Public money put at risk in Peak contract
By any analysis, Summit County’s local governments are taking a risk by investing $456,000 of public money in Peak Speed Communications to create an affordable high-speed Internet access network.
For sure, awarding of the contract to Peak Speed was born on shaky ethical considerations by Bernie Zurbriggen, chairman of the committee charged with awarding the contract.
The risk, a calculated one if you agree with officials who inked the contract, stems from Peak Speed’s relationship with the bankrupt Netbeam. Netbeam, a Breckenridge company formed in 1999 to provide wireless high-speed Internet access in the West, filed for federal bankruptcy protection in 2001.
Peak Speed was formed by part Netbeam owner Greg Friedman to run Netbeam, which could not get credit or buy basics such as workman’s compensation insurance, let alone do business with Qwest.
Financial troubles started when Denver telecom magnate John Malone’s Liberty Satellite and Technology pulled the plug after investing $2.7 million into the company.
A close reading of bankruptcy disclosures – public documents – filed by Friedman gives good basis calling the $456,000 contract with Peak Speed a risk.
Both companies are intertwined through management, employees, equipment and movement of money. For practical purposes, they are one in the same. On paper, the two are separate.
How Peak Speed “won” the contract raises its own questions. The contest came down to two bidders, Peak Speed and Qwest. One other Denver firm bid, but did not make the final cut.
Colorado.Net/Vail.Net was not in the picture as it missed the legal publication requesting bids and was not paying attention.
The first question is why, with limited bids in hand, a viable regional company was not solicited to bid.
A second question concerns the ethics of Zurbriggen, former Netbeam investor and a current Frisco Town Council member, who is out $30,000 in the bankruptcy. Zurbriggen chairs the Summit Telecommunications Consortium, a group of elected officials and staff members from the four town and the county governments charged with dealing with Internet access and cable TV issues with collective strength.
In a Jan. 23 Summit Daily News story, Zurbriggen said he excused himself from the selection process, and that he no longer was affiliated with Netbeam – except, of course, for the hole in his checkbook. That debt, according to the Frisco code of ethics, justifies recusal from such matters.
According to assistant county manager Sue Boyd, a SCTC member, everybody knew about Zurbriggen’s past involvement as he was honest about it, a disclosure also required by the code.
That’s fine, but the minutes of the Aug. 9, 2002, SCTC meeting, where Peak Speed was selected for the contract, show Zurbriggen was one of five SCTC members present and he voted for Peak Speed. He subsequently served on the negotiating committee.
According to the Frisco code of ethics for elected officials and staff members, Zurbriggen, with a debtor interest in Netbeam, should have followed the spirit of the code and abstained from voting for Peak Speed. The letter of the code says Zurbriggen could not have voted for Netbeam, where his debtor interest technically lies.
The code spells out how following the “spirit” of its intentions is as important as the letter of the law.
Since the SCTC is linked to each local government by an intergovernmental agreement, Zurbriggen should not have voted.
Even at that, he was one of five affirmative votes in a unanimous decision. Seven SCTC members were absent.
Already, Peak is behind in establishing the
high-speed network. A $656 daily penalty for tardiness is already being waived based on the fact planning commission approvals for antennae are lacking.
Zurbriggen lays the blame on failure to realize approvals were needed. Both Zurbriggen and Friedman know better. And now, so does the public.
More than $200,000 in public funding has already flowed to Peak Speed, according to the contract. The public deserves full disclosure on the status of this money and how it has been used.
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