it is generally better to bid, but again the committee was being pushed by an urgency supposedly caused by the unique nature of the event, i.e. the 2000 celebration," Woods says.
While city officials refused to intervene on the $170,000 one-source contract with On Cue Systems, they jumped into the middle of a complicated series of negotiations with entertainers with disastrous results.
In late June, Johnston, Woods and Whiting met with Mayor Rimsza to go over planned entertainment. Johnston says he presented a detailed budget that showed the projected cost of each act, along with production expenses.
"Rimsza said, 'What do we need?'" Johnston recalls. "I told him, 'We need money. I need $1 million to do the talent and $500,000 to get it going.'"
Johnston says everybody reviewed the lineup of entertainers and understood how much it would cost.
On July 7, Rimsza and the rest of the city council approved the $500,000 loan to the Citizens for Community Celebration to pay for entertainers and production expenses.
"When the committee got the money, they gave me the authority to make offers," Johnston says.
But Johnson had been cutting deals before the loan was approved.
He sent On Cue Systems a $10,000 deposit check from the CCC bank account (which hadn't been formally recognized by the city) on June 18. Four days later, Johnston secured a $115,000 agreement with Gin Blossoms' manager, Wally Versen. Johnston and Woods forwarded a $10,000 check from the CCC bank account on June 22 to Versen's management company, Titan Music, as a deposit.
Versen's role in the event soon expanded. On July 28, Versen signed a $25,000 contract with Woods and Johnston to supervise, organize and coordinate contracts, contract riders, artist payments, accommodations and ground transportation on behalf of the CCC.
Versen was now working both sides of the table -- managing the Gin Blossoms while also representing the CCC in contract negotiations with bands.
Together, Versen's bands had contracts with the CCC worth $140,000 at the same time he was under a $25,000 CCC contract to represent CCC's interests. The CCC steering committee did not review the contract with Versen until September 1, more than a month after it was signed by Woods and Johnston. By that time, CCC records indicate, Versen had agreed to a $5,000 reduction in his contract, to $20,000.
Versen's dual roles caught Phoenix parks department office of special events director Irene Stillwell by surprise. Stillwell's office directly oversees CCC's operations. She says Versen's role with the bands was not discussed when he was introduced during a CCC steering committee meeting.
"The group was told this was a very experienced person . . . and that he might be useful to the committee," she says. Versen's role as agent for the Gin Blossoms and other bands was not discussed, she says.
"None of that was mentioned," Stillwell says.