State of Oregon

Employment Investigation and Advice

RuponT REGARDING THE EUPIOYMENT STATUS OF

Menx LoNc, foax FRASER,
SHElr,r HotrtpywEll AND Paul SEEslNc

Edwin A. Harnden, Esq.

Paula A. Barran, Esq.

Barran Liebman LLP I 60L SW 2"d Avenue, Suite 2300 I Portland, Oregon 97204
Phone [503) 228-0500 | Fax (503) 274-1.212 | www.barran.com
 INTRODUCTION
This report has been prepared in fuitherance of our legal advice regarding the

ernployment of f'our employees, Mark Long, Joatt Fraser, Shelli Floneywell and Paul Seesing,
who are presently on administrative leave. Tlroughout, our goal has been to provide the best
possible advice on the ernployment status of these four employees. Oul review has necessarily
required an evaluation of the 2009-10 handling of the Energy Assurance Grant ("Grant") within
the Department of Energy ("DOE"), the criminal investigation by the Department of Justice
(,'DOJ"), a¡d the independent review camied out by Judge Francisco Yraguen who was asked to
provide a1 independent review for the department heads regarding whether any employment-
related sanctions might be appropriate. As is more fully developed below, it is our view that (a)
while there wel'e plocess irregularities in the handling of the Grant, the record does not contain
substantial evidence of a deliberate attempt to evade the law; (b) significant departmental tunnoil
at DOE related to a top-down reorganizatton and contemporaneous influx of funding and staff
contributed to or exacerbated intemal friction and poor employee cornmuuications on technical
procurement requirements; (c) progtam staff were inexperienced in the highly teclmical

procurement requirements; and (d) procurement staff were frustrated and concerned about
compiiance issues but ultirnately expressed that the contract was in compliance with legai

requiremcnts and signed The ensuing criminal investigation, which resulted in a public
it.
announcernent that criminal violations could not be proved, has been crjticized for its
investigatory techniques, including but not limited to (a) threatening behavior to the targeted
employees; and (b) false statements of fact made to the targeted employees and other interview
subjects.

We dìsagree with the recommendations contained in Judge Yraguen's repofi based upon
his (a) dependence upon the criminal investigation; (b) failure to interview the employees before
reaching conclusions and then stating at the beginning of the interviews that he would not change
his colól¡sions; (c) providing the employees only a brief period of time to review his report and
challenge details; (d) factual errors in the report; (e) substantial reliance on the disputed

inforrnation from Shelli Honeywell following a conclusion that she lacks credibility; and (f) a

recomrnendatiol for termination that was not the product of any employment analysis and, in

002050s3.4
Ms. Ho¡eywell's case, no apparent consicleration of the cornplications of her etnployment status
or the grant of irmnunity duling the criminal investigation.
In canying ouJ our work, we interiewed Mt'. Long, Ms. Ftaser, Ms. Honeywell, and

others,l reviewed the documents that had been assembled during the uiminal investigation;
reviewed tape recorded interviews; obtained and studied legal position papers and other
infonnatio¡ from counsel for Mr. Long, Ms. Fraser, Ms. Honeywell and Mr' Seesing; obtained
helpful infomation on procufernent processes from Energy's procurcment staff both directly
through Lorena Wise and Jirn Gores, and also as communicated by Donna Archambault; and
reviewed and researched pertinent statutes and regulations. We did not believe that a full.,r-eBeat
of every aspect of the prior investigation was warranted. This matter has been heavily
documented and we have reviewed those docurnelrts. There are lengthy interviews of the

involve<l inclividuals, and we are not aw¿¡re of any knowledgeable person who was not identified

and interviewecl during the criminal investigation or by Judge Yraguen. While the interviews of
the four ernployees who were targeted by the investigation raise issues of unfairness in the
process, others who were interviewed as witnesses have not articulated those same concents ancl

we þelieve that the content of their interviews can properly be considered here. That is so even
though the apparent objective of the cdminal investigation was to support a case of official
rhisconduct o¡ other crimes, and to the extent witnesses were pushed to plovide information it
was not in the direction of finding exculpatory information.
In our review, we have been guided by the general consideration that even where no
property riglrt exists to continued employrnent (such as is the case in the executive service),
pubiic employer:s should evaluate suitability for employment in a fair and reasoned manner and
not deprive the State of the services of qualified employees when there is no compelling
justificaiion for their termination. A related concern, in our view, is tltat a public employer
should be prudent in its employnent decisions where it is apparent that litigation ís a near
certainty. That does not mean that the State should shy away from making controversial

decisions or defending its ernployment decisions. Where, however, litigation is a near certainty
and the State faces a substantial likelihood of an adverse outcôme, caution is watranted.

We do not mean to suggest that this Grant management was an exemplary process; it was
not. It was aclministered in a way that raised many questions, within ancl outside of state

I
Mr. Seesing has not been macle available to us.

00205053.4 2
 goverilnent. At fault is a perfect stonn of factors: (a) in 2009 and 2010 an understaffed
Department of Energy was struggling with a leadership and managemeut change at the dírection
of then-Governor Kulongoski; (b) as part of that change at the highest levels of that department,

a large number of new staffjoined the department and wete not readily assimilated; (c) soine of
the new personnel were not seasoned administrators and there was some internal reseutrnent; (d)
a top-down change in department culture was initiated; (e) the department saw an influx of
considerable and possibly unprecedented funding levels; (fl the new leadership identified a need

to address past errors and apparent rnismanagement; and (g) separate teams (particularly program
ald pto,curement) experienced difficulties forging an effective wofl<ing relationship. . .i.i iì

It is not possible, nor is it sensible, to evaluate the underlying events without confronting
credibility issues. That is particularly so in the case of Shelli Honeyrell who has, throughout the
investigation process and for some of her ernployment, been viewed and describecl as ¿ person
with poor credibility. We do not disagree with that assessment. For example, although we
provided an opportunity for hcr to explain one of the more glaring inconsistencies, she did not
adequately do so.2

Certainly as a matter of law a public employer can make its employment decisions based
upon its own,credibility judgments as well as on other factors such as chatactet that may be
irnportant, but would not be usecl if the issue were to be litigated.3 Our more cautious and
is in part a reaction to the Department of Justice criminal
conservative position, however,
investigation. The employees are able to afticulate cornpelling arguments for why the
infonnation developed in the criminal investigation process is un¡eliable and should not have
been or be used in the evaluations of their suitability for ongoing employment with the State.

2
By wuy of exarnple only, Ms, lloneyvuell told us that she had never received an instruction ÍÌom Mr. Long to do
anything she thought to be ìllegai. During the criminal investigation, howevér, she had described a statement by
Mr. I-ong supposedly implicating the Governor's office and mandating favoritism towards Ms. Hayes. Vy'hen we
asked about that, her explanation at our inierview was that Mr, Long was talking about his instruction to pursue the
Grant funding, not to favor Ms. Hayes. At the end of her first of two criminal interviews, however, Ms. Honeywell
was asked whether Mr. Long directed her to give preferential treatment to TEEM and she responded in the
affirmative, and went on to say that he told her that "dealS were cut" (Interview of September 30, 2010 @91-92).
3
T[e United States Supreme Court explains: "But employers, public and private, often <1o rely on hearsay, on past
similar conduct, on their personal knowiedge of people's. credibility, and on othet' factots that the judicial process
ignores. Such reliance may sometimes be the most effective way for the employer to avoid future recurrences of
irnproper and disruptive conduct. What works best in a judicial proceeding may not be appropriate in the
employment corltext. If one ernployee accuses anothel of ¡nisconduct, it is reasonable for a govemment manager to
credit the allegation more if it is consistent with what the manager knows of the charactei of the aocused. Likewise,
a manager may legitimately want lo disçipline an ernployee based on compiaints by patrons that the employee has
'llatet's
been rude, even though these colnplaints are hearsay." v. Churchill,51l U.S. 661,676, 114 S. Ct. 1878,
1888, 128 L.F,d.2d686 (t994).

00205053.4 J
 We nevertheless find the infolnation developed in the criminal investigation helpful in
this sense: it represents the "wolst case scenaïio" for the employees and, if it were to be
accepted, it summadzes the strongest evidence in favol of their tenninations. As such, it aliowed
us to test assumptions and hypotheses in the process of our review'
THE DEP ARTMENTS VE WIDE LA TO
TAKE ARY

Mr. Long and Ms. Fraser serve at the pleasure of the appointing authority and may be
disciplined or terminated at will. That legal right, however, does not override constitutional,
statutory or common law rights of the employee, which may nevettheless coexist with at will
employment. The same is true for Mr. Seesing's employrnent: it has been of limited duration, is
at will, and has a "no later than" fixed end date of June 30, 201 1. See, for example, Brady
v.

Gebbie,8sg F.zd 1543,1555 (9th Cir. 1988).

Of the four employees, Ms. Honeyr,vell has the most substantial employment protections'
The State's formal policies (70.000.02) authorize dismissal fi'om the management seruice for:
¡ Misconduct: conduct an ernployee knows, or shouid know, is not proper
behavior;
o Inefficiency: failure to produce required results even though the employee is
comPetent to do so;

o Incornpetence: absence of the ability or qualifications to perform required tasks;

. Insubordination: refusal to obey an order or dilectivc;
. Indolence: behavior indicating an unwillingness to woÏk;
. Malfeasance: conduct showing moral turpitude, such as the commission of an act
which is morally wrong and unlawful; or
. Other unfitness to render effective service: any other employee conduct, quality
or condition which tencls to interfere with an agency in fulfillment of its mission
or that justifies that agency questioning whether it should continue to employ the

emploYee.

In theory, at least, some of these factols would permit discipline regardless of the
employee's in¡ocent state of mind. However, the policy also mandates that the appointing
authority or designee consider the ernployee's level of fault'

00205053.4 4
 ilformation we have, it appears the Department has exercised the right to
Based on the

employ disciplinary action on an at will basis oniy spar-ingly in the past. For example, Mr. Long
joined the Department of Energy as a result of Mr. Grainey being placed in another agency on a
job rotation basis. An investigation (in parl by journalists) was said to have tumed up a number
of examples of abuses in contracting and problems with the Business Energy Tax Credit
prog1an1. We are not aware of any disciplinary action taken against employees under
Mr, Grainey's leade¡ship for their roles in inegularities, if any. Ms. Archambault advised us that
she is unaware of any disciplinary actions at the DOE since 1999 involving procurement, but that
had violations been found she would have recommended consideration of the employee's
position relative to the issue, experience in and knowledge of procurement and contracting,
instruction given by the Designated Procurement Officer, and any direction by management'
DESPITE IIUIEGULARITIES IN THE PROCESS. NO DELIBEIL+TE
VrOiArrO¡qS On ruB llW Wnnrc rnnNrrrrnU Ar rnrc Un'ln. llW
PROCUREMENT STAFF APPROVED TTIE CONTRACT

We do not disagree that this contracting process deviated from established best practices.
Department procurement staff have expressed concet'lls about how the process was handled and
have expressed their belief that the process was not carried out in compliance with procurement
1aw. Those concelns, however, were not supported at the tirne by any precise explanation of
how the process violated the law. We were provided more specific information and newly
developed analyses during our review which helps, perhaps, to identify now why procurement
staff were uncomfortable at the time.
The decisionmakers will need to determine whether, and the extent to which, they wish to

rely on any later-developed analyses or auditing of this contracting process, In our view, this is
no small consideration. It implicates at least three issues that we believe important in a
disciplinary proceeding: due process, culpable state of mind, and degree of sanction. Three of
the four employees (excepting Mr. Seesing, who has not been made available) have advised that
they have not been told what actions are alleged to have been contrary to law, or which specific
law. Certainly they have been on notice that theil individual roles in the Energy Assurance
Grant process are under scrutiny and the criminai investigators identified such possible crimes as

forgery and official misconduct. But to date, they have not been told that they are alleged to
have violated specific statutes, regulations, requirements or policies.

002050s3.4 5
 It is our view that the decisiorunakers should give considelation to whether the
employees had a culpable state of rnind at the time of thei' actions and what degree of

responsibility there may have been. Each of the ernployees has something to say about this
issue.

Mr. Seesing had the least state experience of the four employees and is perhaps the least
knowledgeable about procurement requirements. He was motivated to do his work in
accordance with his superior's instructions. He regularly interacted with the procurement staff
and believed he had a good relationship with them. Judge Yraguen criticizes his credibility, but

the recommendation that Mr. Seesing be tetminated is based on his status (limited duration) and

his mere participation in a tainted procurement process.

Ms. Fraser had little hands-on involvement in this issue. She had a brief conversation
with Mr. Long on April 13, 20i0 during which he tasked her with helping Ms. Honeywell figure
out how to involve an Oregon presence in the work, an assignment she understood to mean
"legally involve" whether that was expressly said or not. She had a brief conversation with
Ms. Honeywell shortly after that, during which Ms. Honey'uvell identified options. After that, her
next involvement on this contract was being asked to attend a June 2,2010 meeting scheduled by
procurement to discuss problems they saw in the contract. Ms. Fraser provided us a lengthy
description of the June 2,2010 meeting and her owu thought processes. Her first knowledge of
the meeting was the context, that it was to discuss another problern with Shelli Honeywell. But
when she arrived at the meeting she learned quickly that the discussion centered on the Grant,
about which she had little information.

Lorena Wise, the Designated Procurement Offìcer, reported that "they really didn't work
with me" and told Ms. Fraser that TEEM was not the only Oregon presence (a fact that
Ms. Fraser later checked and concluded Ms. Wise was wrong). Ms, Fraser kept repeating to
Ms. Wise "tell me what's wrong with this," and eventually Ms. Wise just "closed" up in a way
that Ms. Fraser had seen before. She did not view Ms. Wise's attitude as anything out of the
ordinary for Ms. Wise, thinking this was turf protection. "If she had said, 'I called DAS when I
heard about this' - Department of Administrative Services - 'and i talked to the contracts expert

and they told me that they need to meet with you, and that in no way we can do it.' I tell you
what, I would have backed off immediately. But nothing." (Personal Interview of April 21,
20rr @ s6).

00205053.4 6
 Ms. Wise told her she thought the process should start over. Ms. Fraser's imrnediate
thought was that R.W. Beck had won the contract "fafu ancl square" and she wanted to
understand wliat would be gained by starting over. Ms. Fraser also told us that in her DCBS
experience she worked with contract experts who addressed concerns dilectly: "And so I'm used
o'We
to DCBS telling me, 'Okay. This is how we get there," or can't do this, and this is why.'
That's what I'm used to. That's the service that I get. Here we were all -- it was all gossip stuff.
And I thought, 'No, it's a personality conflict,' and that's what I concluded. And that's why I
said, you know, 'sornebody's got to make a decision. And I think we need to move forward. I
haven't heard anything that persuades me otherwirá."' lP"rronal Interview of April 2I,2OlI @
56-58).
Mr. Long's involvement with the contracting process ended with his direction to
Ms. Honeywell and separately Ms. Fraser to, in his words, find a way to involve an Oregon
presence in the project and Ms. Fraser's report back that Ms. Honeywell was working on the
issue and considering splitting the contract. There appears to be no dispute that after April 13,

2010, Mr. Long's time was fully occupied with the demands of the last few weeks of his work at
the Departrnent of Energy. He left the Department of Energy before the June 2,2010 meeting.
There is no suggestion that Ms. Wise or anyone else in procurement ever spoke to him about the
way the conhact was being handled. Mr. Long likely would not have been sufficiently schooled
in technical contracting requirements to have identifred that there might be a compliance issue in
how Ms. Honeywell was proceeding. Mr. Long denies identifying that TEEM should be the
"Oregon presence" in the project; Ms. Fraser and Ms. Honeywell both confirm that his
instruction was "Oregon presence" rather than TEEM. Judge Yraguen, however, concludes that
everyone understood that "fixing" the problem meant including TEEM. Nobody has provided

evidence that this was in fact their understanding. In fact, all have said the opposite including

Ms. Fraser, who, Judge Yraguen concluded, spoke with integrity.

