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RI lawmakers to call oversight hearings after brand-new consulting firm wins $5M contract

Target 12

PROVIDENCE, R.I. (WPRI) — Rhode Island lawmakers will hold oversight hearings on how the state is hiring consultants after a controversial $5.2 million contract was awarded to a brand-new company that incorporated two days after Gov. Dan McKee ascended to the state’s top job.

Spokespersons for House and Senate leadership announced the decision Wednesday. It follows increasing calls from rank-and-file lawmakers for a closer look at how the consulting firm — ILO Group LLC — landed the lucrative state contract, first reported in a Target 12 investigation on Sept. 7.

“The Senate and House oversight committees are planning separate hearings for next week to look into bidding and procurement process concerns,” House spokesperson Larry Berman and Senate spokesperson Greg Paré said in a joint statement. They said further details would be “forthcoming.”

Target 12 has also confirmed the governor met privately with both House Oversight Committee Chairwoman Patricia Serpa and Senate Oversight Committee Chairman Lou DiPalma to try and sell them on the merits of the ILO contract.

“Rhode Islanders expect the state’s procurement process to be open, fair, transparent, efficient and effective,” DiPalma said, adding that he’s tentatively planning to hold his hearing on Monday and the circumstances surrounding the ILO deal will be the focus.

“Concerns have been raised,” he said. “The upcoming Senate oversight hearing is going to address and ameliorate the overall concerns and determine what if any changes might be needed.”

DiPalma and Serpa said McKee never explicitly asked them not to hold oversight hearings. Sepra said she has broad concerns about bloated state contracts that are over-expensive and too often underdeliver.

“I’m more convinced than ever that the way this state puts out RFPs for contract work, awards those contracts and then manages them, is a major problem,” Sepra told Target 12. (RFP is short for “request for proposals.”)

House Speaker Joe Shekarchi and Senate President Dominick Ruggerio did not attend either meeting, according to their spokespersons. The legislative leaders, committee chairs and governor are all Democrats.

The hearing will likely focus on how the McKee administration struck its deal with ILO, which was established by former executives of Chiefs for Change, a national nonprofit led by longtime McKee ally and adviser Mike Magee.

ILO incorporated on March 4. A day later, McKee scheduled a Zoom meeting with Magee and ILO’s managing partner, Julia Rafal-Baer, along with the state’s purchasing agent, Nancy McIntyre. Also invited were the Department of Administration director, Jim Thorsen, and the governor’s then-chief of staff, Tony Silva.

McKee aides said Rafal-Baer didn’t end up attending the meeting, and that issues related to testing and school safety were discussed. It remains unclear why the head of purchasing — who oversees all state contracts — would also attend.

McKee did not respond directly last week to a question about whether the contract that eventually went to ILO was ever discussed during the meeting.

Within a month of that Zoom meeting, an RFP went out at the request of the governor’s office. ILO went on to submit a bid that was initially 10 times more expensive than one submitted by WestEd, a competing firm that’s worked with Rhode Island educational leaders for more than two decades.

A review team the administration put together to oversee the bidding process — which included another McKee confidante, North Providence Mayor Charlie Lombardi — ultimately decided against going with WestEd’s lower bid, and instead asked for revised bids.

But after a second round of proposals there was still a multimillion-dollar gap between ILO and WestEd, so the review team decided to ditch the full RFP process.

“The Review Team believes that no additional time should be wasted on this procurement or a rebid,” the four-member panel wrote in its final report.

Instead, the administration awarded contracts to both companies through a “master price agreement,” or MPA. ILO’s contract is worth up to $5.2 million, while WestEd’s is $926,000.

Serpa said she’s especially interested in learning more about how the RFP turned into an MPA, and why there wasn’t another mini-bid attached to that process.

“One of my major concerns is why the ILO and WestEd contracts were procured as a Master Price Agreement,” Serpa said, pointing out that MPAs are typically used for purchasing goods, such as pens and computers, along with specific services like interpreters, software installation and stenographers.

“These two state contracts are both for project management for specific projects: school reopening and municipal learning programs, [which is] very unusual and the governor and his staff agreed with my opinion,” Serpa said.

The West Warwick lawmaker also said the governor told her that there is a “major issue” and limitations with how Rhode Island does business with outside contractors, such as “automatic ineligibilities that preclude certain companies from even submitting bids because of past history.”

The governor’s staff offered to work with Serpa on legislation related to these issues when the General Assembly returns next session, she added.

Since Target 12’s initial report, ILO has come under a storm of criticism from school leaders and McKee’s political rivals, who have questioned why the consulting firm was hired and what it’s been doing.

The governor initially defended the contract by saying ILO was helping public schools reopen during the pandemic. But that came as a surprise to many local educational leaders who said they’d never heard of ILO — even after schools had already reopened. The R.I. Department of Education later shared a list showing ILO had worked with only six local districts on school reopening efforts.

A much bigger part of the $5.2 million contract, however, is focused on standing up so-called “municipal education programs.” The programs are essentially mayor-led education offices that operate separately from school departments, which are typically led by school committees and superintendents. The only one in the state was created in 2017 by McKee and Magee in Cumberland, when the governor served as mayor there.

McKee has repeatedly stood by his administration’s decision to award the contract to ILO, arguing the consultants have the expertise he wants to help improve education in Rhode Island. On Sept. 14, he penned a three-page letter to the General Assembly, arguing the entire procurement process was done properly and that Magee — who is one of his biggest campaign donors — didn’t have any financial interest or operational control in ILO.

Magee and ILO have also distanced themselves from one another, saying they are not currently working with one another. Rafal-Baer, however, was still employed as the chief operating officer at Chiefs for Changes until June 28 — well after ILO had won the state contract and just a few days before they started doing work.

Asked earlier this month whether ILO had an inside track to obtain the contract, McKee replied, “Oh my God. What don’t people get? Really.”

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

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.

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

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