A top University of Maine official provided insider information aimed at helping one company win the bid for a lucrative energy contract, according to statements made on recorded phone conversations by a consultant working with the winning bidder.

Those conversations, which took place on business conference calls last January and February, indicate that UMaine communicated with and coached partners of ConEdison Solutions, a New York firm that had developed a plan to power the Orono campus with wood-fired steam and electricity from an abandoned paper mill in neighboring Old Town. The UMaine official himself was not on the calls, but the other people on the calls were discussing information that he was said to have provided.

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UMaine favored the ConEdison plan over three others, in part because of the university’s preference to repower the campus with renewable energy and to bolster a bioproducts research center it operates in one of the mill’s buildings. But it would be improper for the university to give an edge to one company in a public bidding process that could lead to a multi-year power contract worth more than $100 million. Such action could violate the university’s procurement rules and its code of ethics, according to the university’s own bidding protocols.

The future of the Old Town mill and its energy potential took on new significance Wednesday, when a company called OTM Holdings LLC announced that it had bought the facility. In a news release, the company said it was a joint venture by a group of Maine companies committed to reviving the forest industry. But documents filed at the Penobscot County Registry of Deeds also indicate that OTM Holdings and a related entity, Powerhouse Holdings LLC, are aligned with ConEdison.

The Maine Sunday Telegram obtained several recordings of conference calls with participants connected to ConEdison, the company that ultimately won the bid. Participants included ConEd representatives, members of the company that intended to buy the Old Town mill, consultants and investors. The discussions also involved senior management at the James W. Sewall Co., which has employment ties to two top UMaine executives. The Old Town engineering firm stands to benefit from the winning bid.

On one call to update progress, a consultant representing a ConEd partner in the bid, John Richardson of Brunswick, refers to a meeting he and others had with Jake Ward, UMaine’s vice president for innovation and economic development.

Ward had provided ConEd’s team with insight into how the competition was going to be scored, Richardson recounted on the call, and also indicated that the university president and chancellor would make the final decision.

Richardson says of Ward: “And he also turned to us and said, essentially, ‘This is yours to lose. And it’s been set up for you to do well.’ ”

Ward was not on the calls reviewed by the Maine Sunday Telegram. And in an interview with the newspaper, Ward denied that he had provided any inside information.

He said he met with Richardson to discuss how the university’s Forest Bioproducts Research Institute was using the mill space and its goals to grow to commercial scale. Now closed, the mill was owned until last week by a liquidator.

“I have no idea how the RFP (Request For Proposals) was being scored,” Ward said. “I had nothing to do with the RFP.”

Subsequently, Ward also issued a statement to the newspaper that included these points:

“In my work supporting the revitalization of the Old Town mill, I have met with many companies with interest in the mill as possible owners or tenants. I did not coach anyone on how to respond to this RFP. My work focuses on encouraging companies to work with the University of Maine to leverage our technology and resources to create jobs for Maine citizens. Any third-party suggestion that my work included providing early or unfair advantages or information to ConEdison Solutions is simply false.”

University of Maine President Susan Hunter said she stands behind Ward’s work on the bid.

“We have complete confidence in Vice President Ward’s integrity,” she said, “and that our solicitation for the right to negotiate with the university for energy solutions was conducted fairly and appropriately.”

THE MILL AS A LINCHPIN

The call for bids to negotiate a renewable energy contract for the university dates back to February 2016. Sixteen companies expressed interest, and four were selected as finalists, all eager to make their case to win the contract, potentially worth at least $100 million.

Three of the bids were based on powering the campus with natural gas. ConEd was alone in laying out a plan to provide energy by restarting the unused biomass plant at the Old Town mill.

The reliance on the mill and control of its ownership is central to ConEd’s proposal. It is also what connects the group of stakeholders who updated the progress of the bid via conference calls. Someone needed to buy the mill to ensure ConEd’s access to the biomass plant. Others needed to help shepherd the bid through the selection process. To these ends, ConEd was able to gain assistance from someone with deep knowledge of the state and how it works – John Richardson.

