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McKee adviser wrote blueprint for $5M contract won by his subordinate’s firm

Target 12

PROVIDENCE, R.I. (WPRI) — One of Gov. Dan McKee’s most influential outside advisers wrote the initial blueprint for a controversial $5.2 million state contract that eventually went to his own subordinate’s brand-new consulting firm, a Target 12 investigation has discovered.

The adviser, Michael Magee Jr., spelled out his vision for the contract on March 5, the governor’s third full day in office, in an email to R.I. Department of Administration Director Jim Thorsen and state purchasing agent Nancy McIntyre. Magee sent the email at 12:56 p.m., right after the three had attended a noon Zoom meeting with the governor on the topic.

Also invited to the Zoom meeting was Julia Rafal-Baer, who was then Magee’s No. 2 at the education nonprofit Chiefs for Change. Rafal-Baer had incorporated a new consulting firm — dubbed the “ILO Group” — the previous day, and ILO registered as a state vendor the same day Magee sent the email.

Rafal-Baer wound up skipping the Zoom meeting, but Magee used the opportunity to mention ILO in connection with the potential contract, according to testimony by Thorsen and McIntyre before legislative oversight panels.

In his follow-up email after the meeting — under the subject line “RFP,” short for “request for proposals” — Magee laid out how Thorsen and McIntyre should structure the bidding document for the deal.

“We’re look [sic] for qualified vendor to provide comprehensive school reopening support along with technical assistance in accelerating learning for Rhode Island students …. We want one vendor with the capacity to oversee, manage and deliver on all this work,” Magee wrote in the email, which has not been previously reported.

Magee laid out four specific goals for the new consulting firm. As for who should be awarded the work, he wrote, “I personally think ‘qualified’ should be defined as a firm whose partners have worked on the health and education areas listed below in at least 15 large school districts and at least 6 states.”

Magee indicated the contract should total about $12 million to $15 million over two years, and concluded: “7 day turnaround would be ideal. I’m available anytime to answer questions.”

McKee was paying close attention. Days later, Thorsen forwarded Magee’s message to one of the governor’s senior advisers, Brenna McCabe, and wrote: “Gov McKee called this morning to ask me if we can move this along.”

(Story continues below.)

An email from Department of Administration Director Jim Thorsen forwarding Mike Magee’s blueprint for what became the ILO contract.

Marion: ‘It’s very unusual’

By the end of June, McKee’s senior staff had awarded ILO a contract valued at up to $5.2 million. The contract has now become one of the governor’s biggest political headaches since Target 12 revealed its existence on Sept. 7. Attorney General Peter Neronha has opened an investigation into the deal, and legislative oversight committees have grilled state officials about it.

Target 12 obtained the Magee email — along with thousands of additional pages of documents related to the ILO deal — through a request under the state’s Access to Public Records Act. The material sheds new light on how the deal came together, and how eager the governor’s office was to get a contract signed.

“It’s very unusual for someone outside of government to be telling government what to do when they write an RFP that ultimately helps one of their business associates,” said John Marion, executive director of the good-government group Common Cause Rhode Island.

Magee has been closely linked with McKee since they worked together while the latter was mayor of Cumberland, where the pair opened up the state’s first municipal education office outside the school system — an initiative ILO is now tasked with helping to expand across the state. Magee and his brother have also been key financial supporters of McKee’s political career.

The documents show Magee was effectively operating as a member of the governor’s staff in the early months of his administration, helping behind the scenes with the effort to block a charter-school moratorium and even doing edits on an op-ed written under McKee’s name.

The governor’s office has repeatedly said Magee “has no past or current financial interest or management role in ILO Group.” And since Magee was an outside volunteer as a member of his transition team — not a state employee — he was not bound by the state Code of Ethics’ rules around conflicts of interest, Marion said.

Other people connected with ILO also had high-level access before the company won its contract.

