Grandson of major backer of Dunleavy election cancels sole-source state contract

JUNEAU — The grandson of a prominent donor to a group that supported Alaska Gov. Mike Dunleavy’s election said Tuesday that he has opted out of his controversial $8,000-a-month contract with a state corporation.

Clark Penney said he’d become a distraction.

The Alaska Industrial Development and Export Authority last year entered into the sole-source contract with Penney. Some lawmakers questioned the contract - which was to help a government industry development team in its efforts to boost jobs and diversify Alaska's economy - and whether the Republican Dunleavy was involved in any way.

Penney is a grandson of Bob Penney, who was a major donor to a third-party group that supported Dunleavy's 2018 election.

Tom Boutin, executive director of the authority, told a House subcommittee last month he never spoke to Dunleavy about Penney or the contract. Boutin signed the contract with Penney.

The initial contract, which was to end June 30, 2019 and was extended, included options for three, one-year extensions with costs not to exceed $441,000 through June 2022. Under terms of the agreement, costs from July 1, 2019, through June 30, 2020, were not to exceed $132,000. That included $8,000 a month and travel expenses.

[Dunleavy calls for investigation into Clark Penney state contract, criticizes Democratic lawmakers who questioned it]

The authority has paid Penney Capital, Penney's consulting company, about $95,000 for services rendered through January, Karsten Rodvik, a spokesman for the Alaska Industrial Development and Export Authority, said by email.

"We anticipate receiving additional invoices for work performed under the contract through the termination date," Rodvik said. Penney submitted a notice of termination, effective immediately, on Tuesday morning, he said.

Boutin told The Associated Press he spoke with Penney Tuesday after the AP inquired about the contract’s status, and he said Penney confirmed he had terminated the contract.

Penney, in an email, said his participation had “become a distraction leading to a challenging environment for my colleagues. I believe in the work the team and I are doing in creating a brighter future for Alaska, but at this time I will be stepping away from this contract effective immediately. My hope is the good work we started will continue.”

"I will be doing all I can from the sidelines to help our great State grow," he added later.

An email seeking comment on how much had been paid under the contract so far was sent to Karsten Rodvik, a spokesman for the Alaska Industrial Development and Export Authority.

Dunleavy spokesman Jeff Turner said Penney had notified the governor's office that he was ending his contract.

Attorney General Kevin Clarkson told Reps. Zack Fields and Jonathan Kreiss-Tomkins in a letter last month that in response to concerns they had raised about the contract and at Dunleavy’s request he had directed the Department of Law to review the matter. Department of Law spokeswoman Maria Bahr said by email that the department is continuing the review.

Fields, an Anchorage Democrat, said he considered it a victory “that we aren’t going to be squandering any more money” on the contract. But he said an answer still is needed on who directed the contract.