Ms. Honeywell is the focal point of the process complaint. There is evidence that she
was tasked to ensure an "Oregon presence" and imrnediately set out to do so without sufficient
involvement of procurernent staff to vet her actions. She claims to have worked closely with
Ms. Wise, which Ms. Wise denies. In our view, Ms. Honeywell has been so inconsistent in her
statements that it is not now possible to discern what she really knew at the time and what her

motivation was, She was viewed by some people at the Department of Energy as someone who

0020s0s3.4 7
wanted to clirnb in the agency or in state govemment, who used every opporlunity to leapfrog
levels of superuision, and as someone who proceeded on her own without properly involving
other staff who had impoftant roles to play. Her involvement in the multi-step investigative

process provides ample reason to criticize her, as well as to proceed cautiously. She gave

conflicting statements about whether Mr. Long had directed her to implement a process to favor
TEEM, finally settling on her statement to us that he had not, She provided a facile but
ultimately ìncredible explanation for a discrepancy in her statement. She blamed Mr. Long for
fail by not telling her that he hired her into the DOE over the objections of
setting her up to
some. She made a veiled accusation of sexual harassment because Mr. Long criticized her flirty
style of clothing and once made her change into a suit befole representing hirn in a meeting with
the Governor. Her counsel have claimed that her reassignment within the Department of
Corrections is adverse action taken to retaliate against her for participating in the investigation.
Against a largely negative backdrop, however, her personnel recot'ds contain much that is
complimentary, she is able to provide a list of State personnel who she claims will vouch for her,

she was the victim of possible due process violations during the crirninal investigation, and she

was granted immunity through that process which now complicates decisionmaking.

It may be, as some have suggested, that Ms. HoneS'well settled into a mode of wor.king at

the DOE that did not respect the expeftise or responsibilities of the procurement staff, that she
understood Mr. Long's communications to point her towards working TEEM into the contract
and thought that she could implement her ideas without checking the technical requirements of
public contracting, or that because she had her marching orders from the Director she could
proceed towards that end without other concerns. It could also be that she was trying to do her

job.
Given the difficult relationship between Ms. Honeywell and the procurement staff,
however, it is not at all clear whether anyone put Ms. Honeywell on direct notice that
procuïement thought she was not adhering to legal requirements. None of the employees is able
to identifu such a direct communication, and it does not appear from this record that there was
any direct communication until the June 2,2010 meeting.

Ms. Wise reports she told Ms. Honeywell then that she did not have the authority to
commit the state. Certainly, Ms, Wise expressed the opinion about what rnight be or was

00205053.4 8
happening, and she complained about telephone calls outside of her presence. What is missing
from this record, however', is a direct expression that an act or acts violated the law.
We a1e of the view that Ms. Honeywell's status should be considered with this in rnind,
particularly because the record contains considerable evidence that there was ongoing intelaction
with the procurement staff on the Grant.
If asked, Ms. Honeywell and Mr. Seesing would be able to identify a number of
communications with the procurement staff during the critical phases of this contracting process.
While Ms. Honeywell rnay have being working on her own and not including procurem.ent staff
in many key conversations, she would be able to demonstrate that there was regular and
substantive communication with procurement staff without legal objections being raised. For
example, Ms. Wise made contemporaneous notes and there is docunentation which show the
following:
. Ms. Wise was involved in this conkact as early as Novemb er 24,2009 when she
received the dlaft statement of work.
. She requested authorjzation for the full amount ($200,000), and she worked on
the draft RFP which she sent to Ms. Honeywell and Robert Underwood.
. Ms. Honeywell communicated to her about the evaluation criteria and scoring
points in late January 2010'
. Ms. Wise finalized the RFP for Mr. Long's review, posted it on ORPIN, and sent
out notices to Ms. Honeywell and Mr. Underwood'
'Wise reviewed the proposals for minimum
. When the RFP closed, Ms.
requirements and prepared for the evaluation committee, with instructions
included in the PrePared Packet'
r After the evaluation committee meeting Ms. Wise spoke with Ms. Honeyvell,
who told her that she and Mr. Long were discussing the proposals and results and
that she would like to see some of the contract funding stay in Oregon. She and
Ms. Honeywell discussed Ms. Wise's belief that Navigant was based in Oregon.
. On ly'ray 7,2010 Ms. Wise and Mr. Seesing discussed the contract and he told
Ms. Wise that Ms. Honeywell was in communication with both TEEM and R.W'
Beck and negotiating with them. Ms. Wise did not question whether

00205053.4 9
 Ms. Iìoneywell was authorized to negotiate, or inquire about the negotiations, but
instead laised once again her belief that Navigant also had an Oregon presence.

On May 13, 2010 R.W. Beck communicated directly with Ms. Wise regarding its

best and fìnal offer and she forwarded that information to Mr. Seesing. She
asked him for the statement of work so she could begin a contract draft. She

realized that DOJ had not done the legal sufficiency review and she and
Ms. Honeyr;vell spoke by telephone about obtaining that review. Ms. Wise and
Mr. Seesing stayed in touch on the iegal sufficiency review.
a From the beginning of the process to May 27,2010 Ms. Wise's principal concem
(as far as her notes go) was her belief that Navigant had an Oregon presence.
Aside from that, until May 27, 2010 there is nothing in her notes to indicate that
she raised any other significant concellls about how the process was being
handled. On May 27, 2010, however, she met with Sara Fast (also from
procurernent) to discuss the process and her concerns, and the two of them spoke
to Mr. Gores about the contract. It was that conversation which led to the June 2,
2010 meeting which, from Ms. Wise's notes, appears to be the first time that the
procurement staff directly articuiated their concems about the process in a way
that could have raised legal concems (but ultimately did not).
a During the June 2,2010 meeting Ms. Honeywell advised the group that she had
made a verbal commitment to R.W. Beck. Ms. Wise's notes show that she asked

whether there was a written commitment, which resulted in a directive to look for
written communications.
a An email string of June g, 2010 was initiated by Rhea Rodriguez (contracts

coordinator) asking for the justification for R.W. Beck's cost proposal. Ms. Wise
was copied. Mr. Seesing prepared a justification for Ms. Honeywell, and on June
11,2010 she sent a revised justification to Mr. Gores, Ms. Wise, Ms. Rodriquez
and Ms. Farr. Ml. Gores responded (copying Ms. Wise, Ms. Rodrigu ez and

Ms. Farr, among others) "Thank you Shelli. This is good. I will only add for the
record that the increase in price did not change the final scoring outcome of the
RFP. Even with the slight increase in cost, R.'W. Beck was clearly still the top
ranked contractor."

0020s053.4 l0
 . On June 10, 2010 Ms. Wise received apploval from the Depaltment of Justice.
¡ The events of June 77, 2010 are significant. On that day, according to her'

contemporaneous notes, Ms. Wise had another discussion with Mr. Gores,

expressing her concern about the level of delegated authority she had on the
project. She telephoned colleagues to ask for advice, but her colleagues differed
in how they would approach the matter. On that same day, Ms. Wise discussed
the process with Melissa Canfield. Ms. Canfield told Ms. Wise that she needed
to tell management (the state procurement office) if the procurement was done
inappropriately, or if she was being inshucted to do it incorectly. Ms. Canfield
met in person with Ms. 'Wise, reviewed the RFP file, discussed the scoring
process, asked questions, "and concluded the procurement was done correctly
and the contract could be sent to R.W. Beck for signature." Following that
approval, Ms. Wise processed the contract including working on changes in
language (on June 14,2010).
o Two days later she asked to attend a meeting because "procurernent should be

present in negotiation discussions," but Ms. Honeyr,vell told her "it was not
necessary" for her to attend, and she did not insist. There is no evidence in this
record that the meeting included any negotiation, and Ms. Wise does not identify
that there were any changes in the contract which was signed that same duy.
.,

. Additionally, Sara Fast told the criminal investigators that Paul Seesing "had
been over to Lorena several times to talk about the contract" (Interuiew of
August 19,2010 @6).
In addition to Ms. Wise's notes and Ms. Fast's recollection, there are additional
documented communications including:
¡ In Decernber, 2009 Ms. Wise communicated with Karen Hartley and Brenda
Brown with questions about the formal procurement. Ms. Wise stated "I thought
the rnethod of sourcing used would be a Competitive Sealed Proposal as per 125-

247-0260, but I'm also thinking a Special Procurement might be better."

. In January, 2010 there were a number of emails exchanged between and among
Ms. Wise, Shelli Honeywell and Robert Underwood regarding tlie RFP, the
staternent of work and the scoring plocess, On January 26,2010, Mr. Underwood

00205053.4 11
 emailed Ms. Wise that "I had assumed you would use the scope of work I
provided as it was written, so I had not reviewed it. Reviewing the RFP this
morning I see that there have been significant changes. + * * Was this done to

meet legal requirements of State RFPs? I would either like to go back to the
original scope, ol spend some time adapting your edited scope to better convey
the areas of interest,"
a In mid-May,2010 and continuing into early June, 2010 Ms. Wise communicated
with Jesse Ratcliffe (Department of Justice) regarding the legal review of the RFP
including providing information about the posting and the fact that a best and
final offer had been made.
a On June l, 2010, Mr. Ratcliffe advised Ms. Wise that "the plocurement
documents are compliant with applicable law. DOJ doesn't make a 'legal
sufficiency' determination per se for RFP documents, but I do not find anything in
the RFP documents that would prevent a legal sufficiency detennination for the
resulting contract when it is ready fot review."
a An email of June 3, 2010 from Shelli Honeywell to Lorena Wise, Sara Fast and

copying Jim Gores reported "I went back to Navigant's website" and that "as
indicated at their website, they have no presence in Oregon, attd no offices in
Oregon. This was the basis of our decision as we moved forward with
discussions. Just wanted to follow up on this issue."

Following the June 2,2010 meeting and June 3,2010 etnail, Ms. Wise emailed
Jim Gores and Sara Fast that "Sara and I are not in agreement with the decision to
proceed." She stated that*It appears to be unfair and not cornpletely competitive
because ODOE ARRA staff suggested to RW Beck to subcontract with TEEM. It
is the responsibility of the DPO and procurement staff to ensure procurements are
done in an open, competitive and fair manner."
a An email of June 11,2010 from Lorena Wise to Steve Rupp attaching the contract
for execution. That same day, by email Dawn Farr told Lorena Wise: "Thanks
for your diligence in making sure we follow DAS protocols through this process."
a The next day, June 12, 2010, an email û'om Shelli Honeywell to Lorena Wise
expressed: "thank you so very much for all your hard work on this. I am grateful

0020s0s3.4 12
 that you keep us all on track! Please continue to engage me and my team on how
we can do things better." Ms. Honeywell also thanked Ms. Wise for the bracelet
Ms. Wise had made for her.
This is not an insubstantial level of involvement, even without considering the statements
of Ms. I{oneyr,vell and Mr, Seesing about their ongoing communications with procurement staff.
We believe that the employees could credibly argue that nobody put them on clear notice
of any irregularities that might constitute legal violatious. We believe as well that the employees
could credibly argue tliat in the end they had every reason to rely on the fact ihat Ms. Canfield
reviewed the RFP file to the extent she thought appropriate at the time and communicated her
acceptance of the RFP process. In retrospect, Ms. Canfield may uot have conducted a

sufficiently thorough review based on a decision by Mr. Gores and Ms. Wise to tell her only
some of the facts.

AT THE TIME OF THE EVENTS. AS WELL AS DURING THE

OF N OCUREMENT ST
EXPIIESSED PROCESS CONCERNS BUT DID NOT CLEARLY ARTICULATE
WHETHER TIIERE WERE ANY LEGAL VIOLATIONS

In evaluating whether any of the four employees had a culpable mindset, there is some
benefit in reviewing the manner in which concerns were raised by procurement staff during the
DOJ investigation, That investigation had provided procurement staff a forum to articulate the
full scope of their coltcems after having had the benefit of tirne to review the events. We
consider it significant that even in this forum and after a period of time, there is still no clear
identification by procurement of a legal violation.
During her August, 2010 interview with the DOJ, Ms. Wise identified the following
issues, concerns or irregularities :

o Mark Long spoke to Sara Fast to inquire about the proper process for the
contract. Lorena 'Wise is the responsible procurement officer and she felt
Mr. Long should have spoken to her.
. Because the amount of the grant was over the $150,000 threshold, Ms. Wise took

seriously that the DOE's delegated authority requiled compliance with the law.
. Shelli Honeywell ranked TEEM the highest (if Ms. Wise meant she ranked
TEEM highest of the Proposers, she was wrong; she may have meant that of the
evaluators, Ms. Honeywell gave TEEM the highest number of points.)

0020s053.4 13
 r She was about to senci a notice to R.W. Beck when Ms. Floneywell told het'to

hold off; her lesponse was "okaY."

¡ Navigant had an Oregon presence with a proposer who lived in Sherwood;

Ms. Wise told Ms. Honeywell "you need to take a look at that."
o Ms. Wise wanted to give the same opportunity to work with an Oregon presence
to all of the proposers because she believed :'you cau't just give oue the
opportunity to do something and not the others."
¡ Ms. Wise received a last and final proposal from R.'W. Beck on May 13 with a

,. higher number to accomrnodate a subcontractor. She believed "you can't do

that," but did not identi$r why.
o Ms. Wise does not know what talks went on "behind the scenes" that did not
include procurement and she was not kept informed of what was going on.
o When procurement realized that "this was just not quite done right" there was a
meeting on June 2,2010 to present "the çoncerns and issues" with how it was

handlcd.
r Shelli Honeywell said that she had already committed the agency; Ms. Wise said
then that Ms. Honeywelt did not have that authority and provided options "of
how \rye can make this right," a concern which she said emanated from the belief
that there could be a public records request.
. An email had come frorn R.W. Beck suggesting the company was forced to
subcontt'act with TEEM.
¡ Another risk was that if the contract was canceled R.W. Beck could ask for all
public records, and then seeing that they had won the contract without a

contractor "fhey could sue us."

o When R.W. Beck askcd for different language in the agreement, Joan Fraser
called R.W. Beck to discuss the issue and did not include procurement in the
conversation. Ms. Wise did not know what was said during the telephone call.
¡ Ms.'Wise told Ms. Honeywell that pïocurement staff were supposed to be present.
during negotiations to "be there part of it to see what the talks about and-and
just, you know, nothing. Tþat's just to be listening." Ms. Honeyvi'ell excluded
her fi'om negotiations.

00205053.4 1,4
 ¡ During the June 2 rneefing, Sara Fast asked about whether there was anything in
writing bringing TEEM and R.W. Beck together "because that is illegal and

inappropriate." She did not clarify what was illegal about it.
. Before the award was finalized Shelli Honeywell had a conversation with R.W.
Beck, and the opportunity to wolk with TEEM was not given to the others.
Ms. Wise had received inconsistent advice from other procurement officers. She

eventually concluded 'osome things were just uot done properly," but at the time did not note any
specific violation of the law stating that "I think we can pass the test with SPO in saying we were
in compliance, but at the same time, there's just some inconsistencies." She also stated that
"There's some things that are not quite honest or, I don't know-I don't even know what the
word is at this time, the feeling of, 'well, I think I didn't' you know, it got past the compliance,
it through, but then this other stuff, you know, has happened. And now we
the tests of getting
have--we received a public request fi'om Navigant. They're asking to see R.W. Beck's
proposal" (Interview of August 72,2070 @19 20).
George Thompson was also interviewed. He was the federal grant officer, but admitted
to having no personal knowledge about the events. He had looked at the paperwork and agreed
that the R.W. Beck proposal was the clear winner. He did not support stopping the process
entirely just because it was "alittl.e bit varied ÍÌom our standard process." He ultimately signed

of{ although he documented that he had objections. Mr. Thompson did not identiff legal
violations, but stated he believed pr"ocurement law to have been violated. He did not identify
how, but in a memorandum that appears to be his personal documentation he stated that he
thought there was fraud, or borderline fraud. His belief was based on his understanding that
there had been an instruction to make sure no documentation existed about instructions to R.W.
Beck to contract with TEEM, a dialogue that supposedly had occurred at a meeting he did not
attend. At the sarne tirne, his mernorandrnn states that "this activity is in fact allowed under the
gfant."
Sara Fast attended the June 2, 2010 meeting. Her recollection is that she and Ms, Wise

were concerned that it"gave off just kind of a bad feeling" to subcontract with a proposer and
that they thought that there rnight be a protest (Interview of August 19,2010 @ 4).
Jim Gores separately identified that he became involved in the process when Ms. Wise
and Ms. Fast brought their concerns to him. They told him 'Just how they were uncomfortable

0020s0s3.4 t5
 with it." After his review and his participation in the June 2, 2010 meeting, he expressed the
belief that the plocurement staff should have been in contact with Beck after the contract was
awarded, lather than the prograrn people, and that contacts with the potential grant recipient
should always have been fi'om the procurement staff rather than the program staff. His solution,
horvever, was to look at the best and final offer and to rescore. As a result of the rescoring, even
with the price change, R.W. Beck won the contract. He expressed that occasionally program
staff do step out of bounds, that he thought this was a flagrant example of stepping out of
bounds, and "that's not acceptable." Towards the end of the process, however, after involvement
of the State procurement office, he felt that "it sounds like we rescored everything," that "it
sounds like everything's legitimate here," and that atthat point he would have signed off on the
contract. Mr. Gores told the Department of Justice in his August 13, 2010 criminal investigation
interview that "they just got ahead of is [us], which I understand, from talking to the State
procurement office, does happen at times with the program staff'(lnterview of August 13, 2010

@ 5). Mr. Gores also stated that whereas a number of things happened out of the ordinary, and
that even though this process was far out of the ordinary, nevertheless "we talked to State
procurement offrce and everything else and got it to the point where I finally felt okay, it sounds
like we re-scored everything, it sounds like everything's legitirnate here. At that point, I
probably would have signed off on it" (Interview of Augus t 13 , 2010 @ rc), Mr. Gores was not

comfortable with the process "until we re-scored" (Interview of August 13,2070 @ l4).
It is our view that the employees will be able to argue credibly that while there were
complaints, there were no identifiecl violations, or that any noted deficiencies had been and were
corrected.

