NOTE: I AM NOT ADVOCATING ONE WAY OR THE OTHER. JUST SIMPLY PUTTING THIS OUT THERE. IT IS A LONG READ, BUT SOME OF YOU IN BUSINESS MAY FIND IT INTERESTING--ESPECIALLY IF YOU HAVE A STATE CONTRACT.
As a Texas Tech fan, no doubt you have heard the term "Sovereign Immunity". It is a very convenient tool that the State of Texas--one of only 3 States that enjoy such a tool--has used multiple times to cancel State Contracts. This is for all State Contracts, not just for football coaches.
Sovereign Immunity is essentially this: The State of Texas has to give you permission to sue the State of Texas, and if that happens, and if you happen to win damages, the State of Texas still does not have to pay the ordered damages. The former football coach was fired for cause and insubordination. Whether that was fair or not, right or wrong, " Cause" is moot when weighed against the privilege of Sovereign Immunity that the State of Texas enjoys.
However, I saw first hand from 2011 to 2013, after the Mike Leach fiasco mind you, how the State cancels contracts, and Chancellor Robert Duncan (then State Senator Robert Duncan) was at the heart of the negotiation.
The State Walked Away From a Contract
As many of you know, I was in professional politics for nearly 15 years. In 2010, I got out and started a career in City Management. In 2011, I found myself in Anson, Texas. I had thought the whole Sovereign Immunity thing was long gone. But alas, it was not. In 2008, the Texas Department of Criminal Justice put a Request for Proposal to build a "Secure Drug Rehabilitation Facility". Jones County, where Anson is the County Seat, responded to a proposal, and was ultimately awarded the RFP Contract from the State of Texas. In fact, the Jones County Facility was included in TDCJ's LAR (Legislative Appropriation Request). The money was there and was budgeted for the Facility. Signed and executed Contract in hand, and after partnering with Wall Street investors, Jones County constructed the Facility, on time, on budget, and to spec---even when the State of Texas was making change orders six weeks prior to completion.
In July of 2010, Jones County, the City of Anson, and TDCJ had a ribbon cutting announcing the Facility was open for business. One month later, TDCJ notified Jones County Judge Dale Spurgin that "the Facility in Jones County is no longer needed, and will not be populated by TDCJ." The State, after $25 Million of private and public funds were invested into building a Facility the State asked for, the State entered into Contract to build, and budgeted money for, simply walked away. Leaving Jones County, the City of Anson, and Wall Street to pay the debt on a "Speculative Venture".
"Just Google 'Mike Leach'"
After months of doing my own research and trying to figure the whole thing out--I came in right after the Contract was broken, I was amazed how the State simply walked away. I personally knew about 1/3 of the Texas House of Representatives, and about 5 or 6 State Senators. As City Manager of Anson, I thought, we can work this out. Man, was I wrong. I spent a good 9 months to 1 year building a case--political, moral, and ethical--as to why the State needs to make everyone whole. It turns out, in 2009, when Governor Perry demanded all State agencies cut their budget by 10%, during the fiscal year, the Jones County Facility was an easy cut and could help the Agency meet this demand. Again, performance or cause didn't matter--the State needed to save money, already spent the money, or simply didn't want to pay the contracted amount.
The "Texas" side of this equation knew the card the State was playing. The Wall Street Side--not so much. To say Wall Street was pissed is an understatement. I distinctly remember a conversation with Wall Street trying to explain how the State can simply walk away. It was simply unfathomable that this could happen. After about 20 minutes or so, the soft spoken County Attorney, equally frustrated in trying to explain how, and the effects of the State's actions simply said "Just Google Mike Leach and Sovereign Immunity."
