Six years ago, a private company supported by Utah's top business leaders tried to gain more control over the competitive, lucrative and often secret realm of luring new businesses to Utah. And when Huntsman took office, he named the company's former director, Chris Roybal, as his chief economic adviser.

Now the company, Economic Development Corporation of Utah (EDCU), is the only bidder - the only "qualified" bidder, according to Huntsman - to assume the duties of the fired workers.

Critics see the windfall in a sinister light - as the spoils of Roybal's power struggle with the former State Division of Business and Economic Development. The governor and Roybal, however, insist a private contractor can do the job better than the state and that the contract bid process is not rigged to favor EDCU.

Yet the deal has sparked concerns that go beyond Roybal's potential conflict - concerns about fairness, public oversight and cost, and about whether a company that has played a supporting role in luring new business to Utah can juggle the needs of the entire state.

"I'm a true believer in the concept," said San Juan Record owner Bill Boyle, a member of the Governor's Office of Economic Development board, "but there are some issues that need to be addressed."

Collaboration to competition: EDCU was started in 1987 by a handful of local government officials and business executives who were underwhelmed by the state's efforts to recruit companies to Utah. They wanted an economic development office that didn't change with each new governor.

"We wanted a business voice in addition to a state voice," said Max Farbman, corporate attorney and one of EDCU's founders.

EDCU had little trouble finding financial backers, including city and county officials and business leaders who felt snubbed by the state. Today nearly 200 entities pay cash or provide in-kind donations to EDCU, which has a budget of nearly $1.5 million split between public and private contributors.

"The private side of EDCU is so crucial because it is made up of people who know what it's like out in the real world." said Robert Hatch, Wells Fargo's Utah president and EDCU chairman.

It wasn't long before state and private economic development contractors started to duplicate each other's efforts. Two sets of recruiters - one working for the state and another working on behalf of EDCU - were wining and dining corporate officers and providing information about Utah to prospective businesses. It was not uncommon for the two organizations to be courting the same company without the other's knowledge.

"There was a lot of confusion over who does what," said Jeff Edwards, who joined EDCU four years ago and was named its chief executive in January after Roybal's departure.

It got to the point where state workers started to believe the redundancies were part of a larger scheme to bolster arguments that the state office should be shuttered.

In 1999, Roybal and others tried to merge the nonprofit EDCU and the recruiting arm of the state. But with so much duplication - and some careers at stake - the two groups couldn't come to an agreement and the plan fizzled.

In the meantime, EDCU's role continued to grow. It was heavily involved in a number of high-profile recruiting deals, such as Alphagraphics' 85-employee relocation to Salt Lake City. EDCU also has claimed success in persuading Verizon Wireless to open a 1,100-employee customer-service operation in West Valley, Goldman Sachs to expand by 350 jobs in Salt Lake City and Kraftmaid to locate a 1,300-job cabinet manufacturing plant in West Jordan.

State workers insist EDCU cannot claim sole credit for those projects. The uneasy partnership with the state ended in January, when Huntsman Chief of Staff Jason Chaffetz and Roybal fired more than 30 state economic development executives, effectively shutting down the state's recruiting operation. EDCU took over not soon after that on a "pro-bono" basis until a permanent private contractor could be found.

Private or public: Turning some economic development functions over to a private contractor is not unique. Roybal and Huntsman claim that Utah, under their leadership, is joining a growing number of other states privatizing recruiting efforts. They insist a private contractor can do the job better.

But more effective does not necessarily mean cheaper. Utah spent about $650,000 annually on recruitment, and EDCU probably will receive a contract worth close to that amount, Roybal said.

And only a handful of states have actually privatized economic development, according to Jeffrey A. Finkle, president and CEO of the International Economic Development Council, a group of recruiting agencies to which EDCU belongs. And those that have privatized say they did so far differently from in Utah, which conducted a mass firing of economic development personnel and is outsourcing recruiting.

For example, Florida created Enterprise Florida, a nonprofit organization funded mainly by the Florida Legislature and some private corporations in 1996. Many state employees involved in economic development simply moved over to Enterprise Florida.

In early May, the Utah procurement office issued a request for proposals (RFP) from organizations interested in taking on the state's business recruitment efforts. As the June 1 deadline passed, only EDCU had applied for the task. Huntsman and Roybal say that's because the corporation is the only firm qualified to take the job.

"We've only got one player in town who's ever been involved in anything like this," Huntsman said.

Adds Roybal, "EDCU has an eight-year track record that speaks for itself."

That may be overstating it a bit, according to Dave Harmer, the former executive director of the Utah Department of Community and Economic Development who was fired in January.

Of all the companies that have expanded in Utah in recent years, only about 10 percent to 15 percent worked with EDCU exclusively, Harmer said. In most instances, the state economic development team was involved at some point in the recruiting process.