AS PART OF THIS LEGAL RE VIEW. PROCUREMENT STAF'F

HAVE IDENTIFIED POSSIBLE VIOLATIONS

As part of our review Donna Archambault asked that we look into a number of specific
procurement concenls, including some that had recently been identified by Jan Lernke who
joined the agency as Finance and Operations Manager after these events. We believe that our
review should include a discussion of those concerns for thoroughness and to understand
whether there are, in fact, procurement violations. We do, however, have reservations about

considering these identifìed issues in deterrnining the employment status of the four employees

to the extent that they were not raised with the employees during the events, particularly in light

0020s0s3 4 I6
of the ultimate approval given to the process by Mr. Gores an<l Ms. Canfìeld, as well as

Ms. Wise's own signatule on the coutract.

Ms. Honeywell and Mr. Seesing had conversations with R.W. Beck and with TEEM after
the April 13,2010 scoring showed R.W. Beck to be the highest ranked of the Proposers. A
notice of intent to award was not provided until June I , 2010, several days after the rneeting that
had been called to address Ms. Wise's collceffls.

The issues that have been raised fbr our consideration no\ry are:
1. No addendum.
No adctendum was developed for the RFP. When an a.ddendurn is used to change a
solicitation document such as a request for proposal, it must be done in time to allow proposers
to address the new terms. That requiretnent is set out in OAR 125-247-0430. It is not entirely
clear that a¡ addendum was required here or that program staff were told one was required.
Ms. Archambault, who communicated the collected concerns of the procurelrent staff to us,
ide¡tified the need fbr an addeirdum as arising out of the agency's decision "to make an Oregon
presence a requirement." I-Iowever, there is insufficient support for the asserlion lhat an Oregon

presence was made a requirement, aS cOmpaled to a desirable outcome.

If an addendum had

been a legal requirernent, there is insufficient evidence to suggest that anyone from the
procurelïìent staff ever told proglaln staff it was a requirement. It was not discussed at the
¡une 2, 2010 meeting, ancl by the time the contract was approved, Ms. Canfield and Mr. Gores
had concluded that there were no procurement violations,
It is clifficult to justify disciplining Mr. Long, Ms. Fraser, Ms. Honeywell ol Mr. Seesing

when the inforrnatiol they were provided at the time they cornpleted the contracting was that the
process was acceptable. It rnay be that if the procurement staff had the benefit of'hindsight and

002050s3.4 T1
the study that they have carried out to assist in this Leview, the coilmunications would have been
different and perhaps the process would never have been approved. Or, Ms.'Wise rniglit have
told Ms. Fraser that her objection rvas based on illegality rather than what sounded to Ms. Fraser
like fi-iction between two work groups. That, however, appears to us to highlight the fact that
even if there was a legal violation, it was not a deliberate one given tliat even plocurement staff

ultimately concluded the pr'ocess was in compliance with tlie law.

2. Failure to accept Ms. Wise's options to cancel the RFP or give options to Proposers.
The program staff did not accept Ms. Wise's options of cancelling the RFP or asking
other ploposers in rank order if they had an Oregon presence. Cancelling the RFP was
discussed. Ms. Fraser explained that she considered it inappropriate to do so because R.W. Beck
had won the contract and there didn't seem to be a reason to take it away fi'orn that company.

Mr. Gores explains that even after rescoring to account for a higher contract price, R.W. Beck
was still the highest scorer (Interview of August 1 3, 201 0 @ 14), We do not see a legal basis for
arguing that the RFP should have been cancelled under these circurnstances

Wise's second option, to ask Proposers whether they had an

Oregon presellce, was actually adopted though not in the satne form she suggested,
As Ms. Archambault expressed the options to us, Ms. Wise stated that the other
Proposers should be asked in rank order whether they had an Oregon presence. Program staff
(Ms. Honeywell and Mr. Seesing) researched that infolmation, although not by means of a
telephone call to the Proposers asking about it, After the June 2, 2010 rneeting, for example,
Mr. Seesilg and Ms. Fraser spoke about what the Proposers' websites showed; neither believed
that Navigant or l(ema had a legitimate Oregon presence (Interview of December 7 ,2010 @ 30).
Ms. Wise apparentiy disagrees about what it means to have an Oregon presence. She
cites the registration to do business in Oregon, though she told us that she did not really look into
Navigant's Oregon presence and could not cornment on whether TEEM had a more or less

substantial Oregon plesence than Navigant. Mr. Gores expiains that in the end he tliought
Ms. Wise understood that TEEM was the only iegitirnately Oregon-based company (Interview of
August 13,2010 @13).

002050s3.4 18
3. Explanation of t'Oregon prcsence" requirement.
Ms. Archarnbault and Ms. Lemke, who has recently joined the agency as Fiuance and
Operations Manager', believe that in faimess the "Oregon pl'esence" requirement should have

þeen explained to the two other Proposers and they should have asked if they had an "Oregon

presence." Both individuals expressed concerns that this is an "antelma" issue or perception
awaïeness that should have been realized and explored. The RFP, howeveL, references
"experie¡ce in Olegon, including renewable energy projects or other relevant projects" in its
evaluation criteda, so state experience was called out in away that put Proposers on notice that

state involvement would be considered. In any event, given the research showing minimal or no

Oregon operations with the other two Proposers, it is not clear that such a discussion after the

fact would have resulted in any different outcome. The winning Proposer was R.W. Beck'
TEEM became a subcontractor.
We also note that the RFP states:
"The outcome of the evaluation may, at agency's sole discretion,
result in: (a) notice to a proposer of selection fol tentative
contract negotiation and possible award; (b) fuither steps to
gather more information for further evaluation; or (c) cancelation
of the selection process if determined it is in the public interest to
do so."

Sectiol 7 .7.2 reserves the right to negotiate the term of the contract, extensiotls, pt'ices or..

consideration, schedules, and statement of work. Given these reselvations of rights in the RFP,

we are of the view that Ms, Wise's suggestions, while appropriate, are ttot legal requirenìents nor
is there substantial evidence that they were communicated to the program staff as requirements

in Aplil-June,2010.

the "Oregon presence" lesultecl fi'om a subcontract

ultimately negotiated between R.W. Beck and TEEM. These
and that TEEM was a subcontractor not a
contractor-have legal significance. We believe it cannot be said with certainly Ihat offering the
other participants an opportunity to subcontract was a requirement of a fair process. After the
scoring and rescoring had been completed, R.W. Beck was a clear winner.

00205053.4 r9
 We emphasize that we do not view this process as a textbook example of how
procurement should have been carried out. However, the issue here is whether any law was
violated, and whether any disciplinary action should be taken against the employees.
4. Ms. Wise's position as Designated Procurement Officer'
Ms. Archambault raised the issue that as the DPO, Ms. Wise was th.e only person
designated by Mr. Long to conduct procurement on behalf of the a9eîcy (citing OAP. 125-246-

0ll0), and the only person given the authority to delegate to others the authority to conduct
procurements and to do the job assigned to procurement. The regulation does not require that the
DPO personally perform all procurement functions (that would be impossible for a single person
to do, given how broadly OAR i25-246-0110 (111) defines "procuÍement"). The regulation
recites that the DPO performs "certain procurement functions" described in the rules. DAS rules
identify the duties and responsibilities of the DPO and identify that the DPO supervises and
manages the procurement system; conducts, supervises and manages the procurement and
procurement process; prepares or monitors the use of specifications or statements of work; issues
solicitatiols and implements other non-Solicitation methods; awards contracts only in
accordance with the rule, executes contracts, complies with reporting requirements; monitors
sourcing decisions, procurements, development of contracts, awarded contracts, contract
compliance and the like; determines opportunities and establishes targets, and conducts cost
analyses. There is substantial evidence that Ms. Wise was deeply and directly involved in this
contract and, that procurement specialists ultimately approved the contract.
5. Violation of optional procedures.
We were also advised that procurement staff believe this process violated OAP.125-247'
0260(5)(a)(C). This regulation govems procurement in competitive sealed proposals and
designates "optional procedures" which impose restrictions after determination of the
Competitive Range, and relate to discussions and revised proposals. OAR 125-241-0260(5)
rnakes clear that these requirements apply to multi-step sealed proposals:
"(5) Optional Procedures. All of the optional procedures
described in this section may be alternatively referred to as
' Multi-Step Sealed ProPosals' "'

The Energy Assurance Grant did not use a tnulti-step sealed proposal process. The RFP
states in section 3.2:

00205053.4 20
 "Agency intends to use the competitive sealed proposal method,
pursuant to OAR 125-247-0260. Agency intends to initially
conduct a sinele-sten comoetitive sealed orooosal method and
reserves the right, based upon evaluation of proposals, to conduct
discussions and negotiations."

The restrictions in OAR 125-247-0260(5) are inapplicable.

There was some confusion due to the use of a best and final offer. Mr'. Gores explained

that he did not understand why there was a final offer because that was a step that belonged to
the rnulti-step process, and this was not a multi-step process. Once the proposals were rescored
"it sounds like everything's legitimate here" (Interview of August 13,2010 @ l0). Someone

(and it is not clear who) confused the two processes, but at least Mr. Gores believed rescoring

fixed that problem and in that he relied on Melissa Canfield's advice.

6. Conflict of interest certification.
Both Ms. Honeywell and Mr. Seesing signed a standard form conflict of interest

certification. The plocurernent staff advised us that they believe there was a violation of the
conflict of interest certification, specifically referencing ORS 244.020.
That statute defines aî actsal conflict of interest as follows:

"244.020 Definitions. As used in this chapter', unless the context

requires otherwise:
(1) 'Actual conflict of interest' means any action or any
decision or recornmendation by a person acting in a capacity as a
public official, the effect of which would be to the private
pecuniary benefit or detriment of the person or the peLson's
relative or any business with which the person or a relative of the
person is associated unless the pecuniary benefit or detriment
arises out of circumstances descdbed in subsection (12) of this
section.

*****

(i2) 'Potential conflict interest' tneans any action or any

of
decision or recommendation by a person acting in a capacity as a
public official, the effect of which could be to the private
pecuniary benefit or detriment of the person or the persolt's
relative, or a business with which the person or the person's
relative is associated, unless the pecuniary benefit or detriment
arises out of the following:

0020s0s3.4 21
 (a) An interest or membership in a parlicular business,
industry, occupation or othel class required by law as a
prerequisite to the holdirrg by the person of the office or position.
(b) Any action in the person's official capacity which
would affect to the same degree a class consisting of all
inhabitants of the state, or a smaller class consistìng of an
indush'y, occupation or other gloup including one of which or in
which the person, or the person's relative or business with which
the person or the persou's reiative is associated, is a membel or is
engaged.
(c) Membership in or tnembership o11 the board of
directors of a nonprofit corporation that is tax-exempt under
section 501(c) of the Intemal Revenue Code."

A prohibited actual conflict of interest requires a decision or recommendation "the effect

of which could be to the private pecuniary benefit or detriment of the person oL person's relative

or a business with which the person ol the person's relative is associated." This issue was laised
during oul review but does not appear to have been identified as a potential problem during the
contracting process itself. There is insufficient evidence of a prohibited conflict of interest.
7. Negotiations by program staff.
There is substantial evidence that Ms. Honeywell and Mr. Seesing had substantive
cliscussions with R.W. Beck after the scoring session but before notice to the Proposers. They
introduced the concept of working with TEEM, but also discussecl othel aspects of the work and
the two companies' possible working relationship. That contact continued for some weeks until
the procurement staff finalized the contract. These early discussious are not thoroughly
<locumented so that it is not possible to reconstruct what discussions or negotiations took place.
Ms. Honeywell states that she worked with Ms. Wise, and invited her to at least one April
meeting; Ms. Wise denies that she was invited and explains that she learned of the rneeting when
she looked at Ms, Honeyi;vell's calendar', to which she had access. She printed the meeting
notice for her records because she had not been invited.
Ms. Wise also points out that she was ceúain that Ms. Honeywell negotiaied with R.W.
Beck outside the presence of procurernent staff because Ms. Honeywell received a best and final
offer from that company. Procurement staff are also concemed that program staff appear to have
divided up the work for the companies. While there are documents related to a division of
responsibilities, those do not appear to have been final

00205053.4 22
 We agree with the procurement staff's view that fbr prograrrr staff to conduct negotiations
outside the presence of the pÍocureÍnent specialists is ill advised, and Ms. Wise recalls that she

had told the evaluators that they should not have those conversations. Procurement specialists
exist to ensure that complex legal requirements relevant to public corfracting are met. Whether
these negotiations are unlawful, however, is a more difficult question

She conducted the solicitation, finalized the contract

award, executed the contract and handled contract administration, all of whioh are areas of
responsibility delegated to hel by SPO (Delegation Agreement No. 433-09).
We spoke to Ms. Wise to atternpt to clarify her views. She told us that because she is the
designated procurement officer she must be present during negotiations, but that she does not
conduct them. Her role, she explained, was to act as the rulekeeper during the negotiations. (See
also Interview of August 12, 2010 @ l4). Nobody has identified a legulation that directly
requires such a process; if that is a requirement it must be inferred. Although the administrative
rules that govem procurement identify that the DPO receives delegated authodty, they do not
draw a line between "procurement" and "progralri" staff in tems of what program staff may do,
so long as the DPO does what is reserved to the DPO by the rules (see, for example, OAR 125-

247-0110 which requires the DPO to approve any fèasibiiity detelrnination; OAR 125-247-0275,
which relates to sole source procurements). Otherwise, most of the provisions in the public
contracting regulations relate to actions of the "authorized agency," not specifically to the DPO.
The delegation agreement identifies that the DPO is the responsible person for certain steps in
the procurement process, but does not state that the DPO must monitor all discussions or
negotiations.
We do not suggest that this very brief surnrnary of the intricacies of contracting roles is or
should be the final word on the subject. We do, however, believe it is important for the
decisionrnakers to consider that there is a non-fì'ivolous argument that however ill-advised this
process was, it was not illegal.

00205053.4 23
8. Documentation.
Procurernent regulations as well as best practices require material communications to be
documented. As we understand the legitimate concelrrs raised by the procurement staff, there
were material discussions conducted by Ms. Honeyr,vell ol Mr. Seesing that carurot now be
wholly reconstructed because the documentation is deficient or nonexistent. However, although
there are gaps, this is not an undocumented process and the documentation may well be
sufficient to satisfy regulatory requirements. No oue has, as yet, identified missing material
documentation.
Certainly Ms. Wise raised her concerns during the June 2,2010 meeting that she was left
out and did not know what discussions were taking place, but she lacks any information to
identi$r that there are any undocumented material communications. In the end, after Mr. Gores
and Ms. Wise met with Melissa Canfield frorn the state procurement office, Ms. Canfield
approved the process, and Mr, Gores confitmed he was not aware of any violation of the law.

As is the case with the negotiation issue, there is a non-frivolous afgument that while this
was not a perfectly documented file, neither was it clearly unlawful.
9. Melissa Canfield review.
The June 2,2010 meeting did not sufficiently address the concerns of the procu'ement
staff, which Ms. Wise and Mr. Gores continued to discuss between themselves. Ms. Wise also
discussed her co¡cerns with colleagues in other agencies and eventually Ms. Wise and Mr. Gores

raised issues with Ms. Canfield.

