City auditor: No deal for voting machines

Official questions contract, possible conflict of interest

Lou Kilzer, Rocky Mountain News

Published May 12, 2006 at midnight

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Denver City Auditor Dennis Gallagher announced Thursday he won't sign a contract with the company supplying Denver with voting machines until two issues are clarified.

In a letter to Alton Dillard, interim director of the Denver Election Commission, Gallagher said he wanted to know whether the relationship between a top city election official and an employee of Sequoia Voting Systems is a conflict of interest.

The auditor also said he wanted to know why the Election Commission's contract appears to sharply limit Sequoia's liability if something goes wrong with its machines.

The relationship that has caught the auditor's eye is between Matt Crane, the commission's interim operations director, and Lisa Flanagan, a Sequoia employee.

The two were recently married.

Flanagan attended at least one commission meeting where voting procedures were discussed, according to Election Commission minutes.

Neither Crane nor Flanagan could be reached for comment.

Dillard responded to Gallagher in a letter late Thursday.

He said that Crane has not "taken direct official action on the Sequoia contract" and his wife has no "substantial interest in the Sequoia contract."

Neither letter names Crane, but both sides agreed in interviews that his relationship with Flanagan is the one in question.

Dillard's letter further says the contract does not limit Sequoia's liability.

Sequoia Vice President Michelle M. Shafer said the company has scheduled a meeting with Gallagher on Monday to go over his objections.

Shafer said Flanagan works in technical support and is not a manager. She said Sequoia intends to assign Flanagan to clients outside of Denver.

Although he runs operations at the commission, Crane is not a regular city employee. He works under a temporary contract with the city, although City Clerk Wayne Vaden said he is trying to make Crane's position a permanent one.

Vaden, who serves as an election commissioner, laughed when asked about the auditor's letter.

He said Crane and Flanagan were married only recently, after the contract was negotiated.

That they had a relationship before they were married is not an issue, Vaden said.

"Do you have to disclose who your girlfriend is?" Vaden asked.

Some city officials say you do.

In his letter to Dillard, Gallagher said the situation might create "at least the appearance of a conflict of interest."

City Council President Rosemary Rodriguez, a former election commissioner, said she has asked Dillard for a detailed response to Gallagher's letter.

She said Crane worked for the commission when she was there, then left to work for the state. Now he is back with the commission.

"Matt struck me as being a pretty smart and ethical guy," she said. "But I didn't know he was dating a Sequoia employee."

Rodriguez said the relationship before marriage could be a problem.

"If you're dating a vendor, you should disclose that," she said.

Vaden said Crane was not the one who decided to go with Sequoia equipment.

Auditor spokesman Denis Berckefeldt said there also is concern over Crane's role as the operations manager as a contract, not a city, employee.

"If that's the case, and he heads operations for a city department, that's a little peculiar," he said.

But what most concerns Gallagher is the strict limit of liability clause in the Sequoia contract.

Gallagher asked Dillard to tell him "who in the city government has the authority to waive or release anyone, including a contractor such as Sequoia, from answering to the city's right to sue or otherwise take corrective action against anyone for its tortious actions or contractual violations against the city?"

Sequoia's Shafer said the language is probably similar to that negotiated by Sequoia in other jurisdictions.

The Denver Election Commission signed a $460,000 agreement last week to buy 80 touch-screen machines from Sequoia. This did not require City Council approval because the contract was under $500,000.

The City Council gave initial approval Monday night to buying an additional 160 Sequoia machines for $940,000, with the confirming vote expected next Monday.

The $1.4 million purchase is covered by federal funding.

The machines are needed for the Aug. 8 primary election to comply with a federal mandate to provide polling technology that allows disabled citizens to vote without assistance and to meet a state requirement that electronic machines provide a paper record confirming how individuals voted.

Sequoia's was a no-bid contract, Berckefeldt said.

"Our electronic environment has been Sequoia for the past eight years," Vaden said. "To go to another voting machine would have cost us over a half million dollars."

Sequoia has had its share of controversy.

Most recently, some Chicago and Cook County, Ill., officials blamed Sequoia for slow election results during a March election.

Sequoia officials say whatever problems were encountered in the Chicago primary were not their fault.

Dueling letters

Excerpts from City Auditor Dennis Gallagher's letter to Alton Dillard, interim elections director:

On the liability waiver: "By what formal procedure and who in the city government has the authority to waive, or release anyone, including a contractor such as Sequoia, from answering to the city's right to sue or otherwise take corrective action against anyone for its tortious actions or contractual violations against the city?"

On conflict of interest: "While it is not my suggestion that any of this is true (it is what has been alleged to me), or indeed, if true, a conflict of interest, I am concerned that allegations made to me, if true, do constitute at least the appearance of a conflict of interest."

On elections: "With the critical importance of maintaining citizen confidence and credibility related to our electoral process, and the importance of ensuring trouble-free elections in which every vote is properly counted, it is vitally important that any actions taken by the Denver Election Commission and the City and County of Denver that impacts the process be completely above board and without reproach."

Dillard's response:

On the liability waiver: "Any matters involving business risk concerning the Sequoia contract were decided by the Denver Election Commission. It is my understanding that Section 45 does not limit Sequoia obligations . . . to indemnify the city and its officers and employees for tortious acts committed by Sequoia."

On conflict of interest: "No on-call employee has taken direct official action on the Sequoia contract and no immediate family member of an on-call employee has any substantial interest in the Sequoia contract."

kilzerl@RockyMountainNews.com or 303-892-2644.

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