"The State is a bad business partner"
The months leading up to the 2013 Legislative Session was very stressful. By this time, Wall Street had not made multiple coupon payments on the Facility, the City of Anson could no longer afford the debt service without any revenue stream, and State wasn't willing to budge. It just seemed like the whole thing was surreal. No way this could happen--but it was. After going back and forth to find a solution, one of which was the State would buy the Facility wholesale, the art of negotiation began. Here I saw firsthand how the State can (and will) exercise Sovereign Immunity. State Senator Robert Duncan represented Jones County in the Texas Senate. He also sat on the powerful Senate Finance Committee. If anyone could get this deal done, it was Bob. He spent the better part of the 2013 Session trying to get support from his colleagues on the Committee and the Senate. However, Senate Criminal Justice Chairman John Whitmire, had other plans. TDCJ was (and still is) Whitmire's baby. It was Whitmire who told Brad Livingston, then TDCJ Executive Officer, to "get these rehab beds online" That one demand started this entire chain of events. Whitmire fought, figuratively and literally, to NOT open the Jones County Facility. In fact, in an unrepresented move, actually walked on the House floor, as a State Senator, to garner support to NOT buy the Facility when it looked like the House was going to vote to fund a purchase. Distraught and out gunned, Duncan with great dignity mind you, sat all the players down in a Conference room in the Capitol Extension. He said there would be no purchase. There would be no deal. There was no offer from the State. You (Wall Street) can pursue legal action, but we are insulated from suit. The next quote was chilling and telling, and still stays with me today: "We only appropriate every two years. If you don't get it all at one time, you are not guaranteed anything beyond the initial appropriation. In many respects, Texas is a bad business partner." The room went silent. It was the end, and nothing was going to happen, and there was nothing anyone could do. It was immediate and expeditious. To this day, the Jones County Facility has not been populated. In fact, it is overgrown with weeds and a made up sign with the inscription "working like a charm" That is how John Whitmire described the project before he decided it was no longer needed.
How does this impact Kliff?
The State doesn't have to pay a single thing it doesn't want to. It doesn't have to abide by its contractual obligations. It can walk away at any point. Now, will there be repercussions if Tech does this--yes. How bad would they be--that is a big unknown. Cause is not a requirement. Performance, or lack therof, is not a requirement. When you get into bed with the State of Texas, you need to know who you are in bed with.
Bob Duncan is a friend, and I think he is an excellent Chancellor. I would think that, being a man of honor and he deeply loves this University, we would act in an acceptable manner. But who knows at this point. If we lose out, does that put enough pressure to make a change? I don't know. What I do know, and have experienced first hand is this: When State is done, they are done. It is finished.
As a Texas Tech fan, no doubt you have heard the term "Sovereign Immunity". It is a very convenient tool that the State of Texas--one of only 3 States that enjoy such a tool--has used multiple times to cancel State Contracts. This is for all State Contracts, not just for football coaches.
Sovereign Immunity is essentially this: The State of Texas has to give you permission to sue the State of Texas, and if that happens, and if you happen to win damages, the State of Texas still does not have to pay the ordered damages. The former football coach was fired for cause and insubordination. Whether that was fair or not, right or wrong, " Cause" is moot when weighed against the privilege of Sovereign Immunity that the State of Texas enjoys.
However, I saw first hand from 2011 to 2013, after the Mike Leach fiasco mind you, how the State cancels contracts, and Chancellor Robert Duncan (then State Senator Robert Duncan) was at the heart of the negotiation.
The State Walked Away From a Contract
As many of you know, I was in professional politics for nearly 15 years. In 2010, I got out and started a career in City Management. In 2011, I found myself in Anson, Texas. I had thought the whole Sovereign Immunity thing was long gone. But alas, it was not. In 2008, the Texas Department of Criminal Justice put a Request for Proposal to build a "Secure Drug Rehabilitation Facility". Jones County, where Anson is the County Seat, responded to a proposal, and was ultimately awarded the RFP Contract from the State of Texas. In fact, the Jones County Facility was included in TDCJ's LAR (Legislative Appropriation Request). The money was there and was budgeted for the Facility. Signed and executed Contract in hand, and after partnering with Wall Street investors, Jones County constructed the Facility, on time, on budget, and to spec---even when the State of Texas was making change orders six weeks prior to completion.
