Months before publicly seeking bids, an Oklahoma tourism official began negotiating a deal with Swadley’s Foggy Bottom Kitchen executives to ensure the company would make money running restaurants at state parks, according to emails obtained by The Frontier.
The emails show Oklahoma Department of Tourism and Recreation officials discussed fees and other contract terms with Swadley’s management beginning in the fall of 2019, before publicly soliciting proposals for a new restaurant operator at five state parks in January 2020.
State law bars public officials from discussing financial terms with potential bidders before seeking competitive bids for government contracts. Violators can be found guilty of a misdemeanor, punishable by up to a $500 fine and/or six months in county jail.
“Swadley’s should make money from day one,” then-Deputy Tourism Director Gino DeMarco said in a Nov. 14, 2019 email to Swadley’s Foggy Bottom Kitchen owner Brent Swadley. Jerry Winchester, then executive director of the Tourism Department, was copied on the message.
In emails, DeMarco discussed a deal to ensure Swadley’s would pay nothing to lease state facilities and equipment to start, or pay royalty fees until the company reached a certain level of profitability. Many of the terms DeMarco and Swadley’s officials discussed in a series of messages between October and December 2019 made it into a Tourism Department contract Winchester eventually approved with the restaurant operator in March 2020, including paying the company management fees, covering financial losses, and limiting royalty fees to the state until the company reached a certain level of profitability.
In another email dated Nov. 5, 2019, Winchester discussed arranging a meeting with Swadley’s executives in December 2019.
“We are looking forward to making this deal happen and thanks for your interest and help for the State of Oklahoma,” Winchester wrote.
Winchester, Swadley and the Tourism Department did not respond to requests for comment.
Joe White, an attorney for DeMarco, cited state law that allows the Tourism Department to enter into “partnerships for promotional programs and projects” without following state competitive bidding or central purchasing rules.
But Rep. Ryan Martinez, R-Edmond, who is leading a special house investigatory committee to look into the Swadley’s deal, said he believes the Tourism Department must follow state purchasing rules.
“I have read that specific statute and there’s nothing in there from what I could tell that would suggest that they’re not subject to the Central Purchasing Act,” he said.
State tourism officials still moved ahead with a competitive bidding process for a new restaurant operator in early 2020. Swadley’s was the lone bidder for the contract.
Bidders for state contracts must sign a “non-collusion certification,” pledging they haven’t coordinated “with any state official or employee as to quantity, quality or price in the prospective contract, or as to any other terms of such prospective contract.”
Curt Breuklander, a former executive vice president for Swadley’s, signed the certification in February 2020.
“Ignorance is bliss,” Breuklander said in an interview with The Frontier. “I’ve never done a state contract before. I’ve never been involved in it. As far as collusion, I don’t think that there was any. I didn’t feel like there was any kind of competitive gain to it.”
Breuklander said he doesn’t believe Winchester and DeMarco intended to violate state law, but thinks they were “trying to get something done quickly and trying to get something going.”
In hindsight, Breuklander believes tourism officials probably “shouldn’t have went to us,” he said.
Another business owned by Brent Swadley, Swadley’s Emergency Relief Team Inc., is suing Breuklander, claiming he stole trade secrets when he quit in September 2021 and attempted to extort $1.5 million from the company.
“It’s basically a frivolous lawsuit,” Breuklander said. “He didn’t like that I took my phone number with me when I left so (Swadley) came up with a bunch of unproven theories about me.”
Breuklander is countersuing for defamation among other claims.
Emails show Breuklander discussed specific financial terms of a deal with DeMarco in November and December 2019, including the dollar amounts of monthly management fees the state would pay Swadley’s to run the restaurants.
In one exchange on Nov. 18, Breuklander demanded that the state “agree to no lease payments for the duration of the agreement” and insisted that restaurants must “be subsidized by the State.”
DeMarco responded that the Tourism Department could not agree to a deal where the company could lease state property at no cost for the duration of the contract because an audit would find the arrangement “imprudent.” But the agency could instead negotiate a deal that would allow Swadley’s to pay nothing until the company hit a level of profitability “higher than we would be able to reach for quite some time,” DeMarco wrote.
The contract Swadley’s signed in March 2020 agreed the restaurant operator would pay the Tourism Department its first $100,000 in total annual profit, but the state would reimburse the company for up to $1 million if Foggy Bottom restaurants lost money. State officials later amended the deal to pay Swadley’s $2.1 million for its financial losses for the 2021 fiscal year.
Breuklander places blame on his former boss.
“I obviously am more concerned about how shady and fraudulent Brent Swadley was in the entire process,” Breuklander said. “Especially when the construction started.”
The Tourism Department’s costs to launch Foggy Bottom restaurants at state parks ballooned to $16.7 million, a report from the Oklahoma Legislative Office of Fiscal Transparency found in March.
As The Frontier first reported, Swadley’s began charging the Tourism Department additional consulting and management fees ranging from 5% to 20% on top of some construction and equipment expenses in 2021. On some invoices, the restaurant company billed the state for both a management and a consulting fee for up to a 30% markup.
Breuklander said Brent Swadley instructed him to “find more money” the company could make from its deal with the state. After Breuklander declined, he discovered the company had begun billing the Tourism Department for extra fees.
Winchester resigned in April and the state filed a lawsuit against Swadley’s, seeking access to the company’s financial records. Oklahoma Speaker of the House Charles McCall has launched a special committee to investigate the Tourism Department’s deal with Swadley’s. The committee will hold its first hearing Thursday.
Martinez, the chairman of the special committee, said the emails show tourism executives circumvented the competitive bidding process to ensure Swadley’s would get the contract.
“I think that’s something that’s going to be a topic that the committee is going to want to delve into a little more deeply to figure out,” he said. “But at first glance, it looks very problematic.”
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