Gore Allies’ Ties to Power Agency Are Questioned

The Gore family ties to the Tennessee Valley Authority run nearly as deep as the raging waters that the sprawling New Deal-era agency has tamed.

Former Sen. Al Gore Sr. defended the federal electric power and planning agency based in his home state from vitriolic attack in the 1950s, and his son, Vice President Al Gore, has been a staunch ally as a member of Congress and vice president.

So the younger Gore was right at home on April 29, 1995, when he came to Tennessee to present TVA with a coveted Hammer Award--a wooden hammer wrapped in a red-white-and-blue bow--for streamlining government and becoming “one of the premier examples of reinvention anywhere in the United States.”

But there is another chapter in recent TVA history that Gore did not mention that day: the awarding of lucrative contracts and jobs to key operatives in the vice president’s fund-raising and political network, sometimes through controversial practices.

Critics say this side of TVA’s record is more suggestive of the old-fashioned spoils system than Gore’s much-touted ideal of modern governmental efficiency and professionalism. The agency’s leadership has come under fire by its inspector general and a traditionally supportive congressional delegation for awarding contracts without competitive bids and failing to hold consultants accountable.

The number of those close to Gore who received TVA contracts is small, but telling. The beneficiaries during Gore’s tenure as vice president include two former chiefs of staff to Gore who remain presidential campaign advisors, Gore’s former state director from his U.S. Senate office and a longtime Nashville political supporter.

Providing Favors an Age-Old Practice

As Gore and Texas Republican Gov. George W. Bush continue their march toward securing the presidential nominations of the two major political parties this summer, both candidates will face close scrutiny of their respective records as public officials.

Providing jobs and favors for supporters is an age-old practice in politics. But, for the vice president, the appearance that TVA was used as a patronage preserve for Gore loyalists contrasts with efforts by his presidential campaign to cast the Tennessee native as a political reformer.

“TVA has always maintained the idea it is above that sort of political horse-trading,” said William Bruce Wheeler, a University of Tennessee history professor and co-author of a book on TVA. “To have non-bid consulting contracts and cronyism really disgusted a lot of [longtime] TVA people.”

Gore was on vacation and could not be reached, spokeswoman Laura Quinn said Saturday. She said Gore played no role in the awarding of any TVA contracts.

TVA is an unusual institution in American governance: a federal corporation with responsibilities spanning parts of seven Southern states. Founded by Congress in 1933, it has harnessed the Tennessee River and its tributaries, poured economic development funds into the region’s poor, rural communities and emerged as the nation’s largest provider of electricity.

The agency’s entire $6.6-billion budget comes from supplying low-cost, wholesale electricity to 159 distributor-customers, including municipalities and retailers.

Although Congress ended its annual federal funding for non-power programs in 1999, TVA still pays no federal income tax.

The agency carries a $26-billion debt, a legacy of a post-1960s nuclear program fraught with problems.

Since 1993, TVA has been embroiled in numerous financial and management controversies. Asked recently whether he still considered TVA an ideal laboratory for government reinvention, Gore backpedaled from his earlier assessment.

“I don’t know if the ’95 statement is fairly characterized as an over-praising,” he said. “I’ll acknowledge that there are a lot of problems that remain and they have a lot of work to do.”

Among the recipients of TVA contracts were Peter Knight, Gore’s lead campaign fund-raiser and former top aide, and Jack Quinn, another ex-Gore chief of staff. Knight signed a no-bid contract for “advice and assistance” with TVA in 1993 that paid his firm $680,856 over six years. And Quinn received a TVA consulting contract after leaving the White House that paid his firm $707,253 over 2 1/2 years.

The contracts to friends of Gore were awarded during the tenure of two TVA directors appointed by President Clinton with Gore’s backing. One is Johnny Hayes, who has served as finance chairman for Gore’s House, Senate and presidential campaigns since 1978. Hayes defended the contracts.

“These were high-quality people,” said Hayes, who left TVA last year to become national finance chairman for Gore’s presidential campaign. “These were people who did their work. It’s not old-fashioned cronyism. It reflects that you get the best people you can to help you.”