Ms. Wise told us, however, that Mr. Gores instructed het' not to tell Ms. Canfield
everything, but to raise only the issues related to having received a best and final offer from
R,'W. Beck. When Ms. Canfield approved the contract and expressed the opinion that the

process had not violated the law, she believes it was because she was not aware that negotiations

had taken place outside the presence of the procut'ernent staff. Mr. Gores told us he agreed that
he had not wanted to make full disclosure of all of the irregularities to Ms. Canfield because he
was concerned that Ms. Canfield might take aggressive action and withdraw the agency's
delegation. FIe was concemed he might lose his job if something he did resulted in such an
action. He also told us that he and Ms. Wise agreed in advance about what they would tell
Ms. Canfreld. Mr, Gores disclosed to Ms. Canfield that the progfam staff had gotten ahead of
the procurement staff in their discussions, so that the negotiation issue was discussed in his effort

00205053.4 24
to obtain advice how to proceed. Mr. Gores was clear after that discussion that once the

rescoring was done "we had dodged a bullet," and the contract was in compliance. He
was also

of the opinion, after this meeting, that the agencywas not required to cancel the contract, which
had been one of Ms. Wise's oPtions.

We acknowledge that Mr. Gores and Ms. Wise had their own reasons for not providing
Ms. Canfield fuIl infonnation to aid her review of the irregularities in this contracting
process,

In the end that deliberate concealment was not helpful. Based on what she was told,
that the
Ms. Canfield sigrred off on the process and concluded there were no legal violations and
contract could properly be issued. certainly Ms. Fraser, Ms. Honeywell, and Mr. Seesing
(Mr. Long was gone by that point) can legitirnately argue that they had, and now have, a right to
rely on Ms. Canfield's approval. That approvai is evidence by which they can prove they lacked
a culpable mindset. It also raises a legitimate question about the responsibility and role of the

procurement staff who are the specialists in contracting requirements and who had the authority
that
to stop this contracting process if they thought any part of it was unlawful. They now state
they declined to exercise that authority for largely personal reasons, although Mr. Gores also
says he is not aware of any illegality.
done
Our comments are not intended to be critical of the work the procurement staff has
in the interim to evaluate this process. Among other things, such a review after the fact is
educational and communicates "lessons learned." our issue, however, is whether disciplinary
action should be taken against Mr. Long, Mr. Fraser, Ms. Honeywell or Mr. Seesing, none
of

whom is a procurement specialist. The record supports that Mr. Seesing and Ms. Honeywell
who should
were participating in telephone communications without directly involving Ms' Wise
have been involved. The record also supports that Ms. Wise knew there were communications
going on at the time and that she chastised Ms. Honeywell in some fashion, but nevertheless
signed the contract. Ms, Wise admitted to us she was not sufficiently forceful in how she
staff
handled her r.esponsibilities. At best, there were mixed messages as to whether procurement
thought, at the time, that the law was being violated or that the process was in compliance.
DIS EVENTS CH CO TO NOF
LIN YS

The handlilg of the Energy Assurance Grant took a number of months and was canied
to the
out in discrete steps, By linking these steps and viewing them in the light least favorable

002050s3.4
25
 empioyees one catl credibly argue that the Energy Assurance Grant process was mishandled or
tailted. The affected employees, however, have offered a thoughtful explanation for each of the

questioned steps and we have not seen substantial evidence to cause us to disbelieve those
explanations. Each of tliese steps in the process, moreover, has been explained in ways that
contradict the theory that apparently drove the criminal investigation.
Before addressing these issues, however, it is our opinion that the context of the
leadership change at the DOE needs to be mentioned. Brian Shipley, Deputy Chief of Staff for
then-Governor I(ulongoski, supports the view that Mr. Long was asked to take over the
Department of Energy in part to restructure the agency; it was in need of restructuring and failed

leadership had damaged its credibility and operations. Mr. Shipley told the criminal

investigators that given the profile of the department, the Governor had wanted to bring in an
agency director to reorgani ze the agency for a bigger, higher profile mission, and wanted
Mr. Shipley's office to be involved in the process and "to work closely with Mark, to suppolt
Mark" in his efforts to change the way the agency did business. (Interview of Septernber 14,
2OIO @ 6). Mr. Shipley confinns that during the organizational changes, Mr. Long was
repeatedly in contact with the Govetnor's office:
!'tJrn, you know, but he also consulted frequently on other
decisions at the depafiment. Um, the- the- his plans. He was
checking in, you kuow, regularly on his plans for some of the
restructuring of the agency that he did, and other people that he
was bringing in to the- to the agency. So, you know, he was- he
was very frequently calling me or- or checking in to give a heads
up to the governor's offîce about what was going on at the
Depaftment of Energy, which was- which was something, you
know, we had sluggled with, um, in- in- in the past. You know,
being able to just know what was going on in, you know, the
governor's Department of Energy. So- So, he was err- He would
err on the side of making sure we knew, um, what was going on."
(Interwiew of September 14,20T0 @7).

Mr. Long's duties were ovenvhelming:

((*++
I mean, Mark was overwhelmed. I mean, the- the agency
was overlÀ/hehnecl with all the demands of closing down the
legislative session and- and reorganizing and increasing the size
of the department and implernenting, you know, stimulus
programs where there was no existing capacity. You know, one
program had been a five hundred thousand dollar every two year

002050s3.4 26
 program, and all of a sudden, with the stimulus, was a forty-two
million dollar program. And there was big pressrÍe to get the
money spent within a- within ayeat. So- So, you had a whole lot
going on. Early on, his conversations with me about the- the
energy assurance planning grant, um, he was contemplating
tuming down the money, Um, you know, and it- it wasn't a- a
big grant in comparison with some of the others, you know, that-
that the state received. Um, but- but that was the kind of thing
tliat he bring to be- to be, 'This is what I'm thinking of doing.
Are you ok?' You know? 'Is the govemor gonna have a problern
if we turn down stimulus rnoney?' Urn, you know, and I
cornmunicated back to him, 'Yeah. The governor doesn't \ryanna
turn down stimulus money. You know, we need to- to find away
to- to make this work."' (Transcript of September 14, 2010 @
e).

Mr. Long viewed the DOE as dysfunctional, lacking in accountability, and suffering
under an unworkable management structure. There can be little doubt that these substantial
changes within the department were not welcomed by at least some of the department staff. Kip
Pheil, fol example, commented during his interview with the criminal investigators:
"I've been here for 20+ years and when we got a ne\ry director last
year he brought in an awful lot of new people that have real
strong ideas about how we should do things, and didn't have any
experience. +** I think there's a reason why you have contract
people and ploject management people also look at things, cause
they'll see things, certainly, differently than somebody who's,
you know, kind of a techno geek or whatever'" (Interview of
August I9,Z0l0 @8-9).

During Mr. Long's tenure, the size of the DOE staff increased by about 26-27 positions.
Some, like Ms. Honeywell, were on job rotation so he could see how they performed in their
positions.
These concerns should be considered in evaluating whether the Energy Assurance Grant
was handled in an "irregular fashion." It was Mr. Long's assignment from the Governor to

restructure the Department of Energy. "Different," "ilTegulaf," "unusualr" even "bizarre" is not
the same thi¡g as "illegal." In considering the employment status of these four employees,
consideration ¡eeds to be given to the fact that their marching orders 'were, at least in paft, to
handle things differently from how they had been handled before.

0020s053.4 27
 1. Initial decision not to pursue the funding
Mr. Long had initially decided not to pursue the Energy Assurance Grant due to the

relatively small size of the grant coupled with the complications of the process, coupled with
how busy he and the department were at the tirne the funds came available. He reversed that
decision based in large part on political pressure, both from the United States Departrnent of
Energy and Govemol l(ulongoski's office.
The Goveruor did not take this position for any inappropriate purpose. It would require a
stretch to assume, even for the sake of argument, that then Govemor Kulongoski would have
insisted upon pursuing the funds so that the benefit might eventually accl't]e to then-candidate
John Kitzhaber's companion. We do not believe that a plausible inference can be drawn t'om
these events. The judgment to forego the funds initially was a sensible olte, as was the decision

to reverse the judgment.

The factors which led to Mr. Long's initial desire not to pursue the Enelgy Assurance
Grant, as weil as the Governor's office's position on investigating all sources of funding were
explained, we think adequately, by Mr. Long and Mr. Shipley. In brief, Mr. Long's duties in his
new position were overwhelming and there was substantial other funding available and in need
of management. The Eriergy Assurance Grant was relatively small. In light of everything that
was burdening the department and its new interim director at the time, the Energy Assurance
Grant was something he believed his staff could not handle. The Govemor's office's reasons for
urging reconsideration of that position are similarly understandable. At a time of budget
shortfalls, with a policy decision to pursue available funding, it was believed that this additional
grant should not have been bypassed. Mr. Long did not make the decision to pursue the grant on
his own; rather, the Govemor's office was involved.
The record lacks evidence that the Governor's office was rnotivated by anything other
than the stated pulpose of pursuing all available funding for the good of the State.

2. Cytvia Hayes' involvement in the grant application.

Cylvia Hayes offered uncompensated assistance in preparing the grant applícation.
Mr. Long, Ms. Flaser, and Ms. Honeyr,vell state that it is not unusual to have a private party
involved in a grant application. They explain that the area was very specialized and the tirning
short. Under those circumstances, Ms. Hayes obtained an opportunity to participate at an early
stage, describing formulatingthe work that would be done under the grant.

0020s053.4 28
 The crirninal investigators saw this as a red flag, presumably devefoping and supporling
the theoly that Ms. Hayes received preferential treatment at an eariy stage in the process, was
aliowed to define the scope of the work, and would accordingly be benefitted in the later process.
That theory is not supported by substantial evidence. Specifically, Mr. Long explained the
circumstances under which he was laboring at the tirne and how Ms. Hayes' volunteering her
assistance was a benefit to the agency and ultimately to the State. Ms. Fraser and Ms. Honeywell

both explained they had prior experience with private parties being involved at the funding level'
Ms. Fraser told us that she thought that Mr. Long should have invited other private parties at this
stage to participate in the grant writing process, not because it was required but rather because

other eventual participants in the RFP process might believe that they were shortchanged.
Ms. Hayes said her work was volunteered without expectation of þenefit.
The most that can be said is that Mr. Long made a choice to accept the seruices of a

volunteer, without being sensitive to how that might have looked after the fact if the volunteer

also became an applicant for the contract. We did not find substantial evidence that offering the

opportunity for early input was part of the design to offer a special deal to Ms. Hayes. In the
end, Ms. Hayes a¡d her business received scant benefit and her work at the application stage was

uncompensated.

As was the case with some of Mr. Long's other decisions, there was solTle criticisrn that
he assigned Robert Underwood, a relatively new arrival at DOE, to tasks on the Energy
Assurance Grant. Judge Yraguen, for example, questioned Mr. Long about why he would do so
in light of the relative experience levels of Mr. Underwood and other long-term employees in the
depafiment. Mr. Long explained that he valued Mr. Underwood partly for his talent, and partly
because Mr. Underwood brought budget and fînance experience to the table. Mr. Long's
predecessor was criticized for his failure to provide accurate budget forecasts, a failure that
created significant problems in the department's relationship with the legislature. Mr. Long
believed Mr. Underwood's financial and budget experience was a valuable resource.
Mr. Long also explained that some of the ernployees who found fault with his staffìng
decisions were employees with whom he had his own issues. In our view, these are not
insubstantial concems on Mr. Long's pafi, and the record does not contain sufficient evidence to
suggest they were a subterfuge to conceal a desire to funnel money to Ms. Hayes.

00205053.4 29
 Ms. Hayes is well known in Salem and her businesses have done work with the State
before. At least one person told us she was considered a "rock star" in Saleln in the energy field.
She volunteered her time o¡ an impoftant energy working group. We know of no regulation that
would prohibit the agency from accepting an offer of volutteer help like hers. With the benefit
of hindsight we would point out that agency leadership (Mr. Long and possibly Ms. Fraser)
should have seen that Ms. Hayes involvement could be politically sensitive. We do not,
however, see evidence in this record to suggest that this was the result of anything more than the
press of time, a grant application that was an annoyance, and a handy and knowledgeable
volunteer.. We have not seen credible evidence in this record that there was any early plan to
involve Ms. Ilayes in the grant proposal for the purpose of giving her a head start in the process.
Although Ms. Honeyrrvell said something different to the Department of Justice, when she
spoke to us she insisted that there was no advance agreement or directive to provide special
benefits to Ms. Hayes. Ms. Hayes has consistently said that she had no promise of benefit from
her participation in this process.

3. Mark Long's discussions describing Cylvia llayes' relationship with John

Kitzhaber.

On at least one occasion (to Ms. Fraser) and possibly more (to Ms. Honeywell), Mr. Long
identified Ms. Hayes as being John Kitzhaber's companion. Competing inferences can be drawn
frorn the fact that he did so. It is, for example, explained as a "heads up" background fact. That
is how Ms. Fraser understood the information, that it was background for her to understand the
context of Ms. Hayes' involvement, but not as an instnrction to apply favoritism. It could also,
however, be explained as part of an instruction to ensure that Ms. Ilayes received pleferential
treatment. That is how Ms. Honeylvell described it during the criminal investigation, though she
told us during our interview that Mr. Long never instructed her to favor Ms. Hayes. Mr- Long
explained that he spoke about the relationship as a way of providing context so that his team
would not be blìndsided by learning it later. Neither of these explanations is inherently more

credible than the other. One is entirely appropriate; the other is entirely inappropriate.
The only evidence in this record suggesting there was an inappropriate reason for
identifuing Ms. Hayes came from Ms. Honeyweli during the crirninal investigation. There are
reasons to disregard that evidence as stated below, including the fact that she told us something

different.

0020s0s3.4 30
4. Discussions identifying a desire to single source.
Some events and conversations suggest that Mr. Long rnay have had or expressed a

desire to single source this contract. This record does not reflect substantial evidence that if he

had such a desire, lie took significant steps towards that objective. The evidence on this issue is
sparse. Mr.. Long recalls asking, probably of Ms. Honeywell, whether the contract required a
cornpetitive process and accepting her statement that it did. Ms. Wise recalls overhearing
Mr. Long asking Mr. Fast about the required process and stating that the process would be done
as required by law (Interview of August 12,201,0 @ 2). Ms. Honeywell recalls the need for a

cornpetitive process coming up repeatedly, with her stating each time that a competitive process
would be required. There was discussion about whether the law pennitted a single source
contract. All witnesses agree that no direct or sigtrificant steps towards a single source contract
were taken.
Competing inferences can be dlawn from the available evidence. There are pennissible
single source contracts. In addition, there are some kinds of federal funding which pennit the
kind of "writing in" that would permissibly be awarded without a competitive process.
il at all unusual for someone not schooled in
Procurement is so complicated that we don't find
the intricacies of the rules to inquire about or misunderstand what procedures might be
applicable.
To discuss the proper procedure to foilow in public contracting is inherently appropriate.
The evidence related to these discussions, however, is not significant for that reason. Rather, the
question it raises is whether the discussions support a pennissible inference that Mr' Long was
motivated to find a way to circumvent the contracting mles and, in so doing, shopped for
answers by asking people on several different occasions to see whether he might get a different

answer. It could also lend weight to the view that the RFP process was a sham or was
disregarded in an effort to provide a benefit to Ms. Hayes.

In our view, such an inference lequires considerable speculation and is not likely to be
sufficiently useful in informing decisions related to Mr. Long's employment. Ms. Honelwell is
alone in stating that Mr. Long needed to be persuaded to use the RFP process. Regardless of
what Ms. Honeywell told the criminal investigators or Judge Yraguen, she told us she had
received no unlawful instruction from Mr. Long. Ms. Wise reported that she heard Mr' Long
state that the contract would be handled in accord with proper procedures. There was a

0020s053.4 31
competitive process and Ms. Hayes has said that she was awale early in the process that she had
no guarantees of receiving the work.
S. Impressions by Ms. Hayes or her companies that she could be '(written into" the
worl< without submitting a proposal'

For a time, Ms. Hayes, ol others in her businesses, had the impression that no competitive
process would be required. It is not entirely clear whose statements caused the
misunderstanding, though it is widely believed by some to be Mr. Long's responsibility.
Ms. Hayes was certainly advised that a competitive process would be required and it is not
entirely clear whether Ms. Hayes ever believed she was misled. For example, on September 9,
2010 she told the criminai investigators that she had offered her assistance in the grant
application with "no charge, no guarantee" (Interview of October 27,2010 @ 44), and that she
had a discussion of the potential for being a sole source provider but "it wastt't very long after
that that Mark came back and said, 'we can't do that"' (Interview of October 27,2010 @ 44).
Robert Underwood offered a different explanation for this apparent rnisunderstanding' He
recalled that the federal gfanting authority may have permitted sole sourcing, or that 3E or
TEEM had gotten the impression that way (Interview of August20,2010 @6).
Ms. Hayes had previously done small projects for the State and recalled doing so as a
sole source provider, but said that she made clear all along that she understood there could be a
competitive process for this grant (Interview of October 27, 2070 @ 45-46). At most, she
speculated there might have been a possibility of being "written in" to the contract for a piece of
it because of the agglessive timelines and because she viewed herself as being a champion of the

application for the grant and had done some upfront work on the grant. Ms, Hayes explained
"my thinking there is that the reason he looked at a sole source was probably because, I believe I
just said that, probably because we had a-I had alerted him to the fact that this is going to be
left on the table. It's an opporhrnity for Oregon" (Interview of October 27, 20IO @ 47).

