PROVIDENCE — Governor Dan McKee is defending why a new consulting firm landed a state contract worth more than $5 million to help reopen Rhode Island’s schools this fall after facing political backlash over the decision.
The company, ILO Group LLC, was registered in Rhode Island as of March 4, which was two days after Governor Dan McKee took office, according to filings with the Secretary of State’s office. And the new company’s leaders include former executives of Chiefs for Change, a nonprofit whose CEO is McKee ally and adviser Mike Magee.
Magee served on the governor’s transition team.
The governor’s office released a letter Tuesday that he penned to state lawmakers explaining the selection process.
The state conducted a competitive proposal process and five companies submitted bids. The purchasing review panel rejected initial bids by ILO and WestEd, a California-based firm that has served as a consultant to the state for the last two decades, that were so far apart they worried the description of the work was too broad. They asked both companies to resubmit new bids with specifics.
ILO came back with a $6.5 million bid and WestEd a $3.3 million bid. The state ultimately settled on awarding two separate one-year contracts that included $5.2 million to ILO and $926,000 to WestEd.
The contracts will be funded by the federal Elementary and Secondary School Emergency Relief III Fund.
In a letter Tuesday that was obtained by the Globe, McKee wrote to House Speaker K. Joseph Shekarchi and Senate President Dominick Ruggerio, both Democrats, the governor said the “factual reason” as to why there was such a gap between the two company’s pricing proposals was because the initial proposal memo included a “vague scope” of the work being asked by the state.
McKee named a third company in the letter, MGT Consulting, that was denied the contract. He said ILO’s revised bid was was “similar and less” than MGT. According to a document obtained by the Globe from the state department of administration, two other companies were also denied contracts: Pittsburgh-based Education Safety Solutions and Boston-based Empower Schools. Both received low scores from the purchasing committee on categories related to staff qualifications, capabilities and capacity qualifications, work plans, and their methodology.
“To avoid unnecessary spending, the contract is to be billed hourly up to the amount of $5.1 million instead of a fixed retainer fee,” wrote McKee. “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 went on to say that the cap was set to ensure there was enough money budgeted to provide the “highest level of support” for the state education department, the state health department, and at-risk school districts throughout the state “in the face of COVID-19 and subsequent variants.”
“As governor, it is my job to maximize the value that Rhode Island receives from this contract,” he wrote.
But the contract has already drawn political scrutiny.
Secretary of State Nellie Gorbea, who is running for governor next year, accused McKee of “cronyism.”
“This multi-million dollar contract was awarded without any public discussion and vetting of the need for its activities. Creating companies in the middle of the night to win contracts for services that might already be provided by public sector employees is wrong,” Gorbea said in a campaign statement last week. She said McKee “took advantage of the system.”
In McKee’s letter, he wrote that he worked with Magee on education when the governor was Mayor of Cumberland.
“Together, we work on the status quo on behalf of local children and families to create new learning options for young people in our community,” McKee wrote. “Contrary to certain accounts, Michael Magee has no past or current financial interest or management role in ILO Group.”
McKee said that while ILO is a newly organized as a Rhode Island-based business, “its team members have worked together for years and have extensive background working in Rhode Island and throughout the country on education consulting projects.” He said the company’s managing partner resides in Cranston, Rhode Island.
“There are three critical priorities that I am focused on right now: fighting the COVID-19 Delta variant by getting as many Rhode Islanders vaccinated as possible, ensuring our economy continues to recover fully and equitably, and keeping our students safely in the classroom while addressing the impacts of interrupted learning over the last 19 months,” wrote McKee.
Spokesmen said Shekarchi and Ruggerio received the documents from McKee on Tuesday, and they are under review.