Gore put his stamp on the agency after becoming vice president in 1993.

Hayes, 59, a former Tennessee commissioner of economic development and insurance executive, was recommended by Gore for the $115,400-a-year post as TVA director. Gore concurred with former Tennessee Sen. James Sasser’s recommendation for Clinton to appoint as chairman Craven Crowell, a former chief of staff to Sasser who was Gore’s city editor at the Tennessean. For six years, Crowell and Hayes were the majority of the three-member board.

At Gore’s urging, Clinton appointed Skila Harris, an Energy Department official and former aide to Gore and his wife, Tipper, to succeed Hayes last year.

This places Gore in a bipartisan tradition of elected leaders--including former Senate Majority Leader Howard H. Baker Jr. (R-Tenn.)--who have promoted confidants for the TVA board, which wields vast authority over the politically potent agency.

And Gore has not forsaken the agency as vice president. His office keeps tabs on TVA concerns and Gore helped it win federal approval to refinance part of its debt in 1998.

The vice president is “a very strong supporter of TVA issues,” said David Withrow, who heads the agency’s Washington office.

Gore credited the TVA board with avoiding electric rate increases, reducing the work force and stabilizing finances and Hayes with doing “an excellent job.”

Of Crowell, Gore said: “Craven’s role as chairman has been more controversial.”

Crowell and other senior TVA administrators declined to be interviewed. It was the decision by TVA management to give no-bid contracts to well-connected consultants that prompted a two-year review by the agency’s internal watchdog.

Even though TVA is well represented in Washington with a supportive 38-member congressional delegation and a full-time, six-person Capitol Hill office, the agency awarded lobbying-consulting contracts to two of Gore’s closest advisors. Knight was retained in mid-1993, just after Crowell and Hayes took office, and Quinn followed in mid-1997, shortly after stepping down as White House counsel.

‘A Gold Rush in Giving Out Contracts’

Knight was Gore’s longtime House and Senate chief of staff and managed his 1988 presidential and 1992 vice presidential bids and the 1996 Clinton-Gore reelection effort. Together, he and Hayes have helped Gore raise more than $43 million for his U.S. Senate and presidential campaigns since 1984.

“When Hayes and Crowell came on board, it was pretty much a gold rush in giving out contracts to political associates and hiring political friends,” said a former veteran TVA employee, who insisted on anonymity but whose comments were echoed by other ex-colleagues.

Following a review of consulting and training contracts in late 1997, TVA Inspector General George T. Prosser cited a “public perception of favoritism” and “a lack of TVA oversight and controls which allowed certain consultants to make excessive profits, overbill and sometimes be unaccountable for their services and charges.” He reported that, since late 1992, TVA had more than 600 such large contracts worth $145 million--more than 80% without competitive bids.

In his review, Prosser conducted a detailed examination of a small number of the largest TVA contracts.

These did not include any of the pacts with Gore allies.

Both Knight and Quinn were chosen for their knowledge of Washington, said Stephen N. Bender, TVA’s vice president for communications. He added that “having a relationship with the vice president or the administration is not a bad thing.”

TVA officials say Quinn and his associates provided valued assistance on proposed electric power deregulation, a potentially serious threat to TVA. Knight consulted on various matters with TVA officials, primarily in Tennessee.

Knight’s contract called for him to “provide advice and assistance in connection with TVA’s programs” to board members and other officials for a $5,000 monthly retainer, which was soon doubled. The contract was renewed annually until it was terminated by mutual consent in September as Knight prepared to dissolve his firm.

In 1997, following Prosser’s report, TVA announced contracting reforms and a review of current sole-source contracts. The value of Knight’s contract was challenged by TVA executives, two current and former officials said.

“Folks at TVA tried to put a stop on that contract three or four times. They questioned why we had the contract when he’s not producing anything,” said a TVA official familiar with these events. “They were told: ‘If Johnny says we can’t kill it, we can’t kill it.’ ”

Hayes said he could not recall being asked about Knight’s contract and denied telling anyone to extend it.

