A $5 million contract that Gov. Dennis Daugaard’s office signed with a national employee recruiting firm earlier this year violates the state and U.S. constitutions as well as state and federal laws, according to a lawsuit filed this week in Pierre.
The lawsuit, brought by three Sioux Falls staffing companies, alleges that the governor’s office “lacked the constitutional authority to enter into a contract” that gave one company an exclusive franchise within private industry.
“Under the contract, the state not only channels private business to use Manpower, but also pays $49,000 a month for that privilege,” according to the complaint. “The inevitable effect is to competitively cripple employee recruiting firms within and without South Dakota who get no monthly operating subsidy and who are unable to compete with the fixed below-market pricing of the fee schedule.”
Daugaard announced his plan to hire Manpower during his State of the State address in January. His plan called for Manpower to recruit 1,000 skilled out-of-state workers in four areas: financial services, information technology, engineering and manufacturing. The Legislature eventually approved $5 million for the project, and the contract with Manpower became effective Monday.
But the contract is unfair to other recruiting firms, the lawsuit says. Employers are compelled to partner with Manpower to hire out-of-state workers in those high-demand areas.
The lawsuit alleges that the contract was illegal for a number of reasons:
■ The governor’s office didn’t have the authority to sign it;
■ the state constitution prohibits the state from granting a “special or exclusive franchise;”
■ the contract impedes on Congress’ authority to regulate interstate commerce;
■ and it violates state and federal antitrust laws by attempting to confer a “de facto monopoly” to Manpower.
And because the contract was to provide a service for the private sector and not the state, the lawsuit argues that the state broke competitive bidding laws.Steve Sanford, the lawyer for the plaintiffs, said the Legislature has told the governor’s office to “go forth and be innovative” to create jobs and wealth in the state. “The question is, where is the boundary of power?” Sanford said. “We don’t think being innovative means you can anoint a private company to be the sole provider of services in a private, competitive market.”
Sanford compared it to the governor’s office deciding that every business should have a pickup truck paid for by the state, but only if it is bought from one dealer chosen by the state.
Daugaard's plan also violated the SDGOP platform:
The South Dakota Republican Party recognizes the free enterprise system and the work ethic of our people as the foundation of our economic success and security.
2.6 The South Dakota Republican Party believes government should not have an unfair advantage in competition with private enterprise.
I covered this issue earlier. Here was the vote on the Hunhoff Amendment to remove the funding:
Here are the representatives who supported the Hunhoff amendment:
Blake; Dennert; Feickert; Feinstein; Gibson; Hansen (Jon); Hawley; Hubbel; Hunhoff (Bernie); Iron Cloud III; Jones; Killer; Kirschman; Kloucek; Kopp; Liss; Lucas; Nelson (Stace); Russell; Schrempp; Sigdestad; Steele; Street; Tornow; Venner; Wismer
It was brought to my attention that the governor's office and the House leadership was putting huge pressure on the members to pass the extra spending. Here are the fiscally irresponsible members who voted against the amendment:
Abdallah; Bolin; Boomgarden; Brunner; Carson; Conzet; Cronin; Deelstra; Dryden; Fargen; Gosch; Haggar; Hickey; Hoffman; Hunt; Jensen; Kirkeby; Lust; Magstadt; Miller; Moser; Munsterman; Novstrup (David); Olson (Betty); Perry; Romkema; Rozum; Schaefer; Scott; Sly; Solum; Tulson; Turbiville; Van Gerpen; Vanneman; Verchio; White; Wick; Willadsen; Wink; Speaker Rausch
So we have alleged violations of state and federal constitutions and obvious violations of conservative principle on free competitive markets found in the SDGOP platform. This state needs legislators who will stand on principle and stand up to the governor when he is wrong. That would also fit the constitutional principle of separation of powers.