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Two weeks ago, when the county pension fund agreed to solicit offers to outsource its 10-member investment team, Lee Partridge planned to submit a bid.

Partridge, the San Diego County Employees Retirement Association’s top investment consultant, had the blessing of the organization’s attorney, Steven Rice. Even though Partridge had proposed creating the work, which would’ve paid his company more than $10 million annually, SDCERA’s attorney said it was legal for him to bid. A perceived conflict existed, Rice said, but not an actual one.

Then I asked questions about whether Partridge’s bid would violate a specific law that prohibits government employees from benefiting financially from contracts they’re involved in creating. I found a state Attorney General’s opinion that suggested it would be illegal.

I gave the opinion to County Supervisor Dianne Jacob, a pension board member, who in turn asked for a legal analysis of my questions.

Today, the board got its answer: What it wanted to do is illegal. Partridge can’t get the work.

Partridge, who’s under a contract that could pay him $4.5 million over three years, is currently unable to oversee the retirement system’s investment employees because he’s an outside consultant. He’d recommended outsourcing the investment team as a way to fix that hitch.

But if Partridge submitted a bid as he proposed and won the work, SDCERA attorney Janet Levine said the board would be subjected to criminal and civil liability.

As a result, the board is scrapping its immediate effort to outsource the county’s investment team.

The board had planned to solicit a limited number of bids from Partridge and others, and then shift the county jobs to the winning private company. The decision not to seek bids anyway raises the question of whether they would have taken those bids seriously. The board originally proposed to simply outsource the jobs to Partridge’s firm without seeing whether others could do it cheaper.

Now that Partridge can’t get the work, the board plans a deeper analysis of the benefits of outsourcing the jobs or keeping them in house. It didn’t set a timetable for that today.

Rice, the SDCERA attorney who’d earlier said Partridge could bid on the work, clearly sought to blunt any criticism that may come to the board for its actions to date. He stressed that nothing improper had yet happened.

“Everything that’s occurred to this point by the board and Mr. Partridge — there’s been nothing inappropriate, no 1090 violation, no imminent 1090 violation,” he said.

(Government Code Section 1090 is the law that prohibits government employees from bidding in contracts they’re involved in creating.)


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