Richardson is a lawyer who served as House speaker in the Maine Legislature from 2004 to 2006, was commissioner of the Department of Economic and Community Development from 2007 to 2009, and briefly ran for governor in 2010. He has been representing CVG Inc., a Lincoln-based business made up of three major timberland owners, and is listed on state records as the clerk and registered agent of a company formed last March called Penobscot Energy & Fiber LLC. CVG and its allied company, Penobscot Energy, had for months been pursuing ownership of the mill.

On another call, Richardson also discussed a meeting he helped organize between the CVG principals and Gov. Paul LePage, who had received thousands of dollars in campaign contributions from the families that make up CVG. They told LePage that $450 million in economic activity could result from the deal to reopen the mill, an apparent attempt to gain the governor’s support for the project.

“He’s not going to cross these three families, I can tell you that,” Richardson said on a call, referencing the CVG principals.

But Julie Rabinowitz, a spokeswoman for the governor, said LePage hadn’t been involved with the energy contract, noting that it was administered, scored and awarded by UMaine, which is governed by its own trustees.

“The governor is always supportive of a competitive process, which he understands the University of Maine applied in awarding the bid related to this contract,” Rabinowitz replied.

Asked about the statements he made during the calls, Richardson at first said he wanted to hear the recordings. But a day later he said he wouldn’t be able to comment, because he had signed a non-disclosure agreement. He declined to say whom that agreement was with.

SEWALL CO.’S INVOLVEMENT

It’s unclear from the recordings how many meetings or conversations UMaine had with ConEd and its allies. The allies include investors, Richardson, CVG and ConEd representatives, but also James W. Sewall Co., an engineering firm in Old Town that previously employed top UMaine officials, including the chancellor.

Sewall’s CEO is involved in a lawsuit over the sale of the Old Town mill – the asset on which ConEd’s entire bid rests.

On one call, Richardson said that Ward was repeating much of what the ConEd team had already heard from “the CFO of Sewall,” an apparent reference to an earlier meeting at Sewall offices that included Dave Stevens. Stevens is chief operating officer at Sewall and had returned to the company in 2016, after four years as a top executive at UMaine. In that job, he served directly under Chancellor James Page, who was Sewall’s chief executive officer until 2012.

Also on that conference call was David Edson, Sewall’s current president and chief executive officer. Edson is involved in a lawsuit concerning the sale of the Old Town mill, something that had to happen before UMaine’s preferred energy plan with ConEd could be developed.

A Connecticut liquidation firm, MFGR LLC, had been trying since January 2016 to sell the mill property. Last July, Samuel Eakin, managing director of Relentless Capital Co. in Cape Elizabeth, filed suit claiming he was illegally pushed out of a $10 million deal to buy the mill in favor of a competitor.

Eakin wanted to buy the mill, restart the pulping operation to provide jobs, fire up the biomass plant and sell power to the university.

Eakin’s lawsuit charges that two of his former redevelopment partners – one of them Edson – worked behind the scenes with ConEd and CVG Inc. to gain control of the mill. In November, according to court papers, a new buyer had emerged – E4Research.org. It is listed as a nonprofit corporation established with the help of Sewall. The board of directors has included former and current Sewall employees, according to its website.

But E4Research dropped out of contention, and in late January OTM Holdings closed on the mill property.

OTM has declined to publicly identify its investors. But documents at the registry of deeds show it has ties to CVG. Jean Carrier, a principal in CVG, is the signatory of a licensing agreement related to the sale. In addition, OTM Holdings lists the same Lincoln mailing address as the Gardner Cos., another CVG partner.

The news release announcing the sale cited Everett Deschenes as the contact person. Deschenes is a former manager at the mill who was working with Eakin during his initial bid to buy the complex. After a falling out between the two men, Deschenes was also included in Eakin’s lawsuit.

