ATLANTIC CITY — The chairman of the New Jersey Casino Reinvestment Development Authority made no apologies Tuesday about the recent awarding of the authority's insurance brokerage contract to a firm headed by South Jersey Democratic power broker George E. Norcross III.
The contract, awarded unanimously at a March meeting to Conner Strong & Buckelew, contained asterisks in the places where maximum compensation was to be provided. In making the award, the CRDA bypassed an insurance broker with longstanding ties to Atlantic City that had insured the CRDA for 21 years. The losing bid had included a cap on compensation.
"We awarded for the best proposal," Chairman Robert Mulcahy said Tuesday when asked for comment after the board's monthly meeting. "We have an internal evaluation committee that evaluates these things. I don't even get involved in the process. I didn't even know who had the bid until it came to us."
The Inquirer reported on the contract award this month after receiving both submitted bids and the executed contract through an Open Public Records Request. The bids were made in response to a Request for Qualifications (RFQ), which grants more latitude than a Request for Proposals (RFP), which would have required bidders to give the cost of premiums and compensation.
The contract came months after Gov. Christie replaced the executive director of the CRDA with Chris Howard, an attorney who previously worked in the governor's administration and at Parker McCay, a law firm headed by Philip Norcross, brother of George Norcross.
Frank Proctor, managing director at Conner Strong, did not respond to a request for comment prior to the story's publication but said in a subsequent letter that the brokerage had already provided a savings of $100,000 to the CRDA on its property insurance policy.
"The unanimous selection of Conner Strong as the broker has already produced dividends to CRDA," he wrote.
Mulcahy said he was unable to provide a total figure of the cost of premiums under Conner Strong to compare with prior policies. "Not yet," he said. "But we will."
Mulcahy, a former athletic director at Rutgers University, took umbrage at any suggestion that that there was anything wrong with giving the contract to the Marlton-based Conner Strong.
"First of all, I don't think you understand the contract," he said.
"The whole issue is to have a process that results in better coverage for less money. And I think when this is all done, that's what you will see. When you see the results, you'll understand."
Against the backdrop of the state takeover of Atlantic City and questions about the ongoing influence of Norcross and allies of Gov. Christie, though, the contract award raised eyebrows locally. The CRDA has controlled the investment of nearly $2 billion from a 1.25 percent tax on gross casino revenue since 1984.
Its mandate has been constrained in the last year, as much of its revenue was redirected to help Atlantic City stave off insolvency. Conceived as the vehicle for Atlantic City's revitalization, the CRDA has also directed hundreds of millions to other parts of New Jersey and back into casino projects.
Mulcahy was also unapologetic about recent pay raises given to CRDA employees, reported by the news site Route 40, after a 10 percent reduction in its staff.
When asked why the insurance contract bids were solicited through an RFQ, not an RFP, Mulcahy said: "Well, the lawyers tell us that we can do it."
Finally, when pressed on the issue of awarding a public contract to a political heavyweight without a firm price on the services that might have come with an RFP, Mulcahy deflected responsibility.
"Look, all of these are signed off by the governor," he said. "Our minutes are all signed off by the governor."
The losing bidder was Insurance Agencies Inc. of Northfield, headed by J. Eugene Siracusa. IAI had teamed with the third-largest insurance broker in the world to compete on the RFQ. IAI's bid included a specific cap on the compensation, which is based on a commission percentage on premiums, of $35,000.
Mulcahy said he was aware that the losing bidder "had been here a number of years."
Proctor, of Conner Strong, said it was misleading to suggest his firm did anything wrong in not supplying a number. "That RFQ never requested that a dollar amount be specified," he said, adding that the contract specified that compensation would be limited to commission that is a percentage of premiums.
Proctor also stated in the letter that Conner Strong was the "incumbent broker in 2009 and displaced by another broker in 2010."
However, Siracusa, of IAI, said that while Conner Strong may have held a single pollution policy in 2009, "we have had the CRDA insured uninterrupted since 1996."
The company won the CRDA contract in 1996 from Commerce National Insurance Services, the Norcross firm that later became Conner Strong.