“Peter gave a lot of good advice and that’s all I’m saying,” Hayes said, refusing to cite any examples. “Peter certainly earned his keep.”

Knight, who claimed a grasp of TVA issues after working with Gore in Congress, declined comment. But one individual familiar with the arrangement said that, when the controversy erupted, Knight offered to step aside and Crowell insisted that he stay on.

Quinn’s involvement with TVA was less controversial, but more rewarding. His connections to Gore go back to Gore’s 1988 presidential bid. More recently, he served as vice presidential chief of staff. He returned to his Washington law firm to head a public policy group in early 1997.

Contract Spells Out Ally’s TVA Role

Quinn’s TVA contract included “a monthly management fee” of $15,000 for overseeing members of his group; his associates billed TVA by the hour. The contract called for them to provide “political and governmental affairs counseling” and develop “strategic plans” on utility deregulation.

Bender said three other firms were interviewed for the contract, but declined to identify them.

Quinn said he did not believe Gore even knew he worked with TVA on deregulation, although “the vice president is critical to issues like this.” Quinn said he “devoted an enormous amount of time to this project.” Under ethics rules adopted by the Clinton administration, Quinn is prohibited from lobbying Gore and other White House officials until 2002.

Quinn’s contract ended last year when he left his firm to start his own company; he recently signed a new contract to advise TVA on deregulation and other Washington issues. TVA said the amount and terms of the contract were not immediately available.

Both Knight and Quinn have played key roles in Gore’s presidential campaign. Knight was the architect of Gore’s fund-raising operation; Quinn vetted questionable donors and fund-raisers.

Another recipient of a large TVA contract also has long supported Gore in his home state--James E. Lawson was paid $461,869 by the agency during a four-year period ending in September.

Lawson said he has knocked on doors, made phone calls and raised “a few thousand dollars” since Gore’s tenure in the House and continues to work on Gore’s presidential bid. The Nashville resident contributed $1,000, the legal maximum, last year.

In 1995, TVA’s Economic Development program--which Hayes helped oversee--awarded Lawson a no-bid contract to assess TVA’s minority business development programs and recommend ways to leverage TVA’s efforts with other organizations. A former bank executive who had served on a TVA advisory council on minority economic development, Lawson had recently founded a one-person consulting firm.

Lawson said his support for Gore played no role in winning the contract but refused to discuss this process. “TVA looked to me because I had the background, the experience . . . the knowledge base,” he said.

Hayes also said he could not recall assisting Lawson in obtaining the contract.

TVA spokesman John Moulton said Lawson made recommendations, provided training and delivered various reports under the contract. He said if TVA needs such services in the future, under its new contracting procedures, the agency will seek them through an open competitive process.

Among the contracts that TVA began dispensing in 1993 were large, no-bid public relations pacts to friends and former associates of Crowell in particular--even though the agency had a sizable in-house team devoted to those activities.

At the time, another member of Gore’s inner circle was already on board.

In late 1992, TVA retained the Nashville public relations firm of Mark McNeely, a Knoxville native who was Gore’s state director when he was in the Senate and was active in his 1988 presidential campaign. McNeely, who had done work for TVA since 1988, was to provide “advice and assistance in connection with the new presidential administration” of Clinton and Gore, the contract said.

TVA extended McNeely’s contract through September 1996. The firm was paid $109,645.

On Nov. 1, 1997, TVA granted the firm a new no-bid contract. Shortly thereafter, Prosser released his report lambasting TVA’s contracting procedures. In response, TVA announced consolidation of its outside public relations services into one publicly bid contract and McNeely’s pact was canceled.

McNeely said he was hired for his “knowledge, experience, skill, the ability to give good, sound advice.” Of his connection to Gore, he said, “I don’t think it hurt.”

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The TVA’s Reach

The Tennessee Valley Authority, created by Congress in 1933 to develop the Tennessee River and its tributaries, is the nation’s largest producer of electricity. It serves nearly 8 million people in a seven-state region.

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Source: Tennessee Valley Authority

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Times researcher John Beckham in Chicago contributed to this story.