Underwood defends contract renewal

Historic City News received word that Ponte Vedra Beach businessman, Ken Underwood, will go before a state appeals court today in an attempt to settle the long-simmering contract dispute between his company, National Safety Commission, and the Department of Highway Safety and Motor Vehicles.

At issue is whether the politically-connected owner of the company that prints the state’s driver manual had the right to renew his contract with the state — even if the state doesn’t want it anymore.

Underwood’s company has printed the state’s driver’s manual since 2005 when it was the only company to bid on the contract.

After years of controversy surrounding the contract, the state agency said it wanted a “clean slate” and pushed to end the contract last year.

But, National Safety Commission exercised a clause to unilaterally renew the contract for five years and sued to keep it in place.

A Leon County circuit court judge last winter ruled that the department had no legal right to drop the contract after National Safety Commission renewed it. That made Underwood happy; until the state appealed the case to the 1st District Court of Appeals.

Filings show that the arguments before the appeals court will center on whether certain laws regarding contracts and vendors cover National Safety Commission. The state argues that contracting laws give state agencies the discretion on whether to renew a contract. But lawyers for National Safety Commission argue that the law cited by the state doesn’t cover them because National Safety Commission gets paid nothing to print the driver’s manual.

Attorneys working for Attorney General Pam Bondi argue that its “absurd” that National Safety Commission got to decide, on its own, whether it had satisfied the contract conditions for the first five years; then could unilaterally renew the contract for another five. “That’s the equivalent of a bad waiter getting to decide if his service was acceptable,” states the filing.

Attorneys for National Safety Commission, which includes the firm of Holland & Knight and the Jacksonville firm of Tanner Bishop, contend that the department cannot end the contract simply because it wants a “clean slate.”

They said in their filings that National Safety Commission did what it promised in the first contract and performed the job as required. That puts the department in the untenable position of arguing that the phrase “contingent upon satisfactory services” really means that renewal is contingent on anything the department wants.

There is also quite a bit of argument over how much the contract is worth to National Safety Commission.

While Underwood distributes the handbook for free at driver’s license offices, court records show that NSC made $189,000 last year in advertising, which does not offset the actual $700,000 to $750,000 it costs to produce the driver’s manual.

But Underwood has testified that the handbook helps him grow his other businesses since they are advertised in the handbook and its value is hard to actually quantify. Among the products included in the handbook – which is used by teenagers trying to study for their driver’s license test – is an online traffic school run by Underwood.

The battle over the contract has generated plenty of controversy over the years, especially since Underwood’s lobbyist was the wife of the agency head who approved the initial contract back in 2005. The attorney general’s office even makes a passing reference at that fact, noting the “persistent, though unproven” hints of favoritism that surround the contract.

It was Julie Jones, the current executive director of the Department of Highway Safety and Motor Vehicles, who made the decision to cancel the contract. She said one of the main reasons is that the ads included in the handbook make it appear that the state favors Underwood’s companies.

Underwood is a prominent political donor and his company has spent plenty of money in the last few years supporting Republicans — including Governor Rick Scott.

Campaign finance records in the last six years show that National Safety Commission has donated nearly $195,000 to legislators, political parties and others. That includes $55,000 given last year to the Republican Party of Florida and $35,000 to Let’s Get to Work — a political committee set up by Scott to help his bid for governor.

Photo credits: © 2011 Historic City News archive photograph