Controversial contract for Dunleavy political donor’s grandson comes under renewed scrutiny
A controversial government contract awarded to the grandson of a major donor to the election campaign of Gov. Michael Dunleavy is coming under renewed scrutiny by members of the Alaska Legislature.
Penney Capital, Inc., owned by Clark Penney, 34, was awarded a one-year no-bid, sole source contract in 2019 from the Alaska Industrial Development and Export Authority (AIDEA) to bring new development opportunities to Alaska.
The contract was then extended through mid-2022 with the possibility of a one-year extension. The amount payable to Penney over that period was capped at $441,000.
Penney is the grandson of Bob Penney, a developer who donated over $300,000 to the election of Dunleavy in 2018, according to records submitted to the Alaska Public Offices Commission.
Jeff Landfield, editor-in-chief of the Alaska Landmine, was the
in May of 2019.
Democratic Reps. Jonathan Kreiss-Tomkins and Zack Fields have tried to learn more about the contract and whether it was motivated by Penney’s political connections.
Commerce Department Commissioner Julie Anderson told Fields and Kreiss-Tomkins last week that she has no supervision over Penney’s work and did not authorize the contract.
At a House Commerce, Community and Economic Development Finance Subcommittee meeting, lawmakers grilled officials about the contract.
Wasilla Republican Rep. Colleen Sullivan-Leonard frustrated by the hearing left, calling it "political theater."
Deputy Commerce Commissioner John Springsteen told the committee that he too did not have supervision over Penney’s work. He presented an organizational chart that showed Penney separate to the structure of the ADT, under the auspices of AIDEA.
What Penney’s exact role is under the Dunleavy administration has been the subject of scrutiny. Also under scrutiny is that Penney has continued to work at a California-based wealth services company while under contract with AIDEA.
According to Springsteen, Penney has been working as a “catalyst and a facilitator” for the Alaska Development Team (ADT), a newly-created task force that aims to bring new investment into Alaska.
When listing off ADT projects that Penney was working on, Springsteen cited expanding mariculture opportunities, working with Red Dog Mine, new investment at Ted Stevens Anchorage International Airport and researching a new operating model for the ADT.
According to the governor’s proposed budget, the ADT is seeking to outsource its “economic development functions to the private sector similar to the tourism marketing model.” That is despite the ADT requesting $2.8 million from the Legislature over three years to pay for its operations.
Fairbanks Democratic Rep. Adam Wool questioned why the ADT needed state revenue.
Springsteen claimed that with the ADT focusing on mining, mariculture and broadband, it could net the state “$100, $200, $400, $600 million of new investment into the State of Alaska” and that that was a “pretty good” return on investment.
After the meeting, Springsteen refused to be drawn into exactly how much investment the development team hoped to bring into the state during the ongoing fiscal year, saying he would wait until deals are signed with investors.
After Springsteen, Tom Boutin, the CEO and executive director of AIDEA, presented to the committee saying that Penney had done “very useful” work.
Boutin denied that he was instructed to hire Penney by the governor. “I certainly wasn’t directed to do so by the governor, I’ve never talked with the governor about either Clark Penney or Clark Penney’s services contract,” he said.
Boutin explained that he made the decision to hire Penney saying, “That’s why my name is on the contract.” He did admit that the optics of hiring the grandson of a major donor to the governor’s election campaign was a “potential lightning rod.”
When questioned by Kreiss-Tomkins why Penney was offered a sole source contract instead of one open to other bidders, Boutin said it was because other Alaska contractors wouldn’t be interested in doing the work described in the contract at the rate of pay offered.
Kriess-Tomkins repeatedly asked why other qualified candidates weren’t given the chance to apply. “We couldn’t duplicate it for twice the money and maybe there are people out there who would say we couldn’t duplicate it for three times the money,” Boutin said.
After the meeting, Boutin showed KTUU the total invoices claimed by Penney since the contract was awarded:
- FY19: Penney claimed $32,000 in wages, the maximum allowable amount. He also claimed $2,110.73 in travel expenses, under the contract Penney could have claimed $12,000 in travel expenses.
- FY20: Penney claimed $48,000 in wages, half of what was allowed under his contract with six months left in this fiscal year. He claimed $5,162.67 in travel expenses in a six month period.