Business site selectors say they don't care who recruits them, so long as the process is easy and Utah has what they need. Companies come to Utah for a variety of reasons - such as low operating costs, affordable and skilled labor, land availability and even incentives.

Jeff Crook, a project manager for Kraftmaid, which recently announced it will build the West Jordan manufacturing facility, worked with the state until Huntsman fired all of the people the company was working with. After that, the company was assisted by EDCU.

"It matters how responsive they are in answering questions and how willing they are to compromise. Whether it was the state or EDCU, Utah was good in both areas," he said. "I didn't see any difference."

By the book: The process may not matter to potential Utah businesses, but the way Huntsman and Roybal have handled it has created distrust and skepticism in some business and government circles.

"The fix was in before the RFP was even issued," added Stephen Jury, a Park City real estate agent who is organizing a new economic development organization and was interested in the state contract. "The fix was in the day Jon Huntsman was elected."

While some have said Roybal is the driving force behind Huntsman's idea to privatize, and more specifically, to award the contract to EDCU, the governor insists limited privatization was suggested early in his campaign for governor last year. Although Roybal helped write Huntsman's economic development plan, the governor says other business leaders pitched the idea as well.

Still, Jury remains troubled by the way the recruiting bid is being handled. He said the state contract was written in a way to ensure EDCU is not only awarded the contract but that no other organizations - such as his own - will even bother bidding.

In fact, it's likely the state could not have qualified under the specifications of the bid proposal - particularly the marketing requirements. Dick Bradford, operations director of the Governor's Office of Economic Development, says the contract was written with the expectation that applicants would provide more "robust" marketing than state workers were able to with limited state budgets.

Despite those higher expectations, David Simmons, a member of Huntsman's review committee, says the bid request "was written in a way to not preclude any group that had the expertise the state is looking for from submitting a bid." And Huntsman and Roybal both insist the bidding process is open and above-board. Roybal has recused himself from the selection process. "We're doing everything by the book, based on my understanding of the book," Huntsman said.

Issues of fairness: Regardless of the bid controversy, local governments are wondering what privatization will mean for their efforts to draw jobs to their communities.

Cities and counties contribute roughly half of EDCU's budget. Now, with the state potentially throwing in about $500,000 or more, EDCU's task could be more complicated.

Local government leaders question whether the private contractor will be as fair as the state in doling out leads. Cities and counties that don't contribute to EDCU wonder if they will get the same treatment as those that do. And smaller communities worry EDCU could be biased toward its biggest donors - Salt Lake County, Utah County and Salt Lake City - a concern they didn't have about the state office.

"There is a concern that privatizing will lead to an emphasis on the Wasatch Front" and that economically disadvantaged areas will not receive the attention from EDCU they want, said Boyle of the San Juan Record.

Many rural areas simply cannot afford to contribute much, if anything, to EDCU.

Washington County Economic Development Council Director Scott Hirschi, for example, said he is supposed to pay about $40,000 annually to EDCU. He pays only $6,000.

Even along the Wasatch Front, some counties worry EDCU will play favorites.

Earlier this year, for example, EDCU asked for a $45,000 contribution from Davis County. "We can't afford that much," said Kent Sulser, Davis County's economic development director.

Sulser is worried that if he doesn't contribute, Davis County will stop getting as much help recruiting new businesses as other areas that do contribute.

Weber Economic Development Corp. Director Ron Kusina got an invoice from EDCU for $36,000 - a price tag his board rejected. Kusina expects EDCU, however, to continue passing tips along to Northern Utah. "I would like to be a partner, but I can't afford to be," Kusina said.

Some of EDCU's biggest contributors have given the organization heartburn. Earlier this year, Salt Lake City Mayor Rocky Anderson proposed cutting the city's $107,000 annual contribution to the corporation. Faced with a showdown with the City Council, he has since backed down.

Now, with state competition out of the way, EDCU is the heir apparent to lure businesses to Utah. But even if the corporation can get past the conflicts of interest, the skepticism of privatization and local government concerns about fairness, a critical question remains: Is EDCU the best business scout for Utah?

Says Harmer: "This will be a real test for EDCU to handle everything themselves."

walsh@sltrib.com

Economic Development Corp. of Utah

What is it? A private nonprofit that tries to persuade companies to expand in or relocate to Utah. There are 78 board members and 12 employees.

What's the budget? $1.5 million in cash and in-kind contributions.

Who contributes? Salt Lake County and Salt Lake City are its biggest public contributors, together kicking in $462,992. Other municipalities and counties supplied just over $264,000. Private companies, including Utah Power, Intermountain Health Care and Questar, gave $457,112 in cash and $236,454 in in-kind contributions such as office space. In all, 192 private companies and 26 from the public sector give support.

How are contributions figured? Amounts contributed vary depending on the size of companies or communities and how much they are willing to pay.