Company with Ties to Leatherman’s Relative Gets Lucrative State Contract

April 22, 2015

Investigative Reports

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By RICK BRUNDRETT
road sign restaurants

Leatherman’s son-in-law gets lucrative contract

If you’re driving on a state highway in South Carolina, you can’t miss those blue signs displaying the logos of restaurants, gas stations and hotels as you approach an exit.

The signs aren’t constructed or maintained by the S.C. Department of Transportation. Instead, the agency contracts with a company – South Carolina Logos Inc. – to do that work. The firm charges businesses to advertise on its highway signs – a multimillion-dollar operation – and pays DOT annual fees totaling at least $2.8 million, records show.

The firm, which as of 2013 had advertising agreements with 1,309 participating businesses statewide, according to company documents, is a subsidiary of Interstate Logos, which operates 22 statewide logo-sign programs and is part of Lamar Advertising Company, a national billboard and outdoor advertising company that shares a Columbia office with its South Carolina subsidiary. John Hardee is Lamar’s director of governmental affairs at the Columbia office.

Hardee, who has a section of road leading to the Columbia Metropolitan Airport named after him, also is a DOT commissioner and the son-in-law of arguably the state’s most-powerful lawmaker – Senate President Pro Tempore Hugh Leatherman, R-Florence.

The Nerve earlier this month revealed how Hardee, who previously served on the DOT Commission from 1998 to 2007, quietly regained his commission seat last year after being found qualified by the legislatively controlled Joint Transportation Review Committee, of which Leatherman has been a member since its creation in 2007.

After the story was published, The Nerve obtained, based on a request under the S.C. Freedom of Information Act, documents from the state Budget and Control Board’s Procurement Services Division, relating to the latest 12-year contract between DOT and South Carolina Logos Inc.

As the Senate Finance Committee chairman, Leatherman has an automatic seat on the Budget and Control Board’s five-member governing panel, which is chaired by Gov. Nikki Haley. He also serves on the Senate Transportation Committee.

The documents obtained by The Nerve reveal that:

  • South Carolina Logos (SCL) Inc., established in 1994, has been the dominant player in the state’s business-logo road sign program since 1995 when it entered into an initial 10-year contract with DOT. The contract was renewed for another seven years in 2005 when Hardee was on the DOT Commission, and again renewed for 12 more years in 2013. “If asked, most people would assume the Program is administered solely by the Department (of Transportation) and would not realize that the day-to-day operation and administration has been contracted to SCL for more than sixteen (16) years,” SCL said in its latest proposal.
  • An April 16, 2013, intent-to-award letter, which noted only one response was received, calls for SCL to pay DOT a minimum total of $35.2 million, or 60 percent of gross program revenue – whichever is greater – over the life of the 12-year contract. The advertising rates charged by SCL to businesses were not specified in the records provided to The Nerve, though according to a company website, base “participation fees” for eligible businesses range from $1,000 to $2,500, depending upon the level of traffic, per location for one direction. SCL noted in its proposal that it has collectively “returned more than $29 million to the Department (of Transportation) from the Program.” The documents, however, didn’t indicate how DOT used the millions it had received from SCL.
  • In its proposal, SCL said it would be able to provide DOT with “significant insight and real-world experience in the initiation and implementation of the Agritourist and Tourist Oriented Directional Signing (TODS) Program upon enactment by the South Carolina General Assembly of the Program’s proposed regulations,” noting it could draw from the experiences of 12 similar programs in other states administered by its sister companies. Under the law, the program allows directional road signs in rural areas for “agritourism and tourism-oriented facilities”; participating businesses must be pre-approved by the state agriculuture and tourism departments. The law was passed by the Legislature in 2012; the Senate bill went through the Senate Transportation Committee, of which Leatherman is a member.

As been his longstanding practice with The Nerve, Leatherman did not return written and phone messages this week seeking comment on SCL’s contract with DOT.

Hardee, who has been with Lamar since at least 1999, according to earlier news stories, did not return several phone messages left for him this week by The Nerve. John Gepper, SCL’s general manager, declined immediate comment when contacted Monday by The Nerve, saying he would “pass this along” to other company officials, who did not respond.

The Nerve also sent written questions this week to DOT spokesman Pete Poore, asking, among other things:

  • Whether Hardee had any involvement in the development or approval of the past contracts and current agreement with SCL;
  • If DOT approves specific advertising rates charged by SCL to businesses; and
  • An annual breakdown of fees that SCL has paid to DOT over the years and how DOT has spent those funds.

Poore did not provide any answers by publication of this story, though he said he forwarded the questions to the agency’s traffic engineering section.

In a written response last week to The Nerve, BCB spokesman Brian Gaines said under state law, DOT procurements of more than $500,000 must be conducted by the BCB’s Procurement Services Division if not exempted by law, which he noted was the situation involving the latest SCL contract. The law exempts the “construction, repair, and maintenance of bridges, highways, and roads” from going through the Procurement Services Division.

Gaines said the “final execution” of contracts is done between the agency requesting the work and vendor, though he didn’t know whether the DOT Commission or DOT staff approved the latest SCL contract. Poore also couldn’t provide an immediate answer to that question.

Reach Brundrett at (803) 254-4411 or rick@thenerve.org. Follow him on Twitter @thenerve_rick. Follow The Nerve on Facebook and Twitter @thenervesc.