Because of that, she believed she had a role in bringing in a half million dollars in grant money
and "he, at least, was exploring the possibility of doing a sole source with us for our piece of it"
(Interview of October 27 ,2010 @ 47).
A factfinder could believe this evidence provides additional support to a theory that
Mr. Long wanted Ms. Hayes to receive this work and trjed to find à way to make that happen.
We believe it to be less plausible since there was in fact a competitive process, but even

0020s053.4 32
assuming there was a clesire to see TEEM or Ms. Hayes do the work, the theory lacks substantial

supporting evidence that the motivation was to favor Ms. Hayes as a result of her relationship
with John Kitzhaber. There are additional factors in play, including Ms. Hayes' own stature in
the energy field, her role in a key energy cornmittee, her business work and reputation, her
contracting experience, her network in Oregon communities, and the fact that she had donated

time to assist in the grant application.

6. Issues relating to the preparation of the scope of work in the RFP process.
Ms. Hayes participated in the grant application process. It is possible, at least in theory,
that she did so in an attempt to merit consideration as a sole source, or to get her foot in the door
early, or even to draft a statement of work she might be most qualified to perform.
It is not clear how much of the application was the product of Ms. Hayes' input. She

explained to the crirninal investigators that some of the language in the draft scope of work was
required by the granting authority, (Interview of October 27, 2010 @ 42), and Robert
Underwood stated that he had drafted the scope of work ibr the RFP, and that it was not all that

similar to what 3E or TEEM had proposed (Interview of August 20,2010 @ 12-13). Ms. Wise
reviewed the RFP in her role as designated procuremeltt officer (Interview of August 12,2010 @
3-4). While Ms. Wise may not have had approvai authority ovel the content of the statement of
work, she raised no issues about it.
A factfinder could plausibly conclude that by this time Ms. Hayes had ingratiated herself

into the department and the process with the desire to become indispensible or define work in a

way that her companies would prosper. A factfinder could also conclude that Ms. Hayes was
functioning as a businesswoman and as a committee member in an effort to make a value-added
contribution to renewable energy in Oregon and was sufficiently passionate about her work and
the advancement of energy interests in the state to donate her time with no promise of benefit.
What evidence there is, and it is spalse, does not provide substantial support to the theory that
this participation was part of a corrupt design.

7. Notice to Cylvia Hayes that the RFP had been issued.

Ms. Honeywell called Ms. Hayes to tell her that the RFP had been posted on ORPIN; this
notification caÍne at Ms. Hayes' request. We were unable to find any evidence that such a call
was out of the ordinary. By the time the call was made, the RFP was public. Ms. Honeywell
could not likely have called the othel applicants because at this tirne only Ms' Hayes had

00205053.4 33
 surfaced to express interest in the grant work. We know of uo contracting law ol regulation that

prohibits such notice.

8. Appointment of Ms. Honeywell to the scoring team.
Ms. Honeywell, as the responsible manager, determined the composition of the scoring
team, and Mr. Long directed her to participate personally in the scoring. During the crirninal
investigation Ms. Honeywell expressed her own concems about why this had happened. At that
time, she described it as Mr. Long's way of ensuring that she would control the outcome so as to
favor Ms. Hayes.
When we spoke to Ms. Honeywell, she reversed herself on whether she had been given
any iliegal directive, and provided additional information about the scoring process. She told us
that during her tenure at the DOE there were actually very few RFPs, with rnost of the fuirding
going to public bodies, She recalled only about four such RFP processes. The Energy
Assurance Grant was the only one of the four in which she attended the scoring session. It was,
however, the first of the RFPs, and the others happened after Mr. Long left the department.
A factfinder could conclude that Mr. Long was using Ms. Honeywell as his tool to ensure
that Ms. Hayes was favored in the scodng process. A factfinder could also conclude that
Mr. Long's insistence that Ms. Honeywell participate was a result of his belief that she had
overall responsibility over this area and therefore should have participated in the scoring, and
because Mr. Long wanted to ensure new hires were involved given the concerns about how the

department had bcen run before he arrived. One of the things Mr. Long wanted to change was
the RFP plocess because of his concerìs about past bias and cronyism. He wanted
Ms. Honeywell on the committee to effect his changes
Ms. Honeywell's statemeds provide the only evidence that her participation in the
scoring session was a result of Mr. Long's unlawful desire to favor Ms. Hayes. In our view,
however, that is not the more plausible of the permissible inferences. Arnong other things,
Ms. Honeywell attended the scoring meeting and ranked TEEM (Ms. Hayes' company) below
R.W. Beck.
Ms. Honeyr,vell's behavior around and after the scoring process does not support her
statements to the criminal investigators that she was threatened or intimidated. Ms. Fraser was

officed near to Mr. Long and regularly saw or heard Ms. Honeywell interacting happily with
Mr. Long in his offìce. Ms. Fraser described these interactions as friendly. Ms. Honeyr,vell's

00205053.4 34
 behavior did not change. One wouid think that zrr employee forced by threats to participate in a
criminal activity would have at least given sorne indication of being troubled, but she did not.
Pelhaps eve11 Ítore significant in evaluating Ms. I-Ioneywell's statements is her conduct
in the June 2, 2010 meeting, which was intended to address Ms. Wise's complaints about the

contracting process. By this time Mr. Long, who is alleged to have given the unlawful
instruction, had left the Department of Energy. Ms. Wise was criticizing the contracting process,
expressing that she did not want to sign the contract, and offering as an option that the process be

re-started. This meeting presented Ms. Honeywell with an opportunity to end the supposedly
conupt process by allowing Ms. Wise to "win" the argument. Instead, she participated in the
meeting without expressing concerns over the process. She supported going forward.
It is our view that these variances, Ms. Honeywell's scoring at the meeting, and
Ms. Honeywell's later conduct, together with her current insistence that she never received an
instruction to do an unlawful act, sufficiently negate any argument that she was placed on the
committee to support an unlawful objective.
9, Mark Long's reaction following the selection process.
Mr, Long expressed concern when he was noti{ied of the results of the selection process.

A fact finder could conclude that concern was appropriate. The funds in question we¡e intended
to be stimulus funds and were to be used for addressing state-wide issues relating to energy

resources. It is not difficult to understand that a department head would be concerned that

stimulus funds were not being awarded to an Oregon business or that sensitive state-wide issues
were going to be discussed and addressed by an out-of-state corporation with no substantial
business ties in Oregon. It would have been unusual for Mr. Long not to have questioned the
award of the grant to an out-of-state business. A neutral fact finder could conclude that
Mr. Long's concem was appropriate.
This is not to suggest that concerns about this step of the process are misplaced, The idea
of a competitive process is, among other things, intended to ensure that procurement is done

without bias or after-the-fact adjusting and to ensure the procurement process is carried out in
compliance with applicable laws and regulations. There is insufficient evidence, however, that
the objective was to benefît TEEM rather than to ensure an Oregon presence or Oregon
company. There is also a rational basis to want to have an Oregon presence in the handling of

00205053.4 35
 the work on the theory that such a presence could logically contribute to a better work product
for tlie State.
Mr. Long explained his direction was to explore a iawfu1 way to accomplish this
objective, and the only contrary evidence corìes from what Ms. Honeywell told the criminal
investigators (see below).
10. Introduction of TEEM and R.W. Beck.
Ms. I-Ioneywell put R.W. Beck and TEEM in contact with each othel and suggested a

collaboration. There is no law prohibiting subcontracting, provided of course that the contract
itself does not prohibit subcontracting. Nor is there a law that prohibits subcontracting when the
prime contractor has the ability to do all the contract's tasks, again provided that the contract
does not include language prohibiting the subcontract. There is some evidence in this record

which, without explanation, suggests that R. W. Beck was forced or manipulated into
subcontracting with TEEM. An internal R.W. Beck email complained about the state's
discussion of the subcontract, and R.W. Beck's request for contract language to the effect that
the subcontract was at the state's insistence.

the request for

specific contlact language rel to the subcontract was addlessed by Ms Fraser in her

telephone call with R.W. Beck.

002050s3.4 36
 If the desire was to rnake effective use of an Oregon presence in the project, as the
eurployees have explained, TEEM was a logical choice as a possible subcontractor. Kema was

not believed to have any Oregon presence, and Navigant's presence was apparently a single
person in a Sherwood offrce, a presence that was reasonably considered to be relatively
insubstantial.
Procurement staff raised the concern that TEEM was the lowest ranked of the four
proposers. We consider that to be of little or no importance. TEEM was not being provided the
opportunity to work as the contractor. R.W. Beck was, and R.W. Beck was the clear winner at
the time the RFP was scored, and later when it was lescored. Moreover, although TEEM was
introduced by Ms. Honeywell, the overwhelming evidence in this records is that R.W. Beck
made the ultimate decision to subcontract. The criminal investigators do not believe this is true;
they believe instead that R, W. Beck entered into the subcontract to please the client (the State).
There is, however, insufficient evidence upon which to base that

L1. Failure to conduct an additional RFP'

The procurement staff suggested starting over with a new RFP as an option. Judge
Yraguen apparently believed there should have been a new RFP. There is, however, a non-
frivolous argument that the scope of work was not changed enough to tnake that a requirement,
and that any changes did not exceed what was reserved to the agency's discretion in the RFP
process. In addition, R.W. Beck, the wiming proposer, won the contract in the original RFP
process.

The ernployees explain their views: Mr. Long was no longer at the agency at the time the
contract issues came up. Joan Fraser tried to find out what was troubling Ms. Wise, but
Ms. Wise did not identify a clear legal violation and Ms, Fraser was legitimately concerned
about R.W. Beck's position. Ms. Honeyrrveli and Mr. Seesing can justify the decisions they
made by the fact that procurernent staff ultimately approved the contract without starting the
process over.

00205053.4 3t
 1.2. Joan Fraser's oversight, decision to accept the risk, and clarifTcation with R.W.
Beck.

Ms. Fraser had little or nothing to do with the contract until June 2, 2010. During the
June 2, 2010 meeting Ms, Fraser told participants that she would "accept the tjsk." Ms. Wise

interpretetl that statement as signaling her approval of the entire process. Ms. Fraser explained
that the statement was made in response to a specific concem -- the possibility that other
Proposers would protest or that there might be a public records request. That was how the
statement was understood by at least other participants in the meeting, Sara Fast and Dawn Fan.

Ms. Frase¡ also explained that she made the statement after repeatedly asking Ms. Wise, to no
avail, if she could identify any legal impediment to proceeding'
Ms. Fraser also explains the context in which this meeting occured which is important to
understanding her motivation. Ms. Honeywell had been a management challenge during her
tenure in the Department, there was friction between Ms. Honeywell and the procurement staff,
and Ms. Fraser was aware of that poor working relationship. Ms. Fraser was also faced with two

polarized working groups, each of whorn had an important job to do, a contract process that was
already delayed, and a conflict that was taking a tum towards personal sniping. Ms. Fraser
reasonably believed she was faced with an internal dispute and a turf battle between the two
g¡oups. Somebody had to make a decision whether to stop the contracting process or continue.
She made that decision based on what she knew at the time.

It can, of course, be argued that this is all after-the-fact rationalization. We considered

whether there is substantial evidence from which one may conclude that Ms. Fraser was aware of
'What
illegality but chose nevertheless to proceed. evidence exists is sparse at best.

Ms. Wise told us that she had elected to raise her concems with her manager, and not
with Ms. Fraser or Mr. Long (during the time that he remained at the DOE). So before June 2,
2010 Ms. Fraser was not aware that Ms. Wise was concerted. Before June2,2010 Mr. Gores
had told Ms. Fraser what he thought about Ms. Honeywell and about the difficulties in working
with her (Interview of April 21, 201I @53), but had not identified that he thought she was
violating any law on the Energy Assurance Grant. Ms. Fraser is not a procurement specialist, so

she would have been dependent upon information from the plocurement staff to understand their

corlceffrs. She was aware of friction. She was also aware that R.W. Beck had won the RFP
because of the strength of the company's submission.

0020s053.4 38
 Ms. Fraser's explained her thought processes to Mr. Riddell. She told hirn she finally
"ciosed off to" the procurement stafls objections because of their iack of fäcts: "there's one
thing I can't stand in goverument or any othel is people's getting teritolial and turfy and

ernotional and making decisions based on emotion. And if you were there at the tirne with me,
that's what I saw. I saw the body language and I saw the way they framed it. And I thought
their lack of facts - Jirn Gores and -and - Sara never said anytliing. But Jim Gores and Lorena"
(Interview of December 7, Z0l0 @ 33). Had she heard credible facts, she woulcl have been
attentive to them: "Now, had they said -- Listen. Had they said, 'I called DAS ancl I talked to
Joe-Suzie Q, whoever the woman is that nrns the contracts people. She's the authority ancl she
said, 'No, We need to start over.' I'll tell you what. I'd have sat back in my chair and I would
listened to that. But they didn't even do that. They didn't do it" (Interview of December 7,2010

@33-34).
Ms. Fraser also explained hel thought process in deciding to "accept the risk" of these
events. Her cornments, she explained, related solely to procut'ement's expressed concern that
there rnight be a challenge to the award (Interview of Decembet 7, 2010 @ 39)'

Ms. Flaser was apparently forceful and likely made clear she wanted to stop the internal
bickering once the June 2, 2010 meeting had concluded. Mr. Gores told us that one of the
reasons he concealed information fi'orn Ms. Canfield is that Ms. Fraser had made clear that she

wanted the contract to proceed. He didn't want to be seen going behind her back.
Ms. Fraser per^sonally spoke to R.W. Beck so that she could personally confirm that it had
not been pressured.
Given concem about

Ms. Honeylvell's credibility, it would likely have been of greater concefft if she had not looked

into this conceffr personally, She was criticized during the criminal investigation because of her
choice of words. Ms. F-raser explained to us that she deliberately decided to ask the company
whether there was anything wïong for two reasons: first, to be as open ended as she possibly
could and, second, to avoid porlraying Ms. Honeywell in a negative light ìn case her conceüls
were misplaced. Thele is no contrary evidenoe. Others may have phrased it clifferently, but

undel the circumstances, we cannot say that she made the wroug choice in irow she approached
the issue.

0020s0s3.4 39
 Ms. Farr, in her September 28,2010 interview, recalled participating in the telephone
cont¡ersatton.
Ms. Farr also recalled attending the rneeting
with Ms. Wise. When asked by the Depafirnent of Justice interviewers whether this process had
not been "fair," Ms. Fam lesponded "I think you're rnaking a value statement there that wasn't

necessarily in the minds of the people in the room at the time." She went on to explain that the
meetíng started over the concem that they might have made a mistake but that Joan F'raser
repeatedly asked Ms. Wise "do we have any concems here where we are being illegal or not
following proper protocols," and Ms. Wise "didn't jump up and say wait stop the presses."
The June 2, 2010 meeting also raised the question whether there were any written
communications with R.W. Beck. That has been portrayed in a negative fashion, but we think
that porlrayal is inaccurate and not based on substantial evidence. Ms. Honeywell stated at the
meeting that she had made a verbal commitment to R.W. Beck, something Ms, Wise said she had

not had the authority to do. It was prudent, in our view, to require a review of comtnunications

to see if there had been a written commitment as well. Given the inegularities in this process, it
would have been an effor for the parties not to har¡e attempted to identify what commitments
rnay have been made to R.W. Beck. There is no evidence from any of the participants that
anyone at the meeting viewed this exchange as an instruction to destroy or fabricate evidence.
Ms. Fraser explained that the suggestion, to look for written comrnunications, was raised by
procurement staff Sara Fast. Ms. Fraser thought it was a good idea to "see if there's anything
that either supporls or doesn't support this discussion" (Interview of December 6, 2010 @35).
Ms. Fraser was not even certain at the time that the formal contracting rules needed to be
followed because the ARRA fuirding was not a contract. She had been given advice by the
Depafiment of Justice that "this is actually not a conh'act. It's a grant and we don't have to
follow the DAS plocess" (Interview of December 7 ,2010 @ 37). Right or wrong, that evidence
of her subjective understanding merits considelation because it is part of tlie context of the
June 2, 2010 rneeting and relevant to the evaluation of her tnotives and intentions.

