Senators grill McKee administration over $5.2 million contract

Senate oversight committee Chairman Louis DiPalma says he cannot assure constituents “that this was an open, fair, transparent process.”

Senator Louis P. DiPalma, chairman of the Senate Rules, Government Ethics and Oversight Committee, speaks during a hearing on Tuesday.Edward Fitzpatrick

PROVIDENCE — Forget who was in the room when it happened. The question in the legislative oversight hearings taking place in Rhode Island this week is: Who was in the Zoom when it happened?

The state Senate oversight committee on Tuesday grilled officials in Governor Daniel J. McKee’s administration over a $5.2-million contract awarded to ILO Group, a consulting firm that formed two days after McKee took office.

And the House oversight committee is set to turn up the heat even further on Wednesday night, as legislators probe whether ILO had an unfair advantage in securing the state contract because of its ties to McKee.

The three-hour Senate session zeroed in on a Zoom call that took place on March 5 — three days after McKee had been sworn in as governor and one day after ILO had formed. That meeting led to the state seeking proposals and awarding contracts to ILO and a lower bidder, WestEd.

According to testimony, the Zoom call included McKee, his then-chief of staff Tony Silva, administration director James Thorsen, state purchasing agent Nancy McIntyre – and Mike Magee, one of McKee’s top campaign donors, a member of his transition team, and CEO of Chiefs for Change, a network of state and district education chiefs.

Thorsen told senators that Magee mentioned the ILO Group during the Zoom call.

Senators noted that ILO’s managing partner, Julia Rafal-Baer, worked for Chiefs for Change at that time, and she had been invited to join that Zoom meeting. Rafal-Baer did not end up taking part in the Zoom call, but senators noted that Rafal-Baer had been a member of the state’s Learning, Equity & Accelerated Pathways (LEAP) Task Force, which issued a report on issues, such as learning loss, that ILO was later hired to address.

Those factors prompted the committee chairman, Senator Louis P. DiPalma, to suggest the McKee administration consider terminating the contracts for both ILO and WestEd soon and rebidding the work.

“It’s about open, fair, and transparent,” DiPalma said at the conclusion of the hearing. “With where we are now, I can’t answer that question emphatically to my constituents that this was an open, fair, transparent process.”

DiPalma – a Middletown Democrat who was a senior adviser to McKee’s transition team and was named as one of five finalists to succeed McKee as lieutenant governor – asked McIntyre to look into whether Rafal-Baer had a conflict of interest in her dual roles as ILO’s manager partner and as a LEAP Task Force member.

“We had an individual involved in defining requirements, defining what the need is across the State of Rhode Island on learning loss, equity, all COVID driven,” he said. “If LEAP informed this RFP and I was involved in the LEAP effort, how do I not have an advantage over anyone else bidding on these contracts?”

Administration officials maintained that the process ended up being fair, thorough, and competitive.

But Senator James A. Seveney, a Portsmouth Democrat, raised concerns about the process.

“I think it is reasonable to assume that that provides a competitive advantage if you are in the room when the discussions take place on what those requirements are going to look like,” he said. “Were there discussions between Mr. Magee and (Rafal-Baer), who wasn’t in the room but could have been in the room?”

Also, Seveney asked, “Why, in the state procurement process, is that circumstance, either actual or potential, why is that OK?”

McIntyre said, “It is not OK.” She said she was invited to the March 5 Zoom meeting with the governor and other administration officials, and she did not know Magee or Rafal-Baer.

“I spoke about the RFP process, and that was my intent – to drive a competitive process,” she said. “I take very seriously the ethical process around procurements. I’ve been purchasing agent for seven years. I have a stellar record. If any vendors that were in that meeting were going to speak about any kind of a procurement, I would recuse myself.”

Thorsen said McKee was concerned about the “student and family hardships caused by COVID” and he wanted to address issues such as learning loss after a year of remote learning. “He wanted to bring on more resources with expertise to help manage the testing, vaccines, learning loss, and municipal learning centers,” he said.

So, during the Zoom meeting, Thorsen said he and McIntyre recommended the state pursue a request for proposals.

But Senate Minority Whip Jessica de la Cruz, a North Smithfield Republican, maintained that McKee’s administration hired an expensive consulting company to perform functions that state employees were already handling.

“What makes this even worse is this consulting group was formed for this very purpose,” she said. “My mom used to say, ‘Where there’s smoke, there’s fire,’ and there is a lot of smoke here.”

De la Cruz cited the ties between ILO, Chiefs for Change, and McKee. “This is cronyism at its worst,” she said. “Rhode Islanders have yet again been fleeced by corrupt deals struck by our government.”

She said it sounds like pressure from the governor’s office resulted in a rushed, “sloppy” process.

But Daniel Majcher, assistant director of special projects in the Department of Administration, took issue with that characterization.

“The goal is to have an RFP that is open and broad and promotes competition,” he said. “In this case, we received three quality proposals from three different vendors, and we were able to have a competitive process.”

Majcher said that after receiving the three proposals, state officials found they “could not compare apples to apples” because the vendors “didn’t understand what the state was expecting.”

The confusion centered on plans for establishing “municipal learning centers” in all 39 cities and towns,” he said. So the state ended up awarding the work to ILO and WestEd through a “master price agreement” process, he said.

Seveney said, “That wasn’t moving the goal posts – you moved the stadium.” He said the disparity in the costs resulted from the lack of definition about what “municipal learning centers” would entail. “Is it a breadbox or a 57 Chevy?” he asked. “Who knows?”

During a news conference earlier Tuesday, McKee was asked about the legislative oversight hearings. “We are going to show that we followed the procedures that were in place, we got really good skilled people where we needed them, and they are doing important work,” he said.

McKee said that when he took office in March, news coverage was focusing on how he would handle one of the worst crises in state history. “I was very clear it was shots in the arms, reopening the economy, and reopening our schools,” he said. “Right now, we are leaders in the way that we safely reopened our schools.”