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McKee defends decision to award $5 million contract to brand-new company

Target 12

PROVIDENCE, R.I. (WPRI) – Gov. Dan McKee sent a letter to General Assembly leaders Tuesday making the case for his administration’s decision to give a $5.2 million contract to a brand-new consulting firm, following a storm of controversy over the agreement.

The governor sent the three-page letter to House Speaker Joe Shekarchi and Senate President Dominick Ruggerio. It was accompanied by more than 30 pages of procurement documents and a work summary from the new firm, ILO Group LLC. The company said the summary was prepared for the governor’s chief of staff, Tony Afonso, and covers July 1 through Sept. 10.

McKee’s letter comes one week after a Target 12 investigation examined how the consulting firm — which incorporated two days after he became governor on March 2 — landed the state contract despite an unusual bidding process. Lawmakers are considering whether to hold hearings examining the contract.

“While ILO is newly organized as a Rhode Island-based business, its team members have worked together for years and have an extensive background working in Rhode Island and throughout the country on education consulting projects,” McKee wrote. He noted that ILO’s managing partner – Julia Rafal-Baer, who owns a majority stake in the firm – is a Cranston resident.

Spokespersons for Shekarchi and Ruggerio continued to offer no substantive comment on the decision to award the contract Tuesday, saying only: “The speaker and Senate president received the documents submitted by the governor today, and they are under review.”

The Assembly leaders did not respond to a further question about whether they supported the governor’s decision to spend federal COVID-19 relief money on the $5.2 million agreement, though the chairs of both chambers’ oversight committees as well as other legislators have raised concerns.

“When I first read the news reports regarding this contract, I, like many others, was outraged,” state Rep. William O’Brien, D-North Providence, said last week. “To pay a group of outside individuals $5 million for the work that the Department of Education should be doing is beyond outrageous.”

In his newly released letter, McKee argued his administration chose the newly established company after it scored high marks on a request-for-proposals (RFP) bidding process that played out during the spring.

However, as Target 12 first reported on Sept. 7, the McKee administration picked ILO even though the initial bidding process for the contract unraveled. That was partly because ILO’s initial price tag for the work totaled nearly 10 times more than a rival consulting firm, WestEd, that had two decades of experience in Rhode Island.

Instead of going with the lower bid, the review team that examined the bid — which included North Providence Mayor Charlie Lombardi, a close McKee ally — blamed state officials for drafting an RFP that was “too broad and vague in nature.” McKee reiterated that point his letter, saying, “the initial competitive proposal process included a vague scope which led to different scope and pricing proposals from the respondents.”

The governor argued the disparity was mostly rectified during a follow-up round of bidding, when the two firms came closer together on estimates of total billable hours.

But McKee didn’t mention that ILO’s proposed hourly rate for the work still totaled $228 an hour, compared to $123 for WestEd — meaning the bids were still nearly $3 million apart. Those numbers are too small and blurry to read in the supporting documents sent by the governor’s office. (Target 12 has separate copies of the original.)

In another section of the report, McKee also downplayed the overall price tag of the ILO contract, saying he doubted the firm would end up billing taxpayers for that much money in the end.

“To avoid unnecessary spending, the contract is to be billed hourly up to the amount of $5.1 million instead of a fixer retainer fee,” McKee wrote. “Based on ILO’s billable hours for work performed since the beginning of July 2021 when the contract began, we expect to remain far below this cap.”

McKee’s letter comes after a week of public scrutiny over the contract, which left local education officials scratching their heads. School committee and superintendent associations were mystified by the existence of the consulting firm, particularly since it was hired in part to help Rhode Island districts reopen schools, a process that is already complete.

Tim Duffy, executive director of the Rhode Island Association of School Committees, said last week he informally surveyed local educational leaders and only one town, Little Compton, reported back that they had worked with ILO on reopening.

McKee also told reporters the firm was working with the Westerly School Committee, which spurred the chairperson to contact Target 12 and say her district wasn’t contracting with ILO or working with them “at all.”

In an effort to address those questions, McKee said the state asked ILO to begin its efforts by working in communities with “the lowest vaccination rates.” However, neither the letter nor the company’s work summary contained a list of those communities.

Separately, the R.I. Department of Education has not responded to multiple requests from Target 12 for a list of communities where ILO is currently working.

In a summary of its work so far on schools reopening, ILO reported having held 35 meetings as a liaison between McKee’s office, the R.I. Department of Health and the R.I. Department of Education. The firm said it has also held other types of meetings; provided operational support to the governor’s office and the Education Department; and held “pressure testing” sessions with school districts on reopening plans “to identify potential areas of weakness or concern that can be strengthened.”

Beyond reopening schools, McKee stressed in his letter that the consulting firm’s scope of work “goes far beyond” direct COVID-19 response, pointing to other initiatives such as creating plans to spend federal coronavirus relief money to address the learning which students missed because of the pandemic.

The governor also said he expects the consultants to help him replicate the Cumberland Office of Children, Youth and Learning, a mayoral-led education department created by McKee when he was that town’s mayor which operates separately from the local school district.

ILO indicated that it has already started engaging with municipal and community organizations about creating Cumberland-style programs, and included a list: Cumberland, Middletown, Pawtucket, Central Falls and North Providence.

“Consultant will plan for and lead a process to support RI leaders and stakeholders in developing municipal learning programs within RI to assist districts and their constituents,” the firm wrote.

McKee founded the Cumberland office in 2007 with his longtime adviser and confidante, Mike Magee, who today is the CEO of a prominent national education nonprofit called Chiefs for Change.

Magee is also one of the governor’s top campaign donors, and he was referenced in McKee’s letter to Shekarchi and Ruggerio regarding his ties to the executives of ILO.

ILO’s three partners, including Rafal-Baer, all previously worked with Magee at Chiefs for Change before leaving to create the new consulting firm in March. But McKee was adamant that Magee himself is not involved in the state contract — echoing statements made last week by both ILO and Magee.

“Michael Magee worked with me on education during my time as mayor of Cumberland,” McKee wrote, noting the work they did together on education in Cumberland – which also included setting up mayoral academies, a type of public charter school.

“Michael Magee has no past or current financial interest or management role in ILO Group,” he wrote.

Separately Tuesday, Target 12 obtained an invitation showing that Rafal-Baer, the ILO co-founder, is on the host committee for a campaign fundraiser later this month that will benefit Democrat Hilary Levey Friedman, who is running in the special election for R.I. Senate District 3.

R.I. Board of Elections records show Rafal-Baer has previously made donations to former Gov. Gina Raimondo as well as a pair of local municipal candidates, Ana Soares and Michael Baer.

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

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.

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

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

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