Montana Senate sends Ellsworth's contract controversy to ethics committee

The Montana Senate on Monday invoked its constitutional authority to adjudicate an abuse of power and waste of state resources by a Republican senator from Hamilton who quietly arranged a six-figure contract with his longtime business associate.

The Senate ethics committee will hear the case of Sen. Jason Ellsworth, whose controversial contract with Agile Analytics constituted an abuse of his government position and a waste of state resources, legislative auditors found last week.

The Senate voted unanimously on Monday for the matter to be heard by the ethics committee, which will meet Wednesday afternoon to outline its process and procedures. The committee is comprised of two Republicans and two Democrats.

Ellsworth quietly signed a $170,100 contract with a former business associate using leftover legislative committee funds, skipping the public bidding process that’s required by state rules for jobs over $100,000. Before that contract was inked, Ellsworth first unsuccessfully attempted to split the contract into two separate documents, to keep the amounts under $100,000 and seemingly to fend off the public bidding process.

The memo from the Legislative Audit Division called the two-contract approach “illegal.”

Ellsworth was attempting to enter into the contract with his former business associate, Bryce Eggleston, and Eggleston's newly-formed company, Agile Analytics, which had no obvious ability to do this type of work.

“It is like using $170,000 of taxpayer money to hire a good friend and business partner to mow your yard, starting payment in January and you still don’t know if that good friend even owns a lawnmower,” Senate President Matt Regier, R-Kalispell, said Monday at a press conference.

Eggleston was sent a certified letter and emails, but the Senate President said he has not heard back. The contract is in the process of being canceled. Eggleston has not responded to the Bureau’s repeated requests for comment.

The vote followed a wide discussion on the Senate floor, where a largely Republican contingent spoke about the need to determine the appropriate level of discipline.

"The people of Montana expect that we find and adjudicate corruption in state government," said Sen. Carl Glimm, R-Kila.

Ellsworth, who also voted to send his own case to the ethics committee, called the episode a "distraction."

"Citizens have asked us to come here and deal with their property tax issues, to deal with many challenges that we’re having as a state that are real," he told the Senate.

Nearly all of the lawmakers who spoke included some urgency in their statements, although some were more dispirited than others about the events to come.

Sen. John Esp, a Republican from Big Timber with the longest streak of seniority in the chamber, said he supported an ethics committee probe on the matter, but did not appear to cast his vote with any delight.

"I stand here today, in my fifteenth year as a Montana State Senator, saddened for the senators in this room today and for all those who wore this title before us," Esp told senators on the floor, reading from prepared remarks. "But to this very point, and as sad as it may be, the substantiated facts outlined in this memo demand that we hold an ethics committee meeting."

Senate Minority Leader Pat Flowers, D-Belgrade, was the only Democrat to speak to the motion to send the matter to the ethics committee. While he supported the motion, he also urged lawmakers to take the process on delicately.

"We must remember the gravity of what we are embarking on. To discipline one of our members is a serious responsibility and one that we must handle carefully, fairly and with due process," Flowers said. "For this reason, we think it’s good for us all, especially members of the ethics committee, to keep a level head and to watch our language on the floor, in the committee and in the press."

Montana Republican Party Chairman Don “K” Kaltschmidt said the party was “deeply concerned and disturbed” by the report released Friday. He said in a statement the GOP fully supported an ongoing investigation by the ethics committee.

“The report raises significant issues related to the abuse of power and mismanagement of state resources, and we believe that accountability is an essential standard that needs to be in place for all elected officials,” Kaltschmidt said. “No one is above the law.”

The leftover money from a judicial reform committee Ellsworth established last year was set to expire on Dec. 31 and be re-routed back to the Governor’s Office of Budget and Program Planning.

The Department of Administration, the agency responsible for overseeing legislative contracts that exceed $100,000, ultimately signed off on the single contract. Because of the funding’s fast-approaching expiration, DOA justified its approval by saying it constituted an emergency — or what is referred to as “exigent” — contract which are not subject to the same procurement rules.

The Legislative Audit Division concluded that the funding deadline did not meet the definition of exigent and in an interview with the division, DOA Director Misty Ann Giles concurred that exigency did not apply.

All of the governor’s appointed cabinet directors, which includes Giles, have to be reconfirmed by the Senate. Under the chamber’s current rules, those appointments go through the Senate Executive Review Committee which Ellsworth currently leads.

The confirmation process has not started yet. It remains unclear how confirmations will be handled in light of Ellsworth’s contract that DOA improperly signed off on.

“There are also some very concerning questions that our Department of Administration also needs to answer,” Regier said Monday.

Regier added that this incident is a “black eye to state government” and said he felt “embarrassed."

The memo released Friday by the audit division explored the procurement process of the contract. Regier said he expects more to come from the Legislative Audit Division, including exploring the “intent” and any "criminal" acts that may have happened in the process.

“This ethics hearing is not the close of our investigation; it's just the start,” Regier said.

Earlier in Monday’s Senate hearing, Republican Majority Leader Tom McGillvray, R-Billings, made a motion to substitute Sen. Sue Vinton, the chair of the ethics committee, off that body. Vinton last week published a letter in several Montana newspapers about Ellsworth’s “alleged corruption,” writing Flowers and Senate Democrats had provided cover for Ellsworth, who are historically closer to political nemeses than allies.

Regier later said only that the substitution was made to ensure a fair ethics process, but Vinton confirmed the letter to the editor was why she was moved off the committee for the time being.

McGillvray’s motion included replacing Vinton with Sen. Forrest Mandeville, R-Columbus, who told the Montana State News Bureau earlier on Monday he hoped the swap would make for an even-handed process.

“We just want to make sure there’s no questions and make sure everyone’s confident with the results of the ethics committee,” he said.

The Senate will vote on the substitution on Tuesday.

Ellsworth declined to comment when asked if he would support Mandeville’s appointment to his ethics proceedings.