Otter: Syringa has no claim for damages in broadband deal

An Idaho firm has “absolutely no claim” for damages over a disputed contract to install broadband in Idaho high schools, Gov. Butch Otter said Thursday.

Otter square
Gov. Butch Otter

Otter responded to two developments in the protracted broadband dispute: the news that Syringa Networks demanded $17 million in a short-lived mediation process; and Democratic challenger A.J. Balukoff’s claim that Otter’s mishandling of the $60 million contract displayed a “shocking” level of incompetence.

If damages were to be paid to Syringa — which claims that it was improperly cut out of the broadband project — the money could theoretically come from taxpayers. CenturyLink and Education Networks of America, the two lead contractors on the broadband project, have shown no interest in paying damages to Syringa, deputy attorney general Scott Zanzig said Tuesday.

In a lengthy statement on the dispute, Otter echoed the contractors’ sentiment.

“Syringa has absolutely no claim or right to recover monetary damages in its lawsuit. Syringa originally filed six counts against the Idaho Education Network. All six counts were dismissed by the District Court. On appeal, the Idaho Supreme Court remanded a single count back to the District Court. Should the District Court rule in Syringa’s favor on the remaining count, there is no legal means for Syringa to receive any monetary damages for its claim.”

Balukoff square
A.J. Balukoff

Otter also defended the state’s decision to hire Boise law firm Hawley Troxell as outside counsel in the case — at a cost nearing $763,000, the Idaho Statesman reported this week. That decision was made jointly by the Department of Administration and the attorney general’s office, said Otter, “based on availability and expertise of counsel.”

The Idaho Education Network contract was signed in 2009 — at the behest of Mike Gwartney, a longtime Otter confidante who served as Administration Department director and remains a contributor to Otter’s re-election campaign. With the contract still in dispute, a Federal Communications Commission contractor has cut off funding for the project, which would normally cover 75 percent of project costs. With this money on hold, the Legislature has already forked over $11.4 million to keep the network online, and may need to pay an additional $2.4 million to cover costs through the end of the 2014-15 budget year.

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Here, in full, is the statement from the Otter campaign:

Let’s take a look at the well-documented facts surrounding Governor Otter, the Idaho Education Network — which provides broadband Internet learning capability to every Idaho high school — and a company that by its own admission did not bid on the project:  

1. Syringa Networks was never a bidder for the Idaho Education Network.

In Syringa’s Reply Brief to the Idaho Supreme Court dated June 4, 2012, it states:

Page 22 “The DOA (Idaho Department of Administration) decision to make a lawful multiple award (as suggested by the Letter of Intent and the first SBPO) was not a rejection of the ENA proposal because it would allow ENA (with Syringa as a subcontractor) to compete against Qwest site by site to provide ‘all services’ to selected schools and libraries under I.C. Section 48-67-5718A.”

2. The contracts were evaluated by an independent review panel consisting of K-12 educators, representatives from higher education and State IT professionals. There were no Idaho Department of Administration employees scoring the proposals. 

3. The original contracts were found to be valid by the District Court and the Idaho Supreme Court.

In the District Court’s decision dated June 24, 2014, it states:  

  • Page  7: “The Supreme Court found that when DOA made the multiple award on January 28, 2009, the original SBPOs (Statewide Blanket Purchase Orders) complied with this requirement [Section 67-5718A] because the initial contracts “constituted an award to two (2) or more bidders to furnish same or similar property.”   “In the appeal, Syringa did not raise any challenge to the original multiple awards to ENA and Qwest.
  • Page 12: “On appeal, Syringa did not challenge the award of the original SBPOs, and conceded that that the original SBPOs were lawful.  See Reply Brief of Syringa at 8. (“Syringa does not challenge the Letter of Intent or the identical and lawful SBPOs issued to Qwest and ENA on January 28, 2009 because they did not split the IEN Project”).
  • Page 13: “Because Syringa has previously conceded that the original SBPOs were lawful, Syringa will be estopped from taking the opposite position now.”

4. Confidentiality agreements are common in mediations to ensure both parties negotiate in good faith. Syringa refused to sign a confidentiality agreement; nevertheless, the state proceeded with mediation. There are no “secret” negotiations taking place. 

5. Syringa has absolutely no claim or right to recover monetary damages in its lawsuit. Syringa originally filed six counts against the Idaho Education Network.  All six counts were dismissed by the District Court. On appeal, the Idaho Supreme Court remanded a single count back to the District Court. Should the District Court rule in Syringa’s favor on the remaining count, there is no legal means for Syringa to receive any monetary damages for its claim.

6. Syringa demanded $17 million from the state. There is no logical basis for Syringa’s monetary demand when, once again, it has no legitimate claim for monetary damages. 

7. Syringa was offered the right to compete for state agency work and rejected the offer. By Syringa’s own estimations, the state agency work was valued at $5 million.

8. When informed by the state that it would pay no monetary damages, Syringa terminated the mediation.

9. Syringa now is providing services for the Idaho Education Network in its member territories and beyond.  Syringa has been paid over $1.4 million for its services since 2011. 

10. The decision to appoint outside legal counsel for the Syringa case was made cooperatively by the Idaho Department of Administration’s Bureau of Risk Management and the attorney general’s office based on availability and expertise of counsel.