Watchdog: Oklahoma tourism deal cost taxpayers $12.4M

OKLAHOMA CITY (AP) — Amendments to a lucrative contract between the state and a barbecue restaurateur to build and operate restaurants at six state parks ballooned the cost of the project by $12.4 million, the head of a state watchdog agency told House lawmakers on Thursday.

Mike Jackson, the director of the Legislative Office of Fiscal Transparency, said his office quickly noticed irregularities in the contract between the Oklahoma Tourism and Recreation Department and Swadley’s Foggy Bottom Kitchen.

“It looked like it was very favorable to the vendor,” Jackson said. “LOFT was unable to find another contract structured this way.”

Jackson said two amendments to the contract, both of which ratified expenditures that had already been made, ended up costing state taxpayers $12.4 million more than expected.

Under the deal, the state agreed to subsidize the restaurant’s financial losses, which ultimately cost the state $2.1 million, and pay the restaurant management fees of $1.34 million, Jackson testified. In addition, the restaurant company served as the general contractor overseeing the construction and charged the state management and consulting fees on virtually every invoice that ranged from 5% to as much as 35%, he said.

The entire project cost the state an estimated $16.7 million, Jackson said.

The agency canceled the contract last month, and Gov. Kevin Stitt’s hand-picked former director of the agency, Jerry Winchester, resigned days later. The Oklahoma State Bureau of Investigation has launched a probe into the deal, and Oklahoma County District Attorney David Prater has asked for a forensic audit of “allegations of potential criminal conduct.”

Jackson said his agency began looking into the tourism agency’s finances after the Legislature authorized $48.6 million in bonds in 2020 for capital improvements to state parks. One of the first thing evaluators noticed was that the annual cost for food and beverage service at state parks, which typically averaged $50,000 annually, jumped to nearly $6 million in 2021, Jackson said.

“We started asking questions pretty quickly,” Jackson said.

A message left Thursday with Swadley’s corporate office wasn’t immediately returned, but the company has said it’s proud of the work it accomplished to help beautify state parks.

“Despite the logistical complexities presented by the location of these restaurant sites, Swadley’s completed its work on the six restaurants in less than two years,” the company said. “From the beginning, Swadley’s acknowledged and accepted that this project would be a difficult undertaking, but the extent of the decay and neglect at the various restaurants made it more difficult than either party initially anticipated.”