The former insurance director of the Maryland treasurer's office said yesterday he resigned from his job last month to protest Treasurer William James' decision to award a three-year state insurance contract to a group of companies that submitted a bid some $245,000 higher than one submitted by a competitor.
But James, who has been state treasurer since 1976, said he rejected the low bid in June because it failed to meet strict state regulations. He said he consulted the attorney general's office before awarding the contract and was advised that his decision was correct.
Martin Silvert, who became the agency's insurance director in May 1981, said he resigned because James rejected a Towson-based company's low bid of $368,000 for one year of coverage in favor of a higher bid of $614,000 submitted by five Baltimore agencies called "the Brokers' Committee."
"I'm not saying the treasurer had ulterior motives," Silvert said yesterday. "It's just blatant incompetence. I didn't think it was worth the cost difference to throw the bid out."
The Towson company, Rossman, Hurt and Hoffman, sent a formal protest to James two weeks after its bid was rejected, complaining that the contract was awarded unfairly. But company officials refused to comment yesterday. "We don't want to be a party to any controversy," said Henry Hurt, the firm's treasurer. The firm, if it seeks further recourse, can also file a complaint with the state's new Board of Contract Appeals.
Among the five bids received, James and his deputy, Charles R. Jones, rejected several that would have required the state to pay deductibles of up to $25,000.
The contract was designed to insure the state against lawsuits resulting from negligence by state employes on certain state property, and could cost Maryland taxpayers up to $2 million for three years. The second and third years of coverage are to be negotiated later. The General Assembly allocated $1 million for the first year of coverage.
James, who is elected by the General Assembly, said he rejected the low bid because it failed to provide three documents required under the contract's specifications. Those documents included proof of the company's A-bond rating, an affidavit saying the firm's officials had never been convicted of bribery, and a sample policy describing the scope of coverage provided. The failure to provide proof of an A-bond rating, James said yesterday, "was a very material deviation."
Silvert, however, said the Towson firm provided the documents two days after the bid was submitted. He said "nine times out of ten" insurance companies do not meet the specifications required in the contract and that it is routine to accept a bid with the provision that necessary specifications are delivered soon after.
"I've never seen a bid of such magnitude rejected because of such insignificant technicalities," Silvert said.
But James said yesterday that "you can't wait for specifications to be provided a couple of days later. State government doesn't work that way."
The treasurer said Silvert was trying to "seek revenge" and that he resigned after learning that his position was being advertised.
"He never said anything to me or to Deputy Treasurer Charles Jones" about his objections to the awarding of the contract, James said. "This is just a revenge matter."