13. Procurernent authority a¡rd State procurement review.

There has been some apparent confusion about the manner in which this file was

reviewed by the state procut'ement office. What is clear is that Mr. Gores and Ms. Wise spoke to
Ms. Canheld of the state procurement office after the June2,2010 rneeting. They discussed

0020s053.4 40
some concems they had, Ms. Canfield reviewed the f,rle, and Ms. Canfield expressed the opinion

that the handling of the matter was lawful.

After the fact, however, in the context of the investigation, there were questions about
how thorough a review Ms. Canfield really did. Mr. Gores and Ms. Wise told us that they had
concealed information from her, though Ms. Wise's contetnporaneous notes do not reference
concealment. Her notes say, instead, that Ms. Canfield leviewed the file, asked questions, and
discussed the scoring process. Ms. Honeywell also told us that the entire RFP file was open and

available to Ms. Canfield.

Judge Yraguen thought Ms. Canfield did not know enough about the handling of the RFP

to supporl her opinion that it had been handled lawfully. Whether or not that is true is not
relevant. She expressed that approval. Ms. Canfield approved proceeding, Mr. Gores was
satisfied, and Ms. Wise signed the contract. Mr, Gores, who appears to have known of all of Ms.
Wise's concerns, remains firm even today that he knew of no smoking gun or laws that were
broken.
Ms. Wise says she signed the contract only out of concems for her job. Ms. Farr,
however, states that she clarified for Ms. Wise that she was not required to sign the contract
because she was concerned she might have earlier left her with a wrong impression (Interview of
September 28,2010 @ 24-25). Ms. Fraser reported that she has in the past been in positions
where she has refused to sign documents "and I still had a job," explaining that she supported
any ernployee exercising his or her own conscience (Interview of April 21,2011 @ 10). That
was the message Ms. Fraser gave Ms. Farr-who repeated it to Ms. wise.

There is mishandling at many levels, including procurement. In considering what, if any,

disciplinary action to take against Mr. Long, Ms. Fraser, Ms. Honeywell or Mr. Seesing, we are
of the view that the missteps of other state employees are relevant. For example, nobody has
suggested that Mr. Gores or Ms. Wise should be disciplined for concealing information from
state review. Nobody has suggested that Ms. Wise should be disciplined for signing a contract
which she apparently personally believed to be illegal. Those issues will undoubtedly be raised
by way of argument in any employment challenge to be raised by the four employees' It has
already been assefted by counsel on behalf of Mr. Seesing, for whom tetmination was
recommended by Judge Yraguen only because of his participation in a tainted process.

00205053.4 4I
 Additionally, at least three of the four ernployees will certainly argue in tlieir own
defense that they were entitled to rely on these final sign-offs by two levels of procuremeut
specialists (Mr. Long wâs gone by this time). The department and state procurement persomel
have compliance responsibilities; if they had legitimate concerns they should have refused the
final approved or returned to management with an explicit statement of theìr concerns. Iustead,
they communicated a final approval of the process. That approval plocess may have been flawed

- Ms. Canfìeld may not have had a thorough understanding of the events. Mr. Gores and
Ms, Wise may have been concerned they might be disciplined for continuing their objections.
But in the end the contract was approved. Ms. Fraser, was aware of the state review (Interwiew
of Decembet 1,2010 @72); in addition, she subjectively understood that the Department of
Justice legal sufficiency review was a thorough review of the process (Interview of December 7,
2010 @ 59), Mr. Seesing had the same understanding (Interview of August 18, 2010 @ 5). In
fact, Jesse Ratcliffe who did the sufficiency review told Ms. Wise she did not see a problem with
the "RFP documents" (email, June 1, 2010).

14. Justification for contract price increase.

At the end of the negotiation process proglam staff had to prepare paperwork explaining
the price increase which, while higher, was still within the conÍ'act limits. Ml. Long \/as gone

from the agency by then and was not involved. Ms. Fraser was not familiar with the process and
was not asked to review it (Interview of December 7,2010 @70).
Ms. Wise's contemporaneous notes state that there was a meeting arnong the
procurement staff (Ms. Wise and Mr. Goles) and Ms. Farr fi-om central services. Ms. Wise
mentioned that she needed a justification for the increase in the price. Mr. Seesing drafted it, and
sent it to Ms. Honeyr,vell for review. Ms. Honeywell finalized it.
The justification is not inconsistent with R. V/. Beck's views.

0020s053,4 42
 Ms. Honeywell asserted that the timeline changed in the sense that tirne had been eroded,
not tlrat the timeline for deliverables was changed (Interview of October 27, 2070 @ 6I).
However, she also stated that she had not spoken to R.W, Beck to understand the pricc change
(Interview of October' 27, 2Ol0 @ 62). At the time of the justification she did not believe that
R.W. Beck was being forced to use TEEM (Interview of October 27,2010 @ 65). She recalls
Ms. Fan agreeing to the justification (Interview of October 2l ,2010 @ 66)'

Ms. Honeywell does not

believe that the written justification was inaccurate. Once Mr. Seesing and Ms. Honeywell had
worked through the cost justification documentation, there were a nunber of email

comrnunications on June 9, 2010 between the ptogratr staff and procurement staff. Paul Seesing
sent the draft to Lorena Wise, Rhea Rodrigtez and Jim Gores; Mr. Gores offered feedback and
made suggestions about additional content; Ms. Honeywell offered additional input; Mr. Gores
finally approved the document.
15. Best and final offer.
The single step process that was identified by this RFP did not involve a best and final
offer prooess. However, R.W. Beck was invited to provide one, which confused, at least,

Mr. Gores. He discussed this with Ms. Canfield, however, and Ms. Canfield's advice was to re-
score the proposals. R.W. Beck was still the wimer and Ml. Gores concluded that the contract
could lawfully proceed.

L6. General observations.

Isolated events can string together to fotm a course of conduct. They can be ambiguous,
relatively questionable, relatively benign, unusual, by the book, and every other possible
charactedzation. Unexplained, the chain of events can be used to suppoft, though not
independently establish, a possible corrupt course of conduct. Explained, many of the individual

00205053.4 43
events lose their persuasive force, particularly coupled with individual discussions of the actors'

mindsets and motives.

Mr. Long and Ms. Fraser have placed particular emphasis on their explanations and have
argued that any fair consideration of their explanations shows they acted for innocent reasons.
For example, they point out:
o Mr. Long was forcefully persuaded to apply for these funds despite his
depaftrnent's staffing challenges and in face of his own overcommitted schedule
and over-whelming responsibilities. He was charged with the near-impossibie
task to tum the department around and change its toxic culture which necessarily
set hirn against many long term employees who were vested in their longstanding

ways of doing business. He had insufficient time for recruiting and staffìng
decisions and had to take some risks. He did not want to work at the DOE in the
first place, and was hoping to return to Building Codes, agreeing to stay on after
six months only at the Governor's request. He wanted to do his best to keep
fiìoney in the state. He trusted that he could depend on Ms. Honeywell, who had
excellent paper credentials and whose talents were lauded by at least one
reference. He is not himself a pïocurement specialist, but believed he could rely
on the experlise and good judgment of his staff. By the time events took a w'ong
or irreguiar turn, he was no longer with the <lepartment.
o Ms. Fraser joined the DOE at Mr. Long's request and was responsible in part for
admi¡istering many of the issues that arose in light of the turmoil that the abrupt
leadership change had fostered. She was not responsible for the contract. Her
initial contact with Ms. Honeywell on the contract was rnerely Ms. Honeywell's
outli¡ing options following the scoring. There was nothing in that contact to
suggest anyone intended to violate any law and she understood that
Ms. Ho¡eywell would work closely with procurement staff. She attempted to

introduce some measure of perfotmance management to Ms. Honeywell's

employment when conflicts began to surface, but was not aware of problems with
the energy assuïance grant until June 2, 2010. The June 2, 2010 meeting was
ineffective if the goal was to put her on notice of illegality, She asked directly

whether there were legal violations and heard back that Ms. Wise was upset

00205053.4 44
 about exclusion, but not violation of the law. She was legitimately concemed

about the nghts of the clear winner, R.W. Beck, and in the face of uo clear
illegality made the decision to proceed, having personally checked certain details.
Ms. Fraser is close to retirement and was unlikely to see any benefit from
curryng favor with the presumptive new Govemot's girlfriend.
a Ms. Honeyr,vell had responsibility for a number of glants, most of them more
significant than the enelgy assurance grant. She argUes she attempted only to
follow inshuctions and worked with procurement from the outset' She can

identify a number of contacts with procurement.

a Mr. Seesing followed directions, was very involved with procurement, and

communicated with Ms. Wise and Mr. Gores on key issues'

JUSTICE DEPARTMENT INVESTI GATION:
CONTRAD F'Á.CTUAL ST
AND ST ANI) ATIONS

The criminal investigation into this rnatter is controversial. It has resulted in adverse
publicity, two known bar complaints, and credible arguments by three of the four ernployees that
its unfairness has tainted any investigation into their conduct. During the investigation, the
following factual statements were made by Sean Riddell, Chief Counsel of the Oregon
Department of Justice Crirninal Division, that areparticularly troublesome:
To Joan Fraser: "They [R'W. Beck] said, 'Oregon won't give us
the contract unless we take TEEM."' (Interview of December 7,
2010 @32);

To Joan Fraser: following her explanation of her conversation

with R.W. Beck about contract language, 'oSee, that's - that's not
what they're telling us happened." (Interview of December 7,
2010 @ s1);

To Joan Fraser: "All of their discussions with us now are saying,

'Oregon made us hire this person."' (Interview of December 7,
2010 @ sr).

To Joan Fraser: "All of the discussions we've had with R. W.

Beck now, people on tape with a lawyer present saying, 'Oregon
madeus do this."' (Interview of Decembet7,20L0 @51-52);

00205053.4 45
 To Joan Fraser: "[W]hat thcy't'e stating uow, that Oregon's
rnaking us do it, and somehow or another it changed'" (Interview
of December 7,2010 @ 5);

To Joan Fraser: that lequesting a subcontract is a violation of

procurement law (Interview of December 7,2010 @ 58);

To Ms. Honeywell: "'When we showed them that justification,

they say that's a lie" freferring to showing R.W. Beck the
justification for the price increasel. (Interview of October 27,
2010 @ 63).

DOJ Special Agent Dennis Carson made the following statements

To Joan Fraser, in Mr. Riddell's presence: "The documents that I

have, the people that I've talked to, state that the day before, on
August 1 lth, you tell them to pull all of the emails related to this
case." (Interview of December 7,2010 @ 67);

To Dawn Farr: "I'll tell you, they didn't walk away from that
phone call feeling thatit was up to them" [referring to the Fraser
telephone call in which she asked if anything was wrongl.
(Interview of Septemb er 28, 2010 @ 6);

To Dawn Farr: "And I'll tell you straight up, it is clear they do
not walk away from that phone call ... with any impression that
they have a choice ... whether they're gonna hire TEEM or not-"
(Interview of September 28,2010 @ l5).

Mr. Long declined to be interviewed by the DOJ based on counsel's recomlnendation

resulting from cornmunications between his counsel and Mr. Riddell.
SHELLI IIONEYWELL INCONSISTENT TESTIMONY
Ms. Honeylvell's status provides the most clearly defined legal protections under state
law. In addition, she makes the most pointed complaints about the treatment she received at the

hands of the criminal justice investigation team.4

At the end of her first long intelview with the Department of Justice crirninal
investigators, after a pause and some apparent threats, Ms. Honeywell made the following
statements (excerpted) :

a
We would note that Ms. Honeywell's attorney has taken the position that her statements have "been consistent,
truthful, and fully supported by the documentary record" (letter from David Aageli, Aprll2l,2011)'

002050s3.4 46
 "RIDDELL: Ok, Ms. HONEYWELL, this is Sean RIDDELL
'We've
again. laid out how TEEM received preferential treatment
in this contract, how the procurement and contt'acting laws were
violated to make sure that they were hired as a subcontractor,
R.W. Beck has represented that they- they did it because they
were told to do it by you all. I'm asking you if Mark LONG
directed you to get TEEM as a subcontractor on this contract,

RIDDELL: I understand. Did Mark LONG direct you to give

preferential treatment to TEEM to get them as a subcontractor on
this contract?

HONEYWELL: Yes.

RIDDELL: Well, this is your chance to talk' Somebody's going

to talk. Somebody always talks and you're the first person who's
been given the opporhrnity and it oniy gets worse from here, so I
need you to answer questions. When and where did Mark LONG
tell you to give TEEM preferential treahnent?

HONEYV/ELL: Itwas August 13'l', last year.

RIDDELL: Ok.

HONEYWELL: He brought me into a meeting and he told me

these were all the people that were gonna play a part in the energy
assurance grant. He said that the goveülol'said that we had to go
after it.

RIDDELL: Ok.

HONEYWELL: And that somebody- This is how stupid I am.

He said somebody by the name of 3E Strategies' I put it as 3G
Strategies in my notes, even, because I didn't l¡rrow.

RIDDELL: Ok. AU risht.

HONEYWELL: And they were playing a role because it was

gonna be diwied up and because everyone had to get the grant
first, that they need a consultant, and that this way they could
help us, And so, I continued to do the job I was supposed to do.

HONEYWELL: And he would say that...He said that deals were

cut, that that's the way it was.

RIDDELL: Deals with who?

0020s0s3 4 47
 HONEYWELL: He kept infening that the governor's office had
sornething to do with it."

(Interview of September 30,2010, @91-94).

Ms. Honeywell's second interview took place approximately a month later. She

describes in that interview that she learned that Ms. Hayes or 3E Strategies had a distinct
impression that the company would be awalded a piece of the contract. When it was ultimately
awarded, she describes her own thinking as "that was when I had concems that we couldn't just
have a consultant put into the grant itself in making application, that, you klow, we would have
to go open competitive with an RFP" (Interview of Octob er 27 ,2070 @ 12). She recites that she
personally told Ms. Hayes not to assume she was part of the grant since it had to go through an
RFP process (Interview of October 27, 20t0 @ 16), and that she expressed her concern to
Mr. Long that 3E or Ms. Hayes thought "they're going to receive this g'ant" (lnterview of
October 27,2070 @ l7). At that point Mr'. Long stated that "Cylvia Hayes needs to be told"
(Interview of October 27, 2070 @ I7). We would note that these conversations with Mr. Long
and Ms. Hayes make no logical sense if Ms. Honeywell had been directed earlier, as she stated in

her DOJ interview, to ensure that Ms. Hayes' company received preferential treatment in this
process,

Ms. Honeywell related to the criminal investigators that after the selection and scoring
process she informed Mr. Long that R.W. Beck, or an out-of-state company, had been selected,
that he expressed concern about "the Oregon company," and that at the time he was angry
(Interview of October 27,2010 @ 27-25). Ms. Honeywell relates that she was directed to "fìx
it," which she thought was to find a strategy to bring TEEM on board, not because TEEM had
anything special to offer, but because Mark Long wanted TEEM to be on board (Interview of
October 27,2010 @ 39). Ms. Honeywell also stated to the criminal investigatols that she had a
secret hope that R.W. Beck would refuse the subcontracting so that she would be relieved of
continuing the contract process (Interview of October 27,2010 @ 48).
Ms. Iloneywell said something difïerent to us. She stated that Mark Long had never
directed her to do anything illegai. When asked to explain what happened in her April 13, 2010

meeting with Mr. Long when he described the instructions as coming "from the top," she said
that he was speaking only about the political pressure to apply for the ARRA funds; he was not

00205053.4 48
talking about TEEM. Her statements to us are more aligned witli the responses she gave during
the initial part of her first justice department crjminal interview.

Ms, Honeywell's statements clianged after the following statements by Mr. Riddell (all
citations are excerpts fi'om the interview of September 30, 2010):
"I'm about to lose my patience" (@ 83);

"So, R.W. Beck, throughout the process, ÍÌom originally awarded

to the time the contract is signed, is under the impression that
you, Joan Fraser, Mark Long, and the Oregon Department of
Energy is directing them to work with TEEM" (@89);

"I wanna know why. I want to know why TEEM was given such
preferential treatment. I want to know why" (@ 90);

"It if you come forward and say it yourself, but did

sounds better
Mark Long tell you to do this? And I can step out now, because
it's very - Your ansrvr/er, your - Hold - Ilold on. Let me
understand. It - Let - Don't - Don't - don't answer that. 'Cause
it's very important right now that you understand the gravity of
the situation. Ok? Your original answer to this question is
extremely important. I'm gonna ask you again in five rninutes."