Magee invited Rafal-Baer to a different Zoom with McKee on March 3, the day after he was sworn in, and she continued to work for Magee until June 28, after ILO had secured its contract. In addition, on March 8 ILO’s eventual project lead in Rhode Island — Emily Hartnett — was invited to a “COVID Community Task Force Meeting” with Magee and the governor. Both were still using Chiefs for Change email addresses when they began doing ILO’s contract work in late June.

Asked about Hartnett’s inclusion in the March 8 meeting, McKee press secretary Alana O’Hare said, “Our understanding at the time was that Emily Hartnett was consulting with Chiefs for Change on a national school COVID testing project. She was invited to the meeting — which included many experts and community stakeholders — as an optional attendee but did not attend.”

ILO touted its ties to the new administration in its proposal for the contract, noting that its staff included “Member of the Governor’s RI COVID-19 Advisory Group” and “Members of RIDE’s LEAP Taskforce.” (LEAP is short for “Learning, Equity & Accelerated Pathways.”)

After reviewing a selection of the documents newly obtained by Target 12, state Rep. Jason Knight said, “It looks to be the governor’s staff, in ways large and small over time, said, ‘Let’s try to steer this business towards this ILO Group’ — for whatever their reasons are.”

“I’m sure if you asked them they would say that’s the best for the state,” he said. “But it’s not the right way to do it, it’s not the way the law says you’re supposed to do it, and it has the appearance of impropriety.” (Knight has endorsed McKee’s rival, Seth Magaziner, for governor.)

Magee and the ILO Group both declined to comment for this report, citing the attorney general’s active investigation into the contract. But the McKee administration has rejected suggestions ILO had the inside track, and the governor has repeatedly criticized news coverage of the deal.

O’Hare argued the newly released documents “show that the procurement process was appropriately followed.”

In order to reopen schools safely amid the pandemic, she said, the governor “sought the advice of Dr. Mike Magee, a national education expert who volunteered his time throughout the transition. And while Dr. Magee did make suggestions based off his expertise, it was an independent review committee that evaluated the proposals and recommended the firms for hire.”

McKee himself told reporters in September, “As far as the agreement goes in terms of the contract, it was a competitive bid process right from the word ‘go.’ I don’t get a say. I don’t sit in the room and do the scoring. I don’t get in the room and have it brought to me. When it’s brought to me, that’s when I do my work.”

Pressed at the time about whether ILO had an inside track to obtain the contract, McKee expressed exasperation. “Oh my God,” he said. “What don’t people get? Really?”

ILO’s hours, rate set by McKee office

Yet the documents obtained by Target 12 show the governor and his aides were closely involved throughout the process that led to ILO’s selection, and they even had the final say in setting the $227-an-hour pay rate ILO is earning under the contract.

The governor’s office formally initiated the RFP process for the contract on March 23, within three weeks of Magee’s email suggesting how it should be structured. A four-member review team was formed to vet the bids that included North Providence Mayor Charlie Lombardi — an unusual choice for such a panel, as an elected official — and Daniel Majcher, legal counsel at the Department of Administration, who went on to play a lead role in managing the process.

After interviewing all the bidders for their qualifications — but not their pricing — the review team awarded nearly identical scores to ILO and WestEd, a rival firm that had consulted for the state for years; out of 70 possible points, ILO received 63 points and WestEd earned 62.

But when the review team opened the financial portion of the bids, they discovered ILO thought it would take 35,719 hours to do the work — at a cost of $8.8 million — while WestEd thought it would take only 3,062 hours, at a cost of just $936,000.

At that point, another member of the review team — Tom McCarthy of the R.I. Department of Health — reached out to the governor’s then-deputy chief of staff, Tony Afonso, for guidance. In an email April 29, McCarthy said Afonso directed him to loop in Christine Lopes Metcalfe, then the governor’s senior adviser on education, so they could nail down how many hours McKee was looking for.

