By Nic Tengg (firm) [Public domain], via Wikimedia Commons

May 23, 2017; Houston Chronicle

Federal, state, and local governments regularly use contracts to facilitate various kinds of business and work that the government itself may not be able to do, or do as efficiently or effectively as the private sector. Government contracts put taxpayer money to use, and citizens trust that elected officials will choose contracts that represent their interests and, more importantly, that the contracts being entered into are for the public good. This is why many elements of government contracting are public information. It’s also one reason why governments are subject to Freedom of Information Act (FOIA) requests,.. Private companies are not subject to FOIA.

Texas legislators are asking questions surrounding a contract between the state of Texas and two 501(c)(3) nonprofit organizations, the Alamo Endowment and the Alamo Complex Management Company. Despite testimony by Land Commissioner George P. Bush to lawmakers that transparency would be maintained, to date, public meetings and operational details have not been disclosed. This raised red flags for Texas legislator Senator Kirk Watson, an Austin Democrat who’s convinced that the organizations benefit from taxpayer money without being accountable to the public.

While the Alamo Endowment may assist the government in maintaining a state landmark, the concern stems from a lack of accountability for the revenue generated from the Alamo. Although as nonprofits these entities are still required by the IRS to submit annual Form 990 informational returns, the donor information is kept confidential. (Alamo Endowment received approximately $45,000 in donations according to its Form 990 filed in 2015.) And, with nonprofit organization board meetings not open to the public, legislators and citizens are left to wonder who or what is influencing the organizations. The state government is gambling with a large loophole that leaves much room for state agencies and nonprofit organizations to take advantage of taxpayer trust and money.

In its report, the Chronicle paraphrases the state’s position.

Brittany Eck, the Land Office press secretary, said details of all state money at the Alamo are subject to Public Information Act requests, as provided by state law.

The details of the Alamo operations, which are contracted to ACM and receive no state funding—are not subject to that same transparency, as was the case when a previous nonprofit, the Daughters of the Republic of Texas, operated the Texas shrine, according to officials. Like the Endowment and Alamo Complex Management, it, too, was a private foundation.

For-profit contracts are susceptible to this as well, as can be seen in the city of Richmond, where a company overpaid intentionally to take advantage of a Virginia state law that requires localities to pay interest on overpayments at the same rate they charge on delinquent accounts, which the city sets at 10 percent to discourage late payments. This resulted in a $3 million dollar tax refund to the company. Fortunately, some City Council members are pressing for a FOIA request to demand release the name of the company in order to determine if this was unintentional or if there was any potential abuse.

With the popularity of governments contracting with private nonprofits and for-profits, the balance between the public’s right to know how its money is spent and the contractors’ right to protect proprietary and confidential information is, and should be, under constant review.—Suja S. Amir