Although the sale has closed, Eakin said his claims are proceeding to trial. He said he plans to file another suit to address what he called the manipulation of UMaine’s energy-services bid process.

“This matter is far from over,” Eakin said.

CONTROVERSIAL DECISION

The phone recordings among the university, ConEd and Sewall intensify questions about the integrity of the award process, which already had come under scrutiny.

The university has been seeking a greener, cost-effective power supply for its sprawling campus. Natural gas is the primary fuel that heats 202 buildings totaling more than 4 million square feet of space. But the university wants to back out of fossil fuels and has a goal of eliminating net emissions associated with climate change by 2040.

In soliciting proposals, the university set out four key objectives:

– Reduce greenhouse-gas emissions.

– Minimize energy costs.

– Create stable and predictable costs.

– Improve the reliability of the electric and steam systems.

Sixteen companies responded, and a selection committee made up of UMaine management culled the number to four. In June, ConEd won an exclusive “award to negotiate” a long-term energy agreement, partly because it would use the mill’s biomass boiler.

But two runners-up appealed the process. They disputed how the award was made, and also claimed ConEd’s plan was a risky bet for the university and Maine taxpayers. Honeywell Energy Services Group and Ameresco Inc. charged, among other things, that ConEd failed to spell out the cost of its proposal and document any achievable savings, downplayed the regulatory obstacles of sending power from the mill to the campus and – overall – failed to show that the project is feasible.

Ameresco also noted that ConEd’s cost estimates ranged from less than $100 million to $150 million, indicating that the true price is unknown, Ameresco said.

The university subsequently denied the appeals of both companies. In a response to Ameresco in November, the university said cost wasn’t the only factor it considered in picking ConEd’s proposal.

More recently, the university told the Maine Sunday Telegram that negotiations with ConEd were advancing and that the company had recently provided confidential pricing information for review.

If a satisfactory agreement can’t be reached, the university said, it could consider the runner-up in the bidding process. Any proposal will have to be approved by the board of trustees, and be subject to public review and scrutiny.

SCORING THE BIDS

Key to selecting a tentative winner was how the proposals scored on the university’s four objectives. The committee judged the entries on four categories, each with a maximum score: Project concept, 50 points; experience, 25 points; financial stability, 15 points; and Maine economic impact, 10 points. ConEd won with 82 points out of a possible 100. Honeywell finished second with 73.8 points. Ameresco was third, with 66.5 points.

Based on the numbers, ConEd seems to have won on the strength of its project concept. But on one call, Richardson focuses on the economic impact category, which is where he says Ward is providing guidance.

During a January 2017 call, he summarizes his interaction with Ward.

Richardson said: “Jake Ward reiterated much of what the CFO of Sewall said that all of us heard … when we were at the meeting in Old Town at Sewall Co. It was almost as though he was in the meeting that we were in. … because we were talking about the significance of what our response should be, and he pointed to the 10 points and said, ‘This is written for you and it’s yours to lose…'”

STAKING OUT AN ADVANTAGE

At another point, participants on the call wonder whether Ward specified anything the ConEd team should focus on, in order to gain an advantage. Richardson recounted that Ward’s audience was CVG, “the folks who are going to own the mill site,” and that Ward implied he was out of the scoring of the bids but would be in on the final selection.

“(Ward will) be in as part of the decision making, meaning at the president’s office, at that level,” said Richardson on the recording. “And then he (Ward) turned and said, it’s yours to lose. And we were, like, ‘Why? Why did you say that?’ ”

Richardson continues. “And he said, this is off the record … it’s the 10 (economic impact) points out of the 100 that are going to be scored,” referencing one of the four judging categories.

Later, Richardson explained on the same call that the other proposals would use natural gas and not put people to work in the forest industry. He said the multiplier effect, in terms of jobs, was important to the economic impact of the project.

PLAYING BY THE RULES

Sharing this sort of information could conflict with rules meant to assure a fair bidding process, according to experts interviewed by the Telegram.