"And it's very important, probably more irnportant than any other
time in your life, that you are completely and utterly honest with
me when I come back and ask those questions" (@91);

"I'm not uns¡rmpathetic and we can do things fot you" (@91);

"Do you really think we can't take care of you? Do you really
think these people can get to you?" (@92);

"And I'm not unsympathetic to that, but I need io get some

answers to some questions, and then we can talk about your
personal safety" (@ 9Z);

"Your turn and your safety will come, I promise you that"
(@e2);

"You got close to thirty years of law enforcement experience next

to me in Dennis Carson. OK? He's been up and back again and
he's protected people. Look at me" (@93);

"Well, this is your chance to talk. Somebody's going to talk.

Somebody always talks and you're the first person who's been

002050s3.4 49
 given the opporlunity ancl ít only gets worse fiom here, so I need
you to answer questions. When and where did Mark Long tell
you to give TEEM preferential treatment?" (@93).

Ms. Honeyrrvell has given materially inconsistent statements tlroughout this process. If
her statements to us are true, she did not plovide complete or truthful infonnation to the
Departrnent of Justice. If her statements to the investigators during the second interview are

hue, she did not speak truthfully during her first interview, or to us. While that conduct might
otherwise provide gtounds to terminate, that right is not without complications or risks' The
language of the immunity agreenrent, discussed below, might be broadly interpreted to protect
her from disciplinary charges under these circumstances. Any decision to discipline

Ms. Honeywell for her statements should take that risk into account.
Ms. Honeywell can be expected to explain her statetnents at the end of the ftrst interview
and during the second interview as being the result of consciously used interrogation measures

by Mr. Riddell and Mr. Carson. She was interviewed during her mother's serious illness when
she was herself on protected family medical leave. Her counsel stated that she was "brutalized"
by the DOJ investigators (Letter of David Angeli, April 21, 20Ll @ I2).
Ms. Honeywell told us that towards the end of the first interview Mr. Riddell continued
to get more agitated, communicated that she was not using her words correctly, or was using the
wrong words. When the tape was off, she said, he pounded his hand on the table and said he was
tired of "this" and that she needed to be aware of the fact that her life was forever changing
because she had committed a crime and was going to prison, that tliis was her only opportunity

to come forth and tell the truth, and that she needed to recognize how important the moment was
for her and the fact that her life was changing. She reports that he was standing over her,
"towering over the top of me." Her attorney spoke in the hall to ask for clarification and asked
what had been illegal. Mr. Riddell stated that she had committed the crime of official
misconduct (Shelli Honeywell personal interuiew @ 58-61).
Joan Fraser explained that "I was under the impression that anybody doing an

investigation asks questions and then draws a conclusion. And you might have in your mind
where you think you'l'e going, but you're open. They sort of were on the attack and made
statements instead of asking questions. And I believe at this point, after reviewing the
transcripts, that they told me a lot of things that were not true. And I have been in state

00205053.4 50
 government a long time, and I think that's not doing the public-not doing work in tire public
interest. We're not drug lunners or rnurderers. And so I believed them when they said that R.W.
Beck-for example, all their emails indicated that they were forced to do this; that they did not
want to do this, blah blah blah. At that point, I believed them. I had no reason not to" (interview
of April 21.,2011 @ B). She says her responses to some questions resulted directly from that
mistaken belief.
IMPLICATIONS OF HONEYWELL IMMUNITY AGREEMENT
After her first interview with the Department of Justice in the criminal investigation,
Ms. Honeywell was offered immunity. Her attorney stated the agreemeut on the record at the
beginning of her October 27,2070 interview in the following tenns:

"And, just for the record, this proffer session is being done
pursuant to an agreement that Mr. RIDDELL and I have reached,
whereby, in the event, in the unlikely event that
Ms. HONEYWELL is ever charged in this case, any statements
that she makes during this session will not be used in any way in
any subsequent proceeding except in the event that
Ms. HONEYWELL testifies to facts contrary to what she says
today, in which case, her statements today could be used for
purposes of impeactunent. "

There was no explicit reservation of the right to use the information in a civil case or

evaluation of Ms. Honeywell's employrnent status. Mr. Angeli told us when we met that he
believed the immunity language as part of the proffer would likely be lirnited to use in criminal
proceedings. We would agree that is the strict interpretation of the language since it speaks of
her being "charged in this case." In the analysis of the employment status, however, we are
concemed that Ms. Honeyr,vell can plausibly argue that she understood the proffer differently
and believed that her statements would not be used in any way against her (".., will not be used
in any wayin any subsequent proceeding..."), We also believe that a jury reviewing the
circumstances of disciplinary action might be of a similar belief. "Charged" is not a term
exclusive to criminal proceedings. An employee can be "charged" with employnent-related
misconduct
.IUDGE YRÂGUEN'S MMENDATTONS
As should be clear fiom the foregoing, we differ in our recommendation from that made
by Judge Yraguen in his final report. Counsel for the four employees have, in varying degrees,

0020s0s3.4 51
identified a number of legitimate concems about the acculacy and faimess of the process Judge
Yraguen used in carrying out his review. In our view, these collcents have merit and are
sufficiently serious to raise doubts about whether his recommendations should be accepted'
The following are the principal reasons we have made different recomntendations:
1. The employees \ilere not given sufficient time to review the prepared report and
lacked resources to challenge factual details. The report was in nearly fTnal form
before Judge Yraguen interviewed the four employees, and they were told that their
interviews would not affect his conclusions except perhaps in nuances.

Judge Yraguen prepared his report in nearly final form before he spoke to any of the four

employees. In all cases, his meeting began with his providing the written report and allowing the
employee a period of time (approximately an hour, sometimes a little more) to review the report
and point out any inaccuracies. He also said their input would not change his analysis or
conclusions. The primary information available to him during the preparation of the report was
that developed during the criminal investigation. The employees' counsel have raised this issue
with us during our review. We are of the view that their criticisms are merited.

Mr, Seesing's attorney, Kevin Lafky, addressed some of his client's concems in his letter
to Mr. Repine of March 28,2011. He states that at the beginning of his client's meeting, Judge
Yraguen provided a 30+ page very dense report and allowed about 45 minutes for comments'
When Mr. Lafky expressed his concerns about the brief amount of time, he was told the repod
would be finalized in three days so that there would be no other opportunity to respond to the
analysis. Mr. Lafky found this particularly difficult since there had been no advance request to
bring any materials to the meeting nor could that have happened given a prior demánd by the
DOJ to return the disks containing the available material with which Mr. Lafky had complied.
Mr. Lafky requested a copy of the tape recording; he advised us he has never received it.
We have, additionally, listened to Judge Yraguen's interview of Mr. Seesing; it is in our
view surprisingly confrontational, more so even than Mr'. Long, Ms. Fraser, or Ms. Honeywell's'
At one point Judge Yraguen pressed Mr. Seesing to identi$r specific contacts he had with
Ms, Wise related to this contract. Judge Yraguen pushed him for specifics and dates of contact
rather than general information, even telling him that "I'm not at all impressed" with Mr.

Seesing's talking in general terms about his experiences with the DOE contracting process and
whether the procurement staff were cut out of the process. He stated 'ol'm not going to listen" to
generalities. Mr. Seesing, however, who had no matedals to consult, would not have had that

0020s053.4 52
 detail to offer him. When Mr. Lafky atternpted to point that out, Judge Yraguen stated that he
had provided Mr. Seesing an ample opportunity and that Mr. Seesing had gotten more than
typically is seen in a comparable investigation.

Judge Yraguen referred to "the difficulty in your credibility" because Mr. Seesing could
not provide specific factual information to rebut Judge Yraguen's conclusions. Mr. Seesing

repeatedly stated he needed to review documents or emails to answer the questions.

Ms. Fraser's counsel also report that while she agreed to participate in an intervìew with
Judge Yraguen in order to cooperate with the process, she too was unable to provide detailed

information because she did not have access to background materials necessary to respond.
All counsel have also pointed out, we think correctly, that the process did not allow an
adequate opportunity to present exculpatory explanations. In Mr. Long's case, because he had

declined to submit to an interview during the criminal investigation, Judge Yraguen prepared the
report without anyone ever having heard Mr. Long's recollections of any of the events.
2. The report relies heavily on information developed during the criminal
investigation; credible complaints have been made about that process.

All counsel have pointed out their belief that the information developed in the criminal
investigation is unreliable because of the investigative techniques that were employed by
Mr. Riddell and Mr. Carson.
3. Some employee admissions resulted from apparent falsehoods in the criminal
investigation process.

Counsel for the ernployees have identified what they believe to be false statements made
to the employees by the crirninal investigators. To the extent admissions were made during the
Department of Justice investigation, the employees state such admissions were based on their
reaction to the falsehoods. It is inappropriate, in our view, to use any such admissions to criticize
or challenge the actions of the employees.
This is a point rnade particularly forcefully by Ms. Fraser, who explained in our inten¿iew
that she had acknowledged not handling the Energy Assurance Grant ploperly because she

believed that the investigators were telling her the huth during the interviews. She was told, for
example, that R.W. Beck representatives confirmed they had been ordered to subcontract with
TEEM (Interview of December 7,2010 @ 51.) Her acknowledgement that she had perhaps
failed to handle this process properly was based on her mistaken belief that the investigators

002050s3.4 53
 wouid not lie to irer. Similarly, Ms. Honeywell's statements acknowledging misconduct
irnmediately followed factual misstatements and apparent threats.
To the extent Judge Yraguen relied ou statements in these interuiews and fonned his

conclusions even in part based on that information, those statements and conclusions are suspect.
4. Citing his deadline, Judge Yraguen declined to follow up on information that was
offered.

Judge Yraguen met with the affected employees within days of the deadline for
submission of his report. Because of that upcotning deadline, he did not have the tirne to follow
up on any additional infonnation. In the case of Ms. Floneywell, for example, Judge Yraguen
reached conclusions regarding her behavior based in part upon comments about her behavior,
performance, and credibility by some work colleagues. He concluded that she was not well liked
in state government and referenced issues he said he had learned from her personnel records.

Following the interview, Ms. Honeywell's attorneys provided a list of names of witnesses they
believed would provide a different perspective. Judge Yraguen, ltowever, declined to speak to
them because his report was due. Ms. Fraser's attorney also states that despite pointing out
factual inaccuracies during her interview, the corrections did not accurately find their way into
the final report.
5. The report contains inaccuracies and errors.
Counsel for the employees have identified discrepancies, inaccuracies and errors in the
Report:
. Judge Yraguen suggests that Mr. Long had involved himself in the Energy
Assurance Grant because he wanted to be a director, citing Joan Fraser's
comments as support for that conclusion (Report @ 37). But a review of the
interview with Ms. Fraser shows her comments to be inaccurately cited.
Ms. F-raser actually said that it was wrong to suggest that Mr. Long to involved
hirnself in the grant in order to cuny favor with Governor Kitzhaber, and that the
unfortunate fallout of this process was that wrongfully accusing Mr. Long would
be that he would not achieve his career goals.

. Judge Yraguen's repoft (Report @ n. 17) cites criticisms of Ms. Honeyrell,

which he told her he learned from hel personnel records. Hel official personnel
file, however, does not include documentation criticizing her for the incident in

00205053.4 54
 question, signing an agreement exceeding her authority, There is an email dated
Iuly 22,2007 ûom Colette Peters raising a question about signing an agt'eement
with a reference to looking further into it, but there is no disciplinary action in the
formal persormel file reflecting that, on follow up, Ms. Honeylvell had done
something wrong.
¡ Ms. Fraser's counsel states that Ms. Fraser identified elrors in the draft report
during her interuiew (of which no recording is available), but that her comections
do not appear in the final report.
. Judge Yraguen states that Ms. Fraser, Mr, Long and Ms. Honeywell met together
April 13, 2010 to discuss involving TEEM (Report @ misnumbered n. 69);
Ms. Fraser, however, states that she never participated in a three way meeting on
lhat subject. Ms. Fraser and Mr. Long had a short meeting (without
Ms. Honeywell) on or around that date during which Ms. Flaser reports she was
told to attempt to find a way to include an Oregon presence in the contracting.
. The Reporl states that Ms. Fraser and Ms. Honeywell had "continued contact"
after April 13, 2010 on how to include TEEM in the grant (Report @ n.69);
Ms. Fraser states that she had a conversation with Mr. Long and a separate
conversation with Ms. Honeywell on April L3, 2010; either directed

Ms. Honeywell to work with procurement or understood that she would do so

(Ms. Fraser does not recall the instruction but Ms. Honeywell says she was so

instructed); and was not involved in the Grant until the June 2, 2010 meeting at
which she asked whether there were any legal impediments to the contract and
was not provided with any specific information that there was.

6. Judge Yraguen's credibility determinations are problematÍc. Judge Yraguen relies

on information supplied by Shetli Hone;nvell after concluding she lacks credibility,
and disregards Joan Fraser, after concluding her integrity is intact. IIe concludes
Mr. Seesing lacks credibility based on his inability to respond fully to his probing
interview questions despite not having materials to review, yet commented during
the interview that nobody in state government had said anything bad about
Mr. Seesing. He is dismissive of Dawn Farr for having the least information despite
her lirnited involvement and short tenure.

It is likely impossible to prepare a report on these events without making credibility

determinations. Certainly the agencies are permitted to consider credibility when rnaking their'

0020s053.4 55
 employment decisions. We raise this issue, however, because of corlcerns about .Iudge
Yraguen's credibility detenninations. Judge Yraguen recites his opinion that Ms. Honeywell has
"poor credibility" (Reporl @ 6) and that she is prone to get helself into trouble (Report @ n.
129). He says that Ms. Flaser is the only one of the four etnployees to accept responsibility for
not halting the contract, and that she ends her career "with her integrity fully intact" (Report @ n.
'Wise's version of
124). He accepts Ms. events though he notes that there aÍe "minor
inconsistencies" in her statements (Report @ I24). To be sure, Ms. Honeywell gave internally

inconsistent statements and offered other reasons to conclude her credibility is suspect. At times,
however, it appears Judge Yraguen accepts Ms. Honeywell's version over Ms. Fraser, whose
integrity Judge Yraguen praised (Report @ n. 0\. He apparently accepts Ms. Honeywell's
statements over contrary statements or explanations of Mr. Long. For example, he concludes
that Mr, Long had to be persuaded to do a competitive process, which Mr. Long says was not so

(Report @ 35). He states that Mr. Long "insisted" that Ms. Honeywell add herself as a member
of the proposal evaluation committee (Report @ n. 9); it appears he did not consider that might
be because it was Ms. Honeywell's job to participate ou such committees or, as Mr. Long said to

Judge Yraguen, his desire to make sure he was bringing in outside views because of his need to

shake up this department. He accepts Ms. Honeywell's version of what Mr. Long said during a
lunch the day that she was placed on leave (Report at n. 93). He also concludes that when
Ms. Fraser saw that R.W. Beck wanted additional language in the contract this raised a "red
flag," but that "given this opportunity to pursue that question Ms. Fraser apparently decided not
to address her underlying concern" (Report @ n. 82). He also notes "her expectation appears to
have been that rather than her raising the issue, it was up to R.W. Beck, Inc. to raise the issue"
(Report @ n. 86). Yet Ms. Fraser explained that she did in fact decide to address her concern by
speaking to R.W. Beck directly.
There is no recording of Ms. Fraser's inten¿iew with Judge Yraguen. However, she
explained to us that her choice of the open-ended question "is anything wrottg?" was deliberate.
In her mind, it would provide an opportunity for R.W. Beck to raise any concerns they rnight
have, but it would avoid a different problem. Specifìcally, she had concerns about
Ms. Honeywell, but did not want to cornmunicate her mistrust to R.W. Beck because R.W. Beck
would be later working with Honeywell. She was concerned she rnight be wrong and did not

00205053.4 s6
 want to poison the working relationship. It was also for that reason, she told us, tliat she asked
Ms. Farr to witness the conversation rather than Ms. Honeywell, ,

It appears û'om the report that Judge Yraguen may have reacted adversely to comments
rnade by Ms. Honeywell or Mr. Seesing about their reliance on procuÍement which he appears to
have believed was an attempt to shift the blarne. V/e have a different view about the actions of
the procurement staff (see, for example, Report @ tt. I}fl.
He also fails to discuss that at the titne, the concems Ms. Wise expressed about the
process were diffelent from the technical concerns that were expressed during her interview, for

which only notes exist. For example:

¡ The handwritten notes of Judge Yraguen's interiew with Ms, Wise report her
concerns as being that Navigant had an Oregon pres€nce, that R.W. Beck wanted
written confirmation the company was being required to use a subcontractor but
that R.W. Beck withdrew that demand after the telephone call with Ms. Fraser.
. According to the notes, Ms. Wise appears to have said that Melissa Canfield's
review was limited (which is not consistent with Ms. Wise's contemporaneous
notes).
e Ms. Wise reported that there was a meeting and she was not invited, but there is
no information about what was discussed at the rneeting and whether the
discussion included anything within Ms. Wise's authority.
. Ms. Wise apparently told Judge Yraguen that both Jim Gores and Dawn Farr told
her not to speak to the Department of Justice about her contracting concerns, but
Ms. Wise did not tell the criminal investigators anything of the sorl. And it does
not appear that Judge Yraguen ever asked Mr. Gores or Ms. Fan to confìrm or
deny whether this was so. Judge Yraguen's notes from the interview with the
criminal investigators confirmed that shortly aÍter Mark Long auived at the
Department of Energy he asked the Departrnent of Justice to look at contract
issues arising under his predecessor or pledecessors, but "nothing ever came of
it." That may explain a less than glowing opinion of tlie Depaúment of Justice,
which Ms. Fraser appears to share.
¡ Despite Ms. Wise's clear discomfort, she dirl not identify any legal violation to
Judge Yraguen.

00205053.4
 . Ms. Wise apparently told Judge Yraguen she signed the contract under duress, but
Mr. Gores told Judge Yraguen than she had becorne comfoftable enough to sign
because there was "no stnoking gult."
r For her part, Ms, Wise ended her interview by referencing her feeling that her role

was not being respected.

7 Judge Yraguen concludes the Energy Assurance Grant was the product of a tainted
or flawed process but his report does not identify any clear or deliberate legal
violations in the processing of the grant.

Judge Yraguen cites procurement law in his opinion, but he does not directly find that the

RFP process was defective, he does not find that the R.W. Beck award resulted from an improper

evaluation, he does not find that the R.W. Beck proposal was other than the most advantageous
or responsive, he does not find that this process failed to provide fair and equal treatment to the
proposers, he does not find that the post-RFP negotiations violated the law, and he does not find

that TEEM had any unethical or illegal gain from its involvement. He notes (Reporl @ n. 110)
that he disagtees with Mr. Long's counsel's interpretation of the procurement regulations, but his

report also agrees that"an argument can be fashioned" regarding the discretion to negotiate with
a winning bidder. Ultimately he rejects the argument; he does not, however, clearly identify
what was wrong other than to suggest that an agency cannot shift from a single-step to a multi-
step process without notice (Report @n.110). As far as it goes we would not disagree with that

assertion, but it does not appear to us that a multi-step process (as defined in the regulations was

really used).
Judge Yraguen appears not to have considered, or to have disregarded, factors we
consider to be key in understanding why cefiain events occurred, the motivations of the actors,
and whether disciplinary action is appropriate. Those factors include the need for and impact of
the leadership changes at the Department of Energy, the rapid personnel changes, the influx of
substantial grant funds with attendant program responsibilities, and the apparent inability of
some employee groups to establish effective working relationships which is most particularly
apparent in the friction between procurement and program. Certainly these factors resulted in a

procurement process that was less than ideal, but we do not believe there is a sufficient basis to
terminate.

00205053.4 58
 8. Judge Yraguen's recommendation (to terminate the four employees involved) does
not result from substalrtial analysis of employment issues.

Although Judge Yraguen cites the status of the four employees, his report is lacking in
any reasoned analysis informing his conclusion that the four employees should be tenninated for

their involvement in the Energy Assurance Grant. While certainly in the case of Mr. Long and
Ms. Fraser, who sen¡e at the pleasure of the appointing authority, he arguably does not need to
provide an analysis. It is our opinion, however, that state govemment is not well served by
making career ending decisions 'Just because we can" without a reasoned analysis, In the case
of Ms. Honeywell, there are specific personnel rules which govem disciplinary actions. Judge
Yraguen's report ignores those requirements and fuither ignores the terms of the immunity
agreement with the Department of Justice which argtably constrains the action which might be

taken against her. In her case, policy 70.000.02 requires a pre-disciplinary notice which includes
the statutory grounds for proposed discipline along with the background and supporting facts,
specifies a pre-disciplinary meeting at which a variety of factors are evaluated, requires a notice
of discipline, and establishes a tirne 1ine.
In making a decision about emplo¡rment, it ìs our recommendation that additional factors
be evaluated. We would, for example, suggest that the decisionmakers identify and follow
certain "best practices" and consider these factors:
r Is there clear evidence of specified wrongdoing?
¡ What evidence is there of the employee's state of mind at the time?
o Was any wrongdoing intentional and deliberate, or was it negligent?
. Were any decisions the product of misunderstanding, inattention, or reasonable
reliance on others?
r 'Was
a fair opportunity provided to the employee to respond to accusations and
were their responses considered?
r Are there comparators; in other words, if wrongdoing is found, have other-s in the
past committed similar wrongdoing?

. What disciplinary action has been taken against other employees for similar or
related wrongdoing?
o What do the employees" work histories show?
o Are there any extenuating circumstances that should be considered?

0020s053.4 59
 SHOUI,D THERE BE SOME DISCIPLINARY
ACTION OTHER THAN TERMINATION?

We do not believe that terrnination is applopriate given the circumstances discussed in

this report. We have consideled whether there should be some lesser form of discipline:
1. Mark Long.
We recomrnend no disciplinary action be taken against Mark Long. Mr. Long moved to
the DOE only at the request of the Governor. He was directed to reorganize the department and
make a number of unpopular changes. His responsibilities were overwhelming and, in addition
to his agency work, he was expected to work extensively with the Legislature to get the
department's relationship with that body back on track after the problems created by his
predecessor. He did his best to recruit talent. Mr. Long can be criticized after the fact for his

decision to hire Ms. Honeywell who swiftly became a controversial employee. Perhaps he was
overly willing to allow her to have direct access to him which perhaps led her to believe that she
was not responsible to her intermediary levels of supervision, but we would be loathe to criticize
an executive who decided not to wall himself off from his staff. Mr. Long can be criticized, after

the fact, for not having the 'oradar" to see how the early discussions with Ms. Hayes could later
be portrayed, and for asking about the possibility of single-sourcing the contract, but we are
uncomfortable taking disciplinaly action against him when he decided to accept the free help that
was offered by a competent businesspercon and by checking, in the face of considerable
confusion, whether a single source was a possibility. We doubt that Mr. Long is the only
executive in state goveûrment who may have asked about a single-source contract. Mark Long

can also be criticized after the fact because he put Joan Fraser and Shelli Honeywell on notice
that Cylvia Hayes has a relationship with John Kitzhaber. In our view, good leaders don't hide
things from their staff and the relationship-which was not a secret one-might be pertinent in
future dealings including as a "heads-up" to avoid casual talk about Mr. Kitzhaber in the
presence of his companion.

In our view, these events would have taken a different turn but for the April 13, 2010
discussion with Ms. Honeywell which resulted in the direction to include an "Otegon presence."
Ms. Honeywell took that direction aircl ran with it. ln hindsight, Mr. Long should perhaps have
directed her to research whether an Oregon presence might be included, but that would have
assumed that he knew, in advance, what she would do. At most, the question here is whether

0020s053.4 60
 Mr. Long gave a direotion to Ms. Honeywell without having thought through what she might do

with it.
We believe that instead of discipline, it is more appropriate for Mr. Long to participate in
a thorough review ofthese events so that the "lessons learned" can be considered and evaluated.
2. Joan Fraser.
Ms. Fraser came to the DOE with an enviable work record. We recommend that no
disciplinary action be taken against her. The principal criticisms of her role in these events are
that when she participated in the June 2,2010 meeting she give a forceful directive to proceed
with the contract, that she did not stop the contracting process, and that she chose the wrong
words to use with R.W. Beck in checking into why the company wanted unusual contract
language.

We doubt that Ms. Fraser is the only executive in state govemment who has had occasion
to diagnose a turf battle. Even after a year it is difficult for us to criticize her understanding of
the June 2,2010 meeting. We spoke directly to Ms. Wise, and even in that informal (and we
hope non-confrontational) setting it was very difficult to follow her logic or understand her
concerns. In Ms. Fraser's view, somebody had to make the decision whether to stop or proceed,
and she was waiting to hear whether there was a legal impediment to the contract. [t is also
important that in that meeting she was the only person who had the responsibility to juggle two
cornpeting interests-the need to proceed with the contract and the need to do it lawfully. The
other participants represented one side or the other. We do not believe she picked a wrong side;
stopping the process could have been adverse to the agency. Ms. Fraser was described (by
Mr. Gores) as being forceful. it is difficult to criticize that, given the context (that she was the
person forced to make the decision).
As is the case with Mr. Long, however, we believe there is great value in Ms. Fraser's
participation in a "lessons learned" analysis. By way of example only, we believe there would
be value in an examination of whether there were other ways to handle the June 2,2010 meeting

to defuse the impact of the polarized work groups and move the dispute into a diffelent kind of
meeting that might have more readily surfaced the groups' considerations.
3. Mr. Seesing.

Mr. Seesing worked directly on the contract, but was really not a decisionrnaker. We do

not believe that discipline is appropriate. He appears to us to have made good faith efforts to do

00205053.4 61
 his job and follow his superiors' directives and he does not appear to have subjectively believed
that anything was amiss.
4. Shelli Honeywell.
But for the actions of the DOJ criminal investigation we would recomrnend disciplinary
counseling or a form of waming for Ms. Honeywell. Despite her insistence that she kept
procurement involved, she did notin our view adequately inform herself of the intrjcacies of
proculement and she decided to jurnp the gun and personally handle negotiations. She set
meetings and had telephone conversations which should have been fully documented but were

not. Although she has talents and many good qualities, she also behaved in a way to cause many
peers to feel she lacked credibility. She gave dramatically different statements during the
investigation process, That said, however, she did so only after being subjected to the

investigators interrogation techniques. We believe that anyone reading the transcripts of those
interuiews or leaming what was said off the record would understand why she said what she did.
While we do not believe that is an excuse, it is an explanation. Ms. Hone¡.well is, however, also
the beneficiary of an immunity agreement which we believe provides some level of possible
protection.
We would, however, recommend a non-disciplinary counseling for Ms. Honeywell. She
told us that she learned for the fìrst time during this investigation process that she has a

questioned reputation in some circles in state government. Although others in management have
in the past given her feedback on her behavior, credibility and work reputation, developing a
further undelstanding of those issues would be valuable in her development as an employee. She
is quick to blame others and find fault with legitimate criticisms (as exemplified by her reaction
to comments critical of her style of dress); it might be helpful to her to discuss how her defensive
'We
posture towards criticism may stall her growth and development. also believe that some

discussion about proper involvement of "local experts" can be of great assistance as she
navigates state government.
\/[/HETHER OR NOT A NAME PROCESS IS LEGALLY RNOIIIRED.
ONE SHOULD BE MADE AV IIOR THIìSE ITOTIR EMPLOYEES

The name clearing hearing is a common law requirement initially formulated in Regents
of state Colleges v. Roth,408 U.S. 564,513 (1972). The Court concluded that an employee is
entitled to procedural due process when stigrnatizing information regarding his or her

002050s3,4 62
 termination is publicly disclosed. That is so because of the lisk of error irdrerent in the truth-
finding process. Mathews v. Eldridge, 424 U.S. 3 79, 344 (197 6).
But "due process" is a flexible concept and the procedural protections it requires vary
from one case to the next, depending on the facts. This controversy presents difficult and

sometimes infl ammatory facts :

l. The information leaked to the press, combined with the long suspensions already
imposed, tikely implicate the liberty interests of Ms. Fraser, Ms. Honeywell,
Mr. Long, and Mr. Seesing even if no termination results.

Normally, liberty interests are tied to stigmatizing terminations. A liberty interest is

implicated in the ernployment temination context if the charge impairs a reputation for honesty
or morality. A public employer violates an employee's due process rights if it makes a charge
that rnight seriously damage the terminated employee's standing and associations in the

community, or imposes on a ter:rninated employee a stigma or other disability that forecloses his
or her fi-eedom to take advantage of other ernploynent opportunities. The legal claim requires
proof that the accuracy of the charge is contested, that there is some public disclosure of the
charge, and that the charge is made in connection with the termination of employment, Brødy v.

Gebbie,859 F.2d 7543, 7554 (9th Cir. 1988). Notably, "termination of employment" includes
. not only fonnal decisions to discharge, but also a decision not to rehire.
Even if the State continues to employ all four employees, we believe as a matter of risk
mallagement that the prudent couîse is to offer each of them a separate name clearing hearing. A
year long suspension coupled with published allegations of potential criminal conduct have the
potential to damage an employee's reputation in a way that can be worse than a speedy
termination with little discussion of the reasons for termination.
Courls have yet to recognize a liberty interest where the employee continues to work for
the employer. Common law protections are notoriously flexible, however, and we are concerned
that Ms. Fl'aser, Ms. Honeywell, Mr. Long and/or Mr. Seesing might successfully act as a "test
case" for expansion ofthis legal theory.
2. BecauseMs. Honeywell's position is classified as management service, she has a
properff interest in continued employment and would be entitled to î
pretermination hearing.

In addition to the liberty interest discussed above, the Fourteenth Amendment establishes
a constitutionally-protected property interest in continued employment if the employee has a

00205053.4 63
 reasorlable expectation of continued employment. Brady v. Gebbie,859 F.2d 1543, 1554 (9th
Cir. 1988) (citing Board of Regents v. Roth,408 U.S. 564,571 (1972)). A state law which iimits
the grounds upon which an employee may be discharged (such as conditioning dismissal on a

finding of cause) creates such a reasonable expectation of continued employrnent, and thus a

property right. Brady v. Gebbie,859 F,2d 1543, t554 (9th Cir. 19BB) (citing Dorr v. Counry of
Butte, 795 F.3d 8l 5, 878 (9th Cir. 1986)).
Ms. Honeywell's position is classified as "management service" and the State's formal
policies set forth the grounds upon which Ms. Honeywell could be terminated from her position.
Ms. I{oneywell has a property interest in her job, and due process prohibits surnlnary dismissal.
3. Employees are not required to make a formal request for a name clearing hearing,
but they must request an open hearing if one is desired.

Some, if not all, of the four suspended employees already have raised the question of a

name clearing hearing. Case law to date would permit a claim to be asserted before a name-
clearing hearing is requested, but at some point any employee wishing to participate in such a
hearing must make a request. In order to handle this issue efficiently, we recoÍtmend that the
State offer the hearings regardless of whether each employee has yet made the request. If the

employee wants the name clearing to be open to the public, the State rnay require the employee
to request an open hearing. Barton v. City of Portland,242 F.Supp .2d 893,903 (D. Or.2002).
4. Procedurally, any hearing should include a summary of the relevant evidence and
any resulting charges or determinations, the opportunity for the employee to
present wítnesses and evidence, and a hearing ltefore at least one representative of
the employer.

Although a hearing where the individual has an opportunity to rebut the charges against
him is always required in due process cases, when the hearing must be held and what procedural
protections must be given at the hearing are determined on a case-by-case basis. Mathews v,

Eldridge,424 U.S. 319,335 (1976).

We recommend a written offer, explanation of why the offer is being made, and deadline
to accept consistent with State practice, sufficient time to prepare (at least a week, but likely
more in this matter), sufficient time to present (at least an hour, but likely more in this matter),
and relaxed evidentiary rules (the employee should be pelmitted to speak, present and
disseminate written materials, and have witnesses speak on his or her behalf),

00205053.4 64
 If possible, the hearing should be conducted at a neutral location, not the public body's
place of business. If the employee requests a public name clearing hearing, public notice of the
hearing should be given in advance of the hearing (at least seven days, possibly more here).
Recipients of the public notice should include any media representatives who usually receive
press releases from the State.

To conform to the due process guidelines, the employees should have access to any
material that will be disclosed to the public, as well as copies or descriptions of relevant
information that has already been made public, as well as with any relevant background
materials that would be subject to discovery in a lawsuit.
Attendees should include decisionmakers, as well as any agency representatives who
originally heard the stigmatizing statements. Apart from opening and closing the hearing at the
appropriate times, state agency representatives should not participate in, or respond to, the
presentation. No rebuttal presentation should be made and employer representatives should not
debate or even respond to questions.

Submitted on May 21,2011.

A. Barran

0020s0s3.4 65