PROVIDENCE, R.I. (WPRI) – Back in October, top officials in the McKee administration told lawmakers they were unaware of any competitive advantage that ILO Group, a politically connected consulting firm, had before winning a controversial state contract.
New records obtained by Target 12, however, show ILO managing partner Julia Rafal-Baer worked with a close confidant of Democratic Gov. Dan McKee, Michael Magee Jr., on the outline of a potential state contract in the days before Magee encouraged state officials to consider hiring her firm.
Magee — who was Rafal-Baer’s boss at a nonprofit at the time — also outlined how she would lead the work, according to emails obtained through a public records request.
“Julia Rafal-Baer and I worked on this scope over the weekend,” Magee wrote to the then-lieutenant governor and his top aides in an email on Feb. 28, two days before McKee was sworn into office as governor.
“Julia would play the lead role in this personally,” Magee added, estimating that the consulting work would likely cost millions of dollars because “none of this is cheap.”
“How many millions?” McKee responded the following morning.
Rafal-Baer and her partners — who all formerly worked for Magee at a nonprofit called Chiefs for Change — incorporated ILO two days after McKee became governor, and subsequently went on to win the lucrative state contract. (A portion of the work also went to a second firm, WestEd.)
The ILO contract was the focus of a Target 12 investigation beginning last summer that revealed a highly unusual bidding process and Magee’s close involvement in the early discussions.
R.I. Attorney General Peter Neronha’s office and the R.I. State Police have since launched a probe into whether the contracting process was lawful, and Neronha spokesperson Kristy dosReis confirmed that investigation remains open. Legislative oversight committees have conducted their own inquiries into how the deal came together.
McKee has argued his administration followed all the rules tied to the state’s competitive bidding process, which is designed to help Rhode Island government get fair contracts at the best possible price.
“As far as the agreement goes, in terms of the contract, it was a competitive bid process right from the word ‘go,’” McKee told reporters on Sept. 15. He has also said ILO was the right firm for the job.
The governor’s office confirmed last week that ILO is no longer working for the state – effectively ending the contract just six months into the deal. The state has paid an initial ILO invoice for $763,000, but the governor’s office has refused to release ILO’s second invoice, saying the billing is still under review.
In response to questions regarding the newly obtained Magee emails, McKee spokesperson Alana O’Hare argued the scope outlined by Magee in the days before McKee took office wasn’t the same as the eventual request for proposals – or “RFP” – that formed the basis of the contract awarded to ILO.
Instead, she said, the scope drafted by Magee was “crafted as an option in the event that the administration wanted to pursue an emergency sole source contract – a practice the prior administration used quite frequently during the pandemic.”
The explanation was echoed by ILO spokesperson Frank McMahon, who said Rafal-Baer was asked to provide advice “regarding a separate set of emergency services,” and that those services “were never contracted.” He argued that Rafal-Baer was “never involved in subsequent deliberations over (nor included on any emails about) whether those services would be needed.”
“The only work that ILO did for the state came as part of a competitive, public RFP process, which the state developed, and which ILO Group openly participated in and won,” McMahon added.
Magee did reference an RFP as an option in the emails obtained by Target 12, however, writing on March 1, “In terms of a strategy for executing a contract, my understanding is there are two options: 1. An emergency contract. 2. A very fast RFP with a very fast turnaround – e.g. 10 days.” (In an email to purchasing officials days later about what became the ILO contract, Magee suggested a seven-day turnaround for an RFP.)
Magee also went over qualifications he said should be included in the RFP process, adding Rafal-Baer’s consulting firm “would qualify under parameters like that.”
The scope of work Magee said he created with Rafal-Baer also included key elements that made it into the RFP, such as COVID testing plans and support for all Rhode Island school districts and an “analysis of all federal stimulus support for education and how best to spend it.”
Magee also sent an email attachment including a “menus of services and activities” for school reopening and addressing learning loss due to the pandemic. The document says that a different consulting firm Rafal-Baer owned at the time – Hope Street Consultants – would “provide guidance on creating municipal education offices within RI to assist districts and their constituents.”
The municipal offices – which Magee helped McKee create when the latter was Cumberland mayor in the late 2000s – were a major part of the final RFP and have emerged as a key education policy initiative for the new administration. McKee’s newly released budget proposes spending $15 million in federal COVID relief funds to create 11 municipal learning programs, including five for the state-controlled Providence school district.
Magee declined to comment for this story, citing the attorney general’s ongoing investigation.
After reviewing the emails and public documents provided to Target 12, Common Cause Rhode Island executive director John Marion said they raised serious red flags about the fairness of the state’s procurement process.
“They’ve got the inside track,” Marion said about ILO.
He also pointed out that the state’s purchasing laws were overhauled decades ago in the wake of scandals — saying reforms may need to be considered again.
“The law apparently has loopholes that allow bidders into the process of creating the terms that they bid on and we have to, I think, look at how we are going to tighten that up as a state,” he said.
DOA: ‘Not aware of the emails or their content’
The internal communications tied to the ILO contract have been closely scrutinized by state lawmakers, who have raised concerns about whether the consulting firm had an unfair advantage.
Those concerns were spelled out multiple times over two days of oversight hearings in the fall, when House and Senate legislators grilled McKee administration officials over state contracting procedures.
“It’s about fundamental fairness,” state Sen. Stephen Archambault said during a Senate Oversight Committee hearing. “You don’t meet with people beforehand because you could give them an unfair advantage.”
The McKee officials who testified made clear that Magee had some knowledge about the consulting work before it was announced publicly. They had participated in a Zoom meeting with Magee on March 5 in which he referenced ILO, and he later sent an email to them detailing how the RFP process should play out.
But R.I. Department of Administration director Jim Thorsen insisted he was unaware that ILO Group knew anything about the process, as he was not privy to any conversations outside of the Zoom meeting.
“I think it’s important to point out that just because Mike Magee knows ILO does not necessarily mean he consulted with them or told them about an RFP,” Thorsen said.
Target 12 shared the new emails with Thorsen’s office, asking whether he and his staff were aware of the communications and if they posed any type of conflict of interest.
“Beyond the Governor’s Office’s statement to you, the only statement I’ll add on behalf of DOA is: Director of Administration James E. Thorsen and Purchasing Agent Nancy McIntyre were not aware of the emails or their content,” department spokesperson Derek Gomes wrote in a statement.
Also included in the emails was a two-year budget estimate Magee said he created with Rafal-Baer, explaining the work would cost about $9.1 million in the first year. When ILO bid on the contract, the firm’s initial cost proposal for the work totaled $8.8 million for a one-year contract. The amount was later reduced after WestEd – an education consulting firm with years of experience working for the state – proposed doing the same work for about one-tenth the cost.
“Clearly ILO had preferential treatment,” Senate Oversight Chairman Louis DiPalma said after reviewing the new emails. “There’s no ifs, ands or buts about it. They were prescribing the scope, and establishing what the budget should be for this as well.”
During the legislative hearings in October, state Sen. James Seveney raised concerns that conversations about the work may have happened prior to the contract going out, asking Thorsen and McIntyre whether that would have created an unfair advantage and a “conflict of interest.”
“The concern is really: how did this start?” Seveney, D-Portsmouth, said. “If there were discussions between Mr. Magee and [Rafal-Baer]… why is that circumstances, either actual or potential, why is that OK?”
“It is not OK,” McIntyre responded.
Ted Nesi contributed to this report.