Providence - Questions are being raised about contracts awarded by the state to provide concessions at state beaches amid a probe by Rhode Island State Police.

State Rep. Peter Palumbo, a Democrat from Cranston, was the high bidder for the contracts to run the concessions for five years starting in 2014, but backed out, leaving Democratic Party Chairman David Caprio with the winning bid, as first reported this week by WJAR-TV.

Palumbo told the station that he was unable to come up with the $1.78 million that he bid in September 2013 to run the stands at three state beaches. Caprio had bid only $1.55 million to run the stands, $226,640 less than Palumbo. Caprio, whom Palumbo described as a friend, then hired Palumbo to manage the stands.

Palumbo and Caprio did not immediately return messages seeking comment Wednesday.

Caprio resigned as state Democratic Party chairman on Tuesday, a day after the WJAR report and six weeks before the September primary.

He said he no longer had the time to devote to the job. Caprio's brother, former general Treasurer Frank Caprio, is running for that job again.

State Police Maj. Todd Catlow said the department's financial crimes unit is investigating the awarding of the contracts and who is filling the contracts.

When asked whether Caprio or Palumbo were being investigated, Catlow would not comment but said, "It's fairly self-evident based on the contracts."

He said his unit had also spoken with the attorney general and U.S. attorney's office. He would not comment on details of the investigation.

The office of Democratic Gov. Lincoln Chafee referred all questions about the contracts to state police, including questions about the date they were awarded, requirements about who may be awarded state contracts and whether competing contractors are allowed to work in concert with each other.

John Marion, executive director of good-government group Common Cause, said he believes state law prohibits lawmakers from receiving such contracts.

Several Republicans weighed in Wednesday. The state Republican Party called on Palumbo to withdraw his candidacy for re-election. He faces Robert Lancia in the November election.

Republican gubernatorial candidate Allan Fung called on Chafee to cancel the contracts and put them back out for bid. Chafee is not running for re-election.

When asked whether he would cancel the contract, his office referred the question to state police.

"This entire transaction looks like an insider deal," Fung said in a statement.

Fung's opponent in the September primary, Ken Block, said if elected, he would call for legislation to make it illegal for members of the General Assembly to bid on state contracts.

"This is a commonsense solution that other states have implemented," he said. "It's outrageous that we allow that to occur here. It won't stand."

Associated Press writer Jennifer McDermott contributed to this report from Scituate.