By May 4, Majcher had an answer. “We need to get this wrapped up,” he wrote in an email to Metcalfe and the other review team members. “My understanding is that the expectation from the Governor is that this will not take less than 22,000 hours for this project.”

That message raised a red flag with Knight, D-Barrington.

“Why is the governor’s people saying … the contract should contain a specific amount of hours that are needed to accomplish the job?” he asked. “Presumably that would be coming from the Department of Education.”

At that point, the review team went back to ILO and WestEd to request revised bids to reflect the number of hours of work Majcher had said the governor wanted. But when they replied, they were still millions of dollars apart: ILO bid $6.5 million, while WestEd bid $3.3 million.

Rather than give the contract to WestEd, the review team filed a report on May 28 saying the original bidding documents had been “too broad and vague,” that the attempt to close the gap between ILO and WestEd “was unsuccessful,” and that they were “not confident in issuing a recommendation for an award to a single vendor.”

Instead, the review team gave the governor’s office the green light to negotiate contracts with both companies under what is known as a “master price agreement.” McKee and his advisers met privately with ILO and WestEd in early June.

As the negotiations continued, Majcher told the governor’s staff that they had the discretion to drive a hard bargain rather than paying the full rates the two companies had requested in their bids.

“[T]hese are the maximum hourly rates,” Majcher wrote in a June 11 email. “In other words, the rates you work out with the vendors can be lower than the attached, but not higher.”

But an administration spokesperson confirmed to Target 12 that the governor’s office has opted to pay ILO the maximum hourly rate that the company had sought: $227.84 an hour.

Yet O’Hara, McKee’s press secretary, said Monday the governor’s staff no longer thinks ILO will need to work roughly 22,000 hours. She suggested that figure had been “an early estimate” reflecting coronavirus conditions at the start of May. She also noted that ILO “did not begin work under the contract until after the scope of work was finalized at the end of June, which also contributes to the expectation that they will work fewer hours than originally estimated.”

However, a revised budget submitted by ILO on June 22 showed at that point the company still projected to earn $5.17 million for 22,695 hours of work. O’Hare said ILO has not submitted a revised internal budget to reflect the lower hours the governor’s office is now seeking.

The ILO contract is being funded with federal coronavirus relief funds. The governor’s office has said it is expecting to receive quarterly invoices from ILO, but so far none have been submitted.

(Story continues below.)

A revised budget submitted by ILO Group on June 22.

In September, McKee expressed frustration about how long it took to finalize the ILO contract.

“We had to go through a lot of procedure — it’s quite a protocol in terms of actually going through that process, one that I believe that needs to be streamlined quite a bit,” he said.

The emails give further indication of the sense of urgency.

On June 8, Metcalfe sent the governor himself a detailed day-by-day plan for how the staff planned to finalize the contract over the coming days. (The governor’s office redacted the substance of Metcalfe’s message in its response to Target 12’s public-records request, but the same email was separately provided without redactions by the Department of Administration, which also possessed a copy.)

(Story continues below.)

A side-by-side comparison of a June 8 email regarding ILO as released by the governor’s office (left) versus the Department of Administration (right).

In a message the next day, June 9, McKee’s then-chief of staff Tony Silva wrote: “Please provide me with an update on the projected timeline of the approved agreement with ILO and WestEd. As agreed upon yesterday, and at the request of the Governor, a signed agreement will be completed by Monday, June 14th.”

The documents also shed new light on a topic that drew lawmakers’ attention during oversight hearings: whether everyone involved in the ILO process had filed conflict-of-interest forms.

“Anyone that is brought into discussions with the RFP needs to be vetted and sign a COI form — they can be an adviser if there is not conflict,” wrote Nina Lennon, the state’s interdepartmental project manager, after she’d learned multiple people including some of the governor’s senior aides were unexpectedly asked to weigh in as the process was ongoing.

“Have you discussed this RFP with anyone else,” Lennon asked an education official in an email at a different point in the process. “This should be kept private.”