In July of 2010, Jones County, the City of Anson, and TDCJ had a ribbon cutting announcing the Facility was open for business. One month later, TDCJ notified Jones County Judge Dale Spurgin that "the Facility in Jones County is no longer needed, and will not be populated by TDCJ." The State, after $25 Million of private and public funds were invested into building a Facility the State asked for, the State entered into Contract to build, and budgeted money for, simply walked away. Leaving Jones County, the City of Anson, and Wall Street to pay the debt on a "Speculative Venture".
"Just Google 'Mike Leach'"
After months of doing my own research and trying to figure the whole thing out--I came in right after the Contract was broken, I was amazed how the State simply walked away. I personally knew about 1/3 of the Texas House of Representatives, and about 5 or 6 State Senators. As City Manager of Anson, I thought, we can work this out. Man, was I wrong. I spent a good 9 months to 1 year building a case--political, moral, and ethical--as to why the State needs to make everyone whole. It turns out, in 2009, when Governor Perry demanded all State agencies cut their budget by 10%, during the fiscal year, the Jones County Facility was an easy cut and could help the Agency meet this demand. Again, performance or cause didn't matter--the State needed to save money, already spent the money, or simply didn't want to pay the contracted amount.
The "Texas" side of this equation knew the card the State was playing. The Wall Street Side--not so much. To say Wall Street was pissed is an understatement. I distinctly remember a conversation with Wall Street trying to explain how the State can simply walk away. It was simply unfathomable that this could happen. After about 20 minutes or so, the soft spoken County Attorney, equally frustrated in trying to explain how, and the effects of the State's actions simply said "Just Google Mike Leach and Sovereign Immunity."
"The State is a bad business partner"
The months leading up to the 2013 Legislative Session was very stressful. By this time, Wall Street had not made multiple coupon payments on the Facility, the City of Anson could no longer afford the debt service without any revenue stream, and State wasn't willing to budge. It just seemed like the whole thing was surreal. No way this could happen--but it was. After going back and forth to find a solution, one of which was the State would buy the Facility wholesale, the art of negotiation began. Here I saw firsthand how the State can (and will) exercise Sovereign Immunity. State Senator Robert Duncan represented Jones County in the Texas Senate. He also sat on the powerful Senate Finance Committee. If anyone could get this deal done, it was Bob. He spent the better part of the 2013 Session trying to get support from his colleagues on the Committee and the Senate. However, Senate Criminal Justice Chairman John Whitmire, had other plans. TDCJ was (and still is) Whitmire's baby. It was Whitmire who told Brad Livingston, then TDCJ Executive Officer, to "get these rehab beds online" That one demand started this entire chain of events. Whitmire fought, figuratively and literally, to NOT open the Jones County Facility. In fact, in an unrepresented move, actually walked on the House floor, as a State Senator, to garner support to NOT buy the Facility when it looked like the House was going to vote to fund a purchase. Distraught and out gunned, Duncan with great dignity mind you, sat all the players down in a Conference room in the Capitol Extension. He said there would be no purchase. There would be no deal. There was no offer from the State. You (Wall Street) can pursue legal action, but we are insulated from suit. The next quote was chilling and telling, and still stays with me today: "We only appropriate every two years. If you don't get it all at one time, you are not guaranteed anything beyond the initial appropriation. In many respects, Texas is a bad business partner." The room went silent. It was the end, and nothing was going to happen, and there was nothing anyone could do. It was immediate and expeditious. To this day, the Jones County Facility has not been populated. In fact, it is overgrown with weeds and a made up sign with the inscription "working like a charm" That is how John Whitmire described the project before he decided it was no longer needed.
How does this impact Kliff?
The State doesn't have to pay a single thing it doesn't want to. It doesn't have to abide by its contractual obligations. It can walk away at any point. Now, will there be repercussions if Tech does this--yes. How bad would they be--that is a big unknown. Cause is not a requirement. Performance, or lack therof, is not a requirement. When you get into bed with the State of Texas, you need to know who you are in bed with.
Bob Duncan is a friend, and I think he is an excellent Chancellor. I would think that, being a man of honor and he deeply loves this University, we would act in an acceptable manner. But who knows at this point. If we lose out, does that put enough pressure to make a change? I don't know. What I do know, and have experienced first hand is this: When State is done, they are done. It is finished.
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