By May 23, 2018 Read More →

Governor’s office finds problems with RISE West Virginia program, $17 million in contract issues


For The West Virginia Press Association

CHARLESTON, W.Va. — Hundreds affected by the West Virginia floods of June 2016 have expressed concerns about extreme delays in receiving promised funds from the RISE West Virginia program to repair or rebuild their homes.

Some of that time can be chalked up to bureaucracy, typical in distribution of federal disaster funds. But on Monday, representatives of the office of Governor Jim Justice said the last eight to 10 weeks can be attributed to the Governor “pushing the pause button” on the program after finding irregularities in the West Virginia Department of Commerce’s management of the program and $17 million in contracts.

Brian Abraham, general counsel for the Governor’s office, said Justice officials ordered a review of administration of the funding, which triggered a series of actions, including the firing of one staff member at the Department of Commerce.

The Department of Commerce manages the RISE West Virginia disaster recovery program through the West Virginia Development Office and West Virginia Community Advancement and Development Office.

Abraham said former U.S. Attorney Mike Carey, brought in as outside counsel to handle the review,  found a $17 million payment to Horne LLP  to be “problematic.” The payment did not go through the purchasing agency and was not reviewed by the Attorney General’s office — required steps in payment distribution.

Once made aware of the situation Gov. Justice said he took action. In a written statement, Justice said:

“There’s a new sheriff in town and people need to realize that Jim Justice will see to it that West Virginia is not going to be on the short end of the stick. We found things that could save West Virginia millions in federal funding. Our flood victims are going to continue to be served. Those people that weren’t doing their jobs have been held accountable.”

Abraham did not provide details of that accountability or staff members involved.

Abraham said the Governor’s office became concerned after  a  ‘conflict resolution meeting’  in November 2017 in Charleston between FEMA officials, HUD officials and various state agencies, to examine and discuss flood relief efforts.

That meeting was among the first interactions the Justice administration had with flood relief efforts, according to Abraham.

Former Gov. Earl Ray Tomblin appointed the Commerce Department to manage the RISE West Virginia program in 2016 even though it had never managed flood recovery efforts, said Abraham.  Horne LLP, described as an accounting and law firm based in Mississippi, was selected by the Tomblin administration in a consulting position, because of its prior experience working with HUD, including the Hurricane Katrina disaster.

“They (Horne) were to present West Virginia’s plan to HUD,” Abraham explained. “That bid was about $900,000.

In January 2018, Carey followed up on concerns expressed at the November 2017 meeting by asking for and receiving documents from Commerce that had “significant issues,” said Abraham.

“There were portions of a contract that were awarded after the original contract, in the amount of $17 million,” Abraham said. “We were concerned about that, because it did not go through our purchasing agency at the department of administration and that contract was not reviewed by the Attorney General’s office, required in West Virginia in a legally binding contract.”

Abraham said one red flag was a “continuing management agreement” that resulted Horne’s portion of the contract increasing from $900,000