In a May 3 email, Lennon specifically directed Metcalfe to fill out a conflict-of-interest form once she’d been pulled in to help figure out what to do next after the initial ILO bid came in so much higher than those of its competitors.

Under questioning from Knight at an oversight hearing, Majcher suggested Metcalfe had filed the form. “It was handled by Nina Lennon,” he testified. “I assume that she requested it and she got it. I would have to go back and check.”

Majcher’s assumption was incorrect. Target 12 has confirmed Metcalfe never filled out the conflict-of-interest form despite Lennon’s direct request.

Administration officials have been unable to explain what led Metcalfe not to fulfill that request, but they insist Lennon went beyond the requirements of state purchasing rules in demanding a form from Metcalfe since she never joined the review team for the ILO contract.

“There is no record that Christine Lopes Metcalfe responded to the email requesting the form, which was not required under DOA/Division of Purchases’ policy,” said Derek Gomes, a spokesperson for the Department of Administration. (Metcalfe resigned from the governor’s office in August.)

Still, the documents indicate Department of Administration officials remained wary of how many people outside the review team eventually got involved in the procurement process. In response to a message suggesting Lopes Metcalfe would contact ILO and WestEd directly, Majcher wrote on May 3, “because we are in the middle of a procurement, communicating with the vendors should be handled formally by Nina Lennon in the Division of Purchases.”

‘Government shouldn’t play those games’

Despite the thousands of pages provided to Target 12 so far, the McKee administration is still keeping a significant amount of material related to the ILO contract secret.

Doris Adesuyi, an administration lawyer, wrote in a letter on Oct. 25 that the governor’s office had withheld 135 documents, a determination that Target 12 is appealing to the attorney general’s office.

Only broad information about the contents of those documents was provided. In one case, Adesuyi said a document had been withheld “because it is an email correspondence between a constituent and the governor.”

Marion questioned that justification. “When you’re dealing with the governor, everybody in the state’s a constituent,” he said. “All of his employees — or most of them, presumably — are constituents. So to use that exemption in that way is to abuse that exemption.”

Initially the administration also withheld Magee’s March 5 email laying out his vision for what eventually became the ILO contract. But Target 12 had already learned of the email’s existence, and on request the Department of Administration agreed to release it.

In response to a question about why the Magee email had not been handed over originally, administration officials revealed that in some cases they had only provided ILO-related documents which mentioned “Mike Magee” — the way Magee’s name was written in Target 12’s public-records request — while withholding documents that mentioned “Michael Magee.”

Marion scoffed at that.

“Saying it’s unresponsive because you used the person’s common name instead of the proper name is slow-walking the response,” he said. “Government shouldn’t play those games. They know who you’re asking about.”

Looking ahead, McKee has made clear he plans to keep the ILO contract in place, and it’s unclear what if anything will come from Neronha’s investigation into the bidding process.

“Whenever there is some concern on the part of the public that something in government wasn’t done quite the right way, it’s incumbent on us in the job that I have — with the state police — to take a look at it,” the attorney general told 12 News last month, adding, “There are some instances where public confidence would be shaken if we didn’t.”

Knight suggested the ILO controversy should be a wake-up call to other government officials about the appropriate process for handing out state contracts.

“My goal is, is that everybody learns their lesson, and this doesn’t happen again, and that people understand that the procurement process is there for a reason and they should let that process play out,” he said.

Ted Nesi (tnesi@wpri.com) is a Target 12 investigative reporter and 12 News politics/business editor. He co-hosts Newsmakers and writes Nesi’s Notes on Saturdays. Connect with him on Twitter, Facebook, LinkedIn and Instagram

Tim White (twhite@wpri.com) is the Target 12 managing editor and chief investigative reporter at 12 News, and the host of Newsmakers. Connect with him on Twitter and Facebook.

Eli Sherman (esherman@wpri.com) is a Target 12 investigative reporter for 12 News. Connect with him on Twitter and on Facebook.

Copyright 2021 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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