State rejects Matanuska Maid auction protest

State assistant attorney general Tina Otto, in an April 1 letter sent to a lawyer for Grubstake Auction Co., rejected the company's contention that the state Creamery Board's decision should have been subject to state procurement rules.

The complaint raised "a number of novel arguments," but the Creamery Corp., while set up by the state, is not a state agency and therefore not subject to the state procurement laws, Otto stated.

Grubstake owner Ron Alleva said Monday he may take his case to the courts. The fact that a state attorney is defending the Creamery Board's decision is proof of its ties to the state, he said.

Grubstake, in its protest filed last month with the state Department of Natural Resources, had contended the Creamery Board, which oversees Mat Maid, is so intertwined with the state that it should be subject to state rules.

Specifically, the board should have publicly advertised it was soliciting bids and spelled out the details of what work would be required of auctioneers before making its March 8 decision, the company argued. Instead, Grubstake and other Alaska auction firms said they learned of the proposed auction only at the last minute after reading about it in a newspaper article. The company also challenged the legality of the Creamery Corp., asserting the state law under which it was created has since been repealed.

Otto, in her response to Grubstake, stated that even if the board was considered part of a state agency, state procurement rules would not apply because no state funds are involved in the auction contract with Tauber-Arons Inc. and Rabin Worldwide. She also wrote that the state responded because of Grubstake's assertion the state Department of Natural Resources had responsibility for the auction contract.

The state set up the Creamery Corp. in the late 1980s as a private corporation to run Mat Maid after the company went bankrupt and the state took it over. The seven-seat Creamery Board acts as its board of directors.

The auction of Mat Maid's equipment is currently set for May 21-22.

Find S.J. Komarnitsky at www.adn.com/contacts/skomarnitsky or 352-6714.