In a written protest filed with the state Creamery Board and the state Department of Natural Resources, an attorney for Grubstake Auction Co. claims the March 8 decision by the board violates state law. The company also challenges the legality of the board itself.
The letter from Grubstake, which submitted a losing bid, follows complaints by it and four other Alaska auctioneers about the Creamery Board bidding process. Grubstake in its complaint March 18 contends the board should have followed state procurement rules in soliciting bids and selecting the firms Tauber-Arons Inc. and Rabin Worldwide to conduct the auction.
The board posted no public notice it was soliciting bids, did not list a scope of work required of the auctioneer and did not provide an inventory of equipment to be sold, Grubstake contends. State procurement rules require such postings to ensure bidders compete on a level playing field and that bids chosen are in the public's best interest, the complaint letter states.
State officials and Creamery Board members have contended the corporation is private and therefore exempt from the state procurement rules.
Grubstake, however, argues the state and the company are so intertwined that "the Creamery Corp. is the alter-ego of the state" and that the dairy assets should be considered public property subject to state rules.
The complaint notes the state is the sole shareholder of the Creamery Corp., which oversaw Mat Maid operations. The corporation directors are the five members of the Creamery Board. Gov. Sarah Palin in summer 2007 appointed the five to the state Agriculture and Conservation Board. After that, the five appointed themselves to the Creamery Board, the Grubstake complaint notes.
The state set up the Creamery Corp. as a private corporation to run Mat Maid in the late 1980s after the company went bankrupt and the state took it over. The Creamery Board shuttered Mat Maid in December after more than a $1 million in losses.
Grubstake's appeal also contends the corporation itself is illegal because the state law under which it was created has been repealed. Current state law prohibits the state from owning stock in a private corporation, according to the complaint.
Kathy Sheehan-Dugan, a spokeswoman for the Natural Resources Department, said the agency would not respond to Grubstake because the Creamery Board is not part of the department.
"We have no jurisdiction," she said.
Creamery Board chairwoman Kristan Cole said by e-mail that assistant state attorney general Tina Otto, who on Monday was out of town and unavailable for comment, would review the Grubstake complaint. Cole has previously defended selection of the California firms, saying their proposal "contained the most beneficial terms and was in the best interest of the corporation and its shareholder."
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