For one thing, the university’s Office of Strategic Procurement has committed to a code of ethics that sets out best practices for its bidding process. The guidelines, set by the National Association of Educational Procurement, lay out actions for its member institutions that seem relevant to the energy contract RFP process. They include:

– Grant all competitive suppliers equal consideration insofar as state or federal statutes and institutional policy permit.

– Conduct business with potential and current suppliers in an atmosphere of good faith, devoid of intentional misrepresentation.

Melanie Freeman, interim chief executive officer of NAEP, said whether a member formally adopts the code is up to the institution, and that her association hasn’t established procedures for enforcement.

The university also must follow its own procurement rules, as well as standards that cover bids and contracts, according to Chris Branson, who chairs the business and corporate law practice group at Murray, Plumb & Murray in Portland. If those standards are violated, he said, a competing bidder could ask the university – or a civil court of law – to invalidate the award. That could lead to the bid process being reopened, Branson said.

“A do-over would seem to be one of the leading remedies for an aggrieved party,” he said.

LEPAGE: LIABILITY OR LEVERAGE?

Another theme of the recorded discussions was whether it would be advisable to solicit LePage’s support for the ConEd-CVG bid. Ward Strosser, ConEd’s Northeast regional sales manager, said during one call that he was unsure whether LePage’s support would be seen as an advantage with the university, which has clashed with the governor over education and financing decisions. He asked for Richardson’s opinion.

Richardson responds: “I think the pressing of the thumb by the governor or anybody outside of the university system would be met not favorably, let’s just say that.”



Strosser: “All right, then forget it. I guess we shouldn’t do it, right?”

Richardson says it still would be worth exploring. “Specifically, reach out to Jake Ward and see how he sees it. … We can see if the governor is interested, and if he isn’t, game over. And if he is, we can certainly talk to the university and see if that’s going to be helpful or considered a hindrance.”

Strosser didn’t respond to an email and phone call from the newspaper seeking ConEd’s comments.

POLITICAL SUPPORT

In a March conference call, Tom Gardner, one of the CVG principals, said he and Richardson were trying to set up a meeting with LePage. They wanted to quietly “get him (LePage) in on the ground floor,” Gardner said, noting the governor’s interest in forest bioproducts and bringing back mill jobs.

“We just want the governor to have no surprises,” Gardner says.

Richardson also makes reference to the importance of telling LePage that CVG – owned by the Gardner, Carrier and Varney families – is involved in the venture, saying that the governor wouldn’t cross them.

The family-owned businesses are economic pillars in northern Maine, with vast timberland ownerships, logging, trucking and wood chip operations. But Richardson’s comments were a reference to their political support for LePage. All three families have contributed to LePage’s gubernatorial campaigns. Together they donated more than $14,000 to his 2014 election, state records show.

Jean Carrier donated a total of $6,000 in 2012. Other members of the family associated with the E.J. Carrier trucking and logging firm in Jackman gave a total of $2,100. Tim Varney, whose Bangor-based family owns diversified ventures including an insurance agency, logging company and a Canadian sawmill, donated $3,000 in 2013, with other family members contributing a total of $2,350. Gardner, a principal at the Gardner Cos. trucking and logging firm in Lincoln, gave $250 in 2014. The company and a brother also donated a total of $600.

LePage met last April 19 with Carrier, Varney and Gardner, his office confirmed. The topic summary was “re: Old Town Mill,” according to the governor’s calendar. Also present were Rosaire Pelletier, the state’s senior forest products adviser, and John Butera, the governor’s former economic adviser. Richardson didn’t attend the meeting.

But Richardson did recount the meeting on a subsequent phone call with business associates. He noted that the governor “perked up” when the CVG partners told him about the $450 million projected economic impact. Richardson added that when LePage was told the deadline had been extended for the RFP process, he was upset.

Richardson and Strosser later concluded that it was unclear what impact the meeting might have had on the process. “Where that goes, I don’t know,” Richardson said.

Tux Turkel can be contacted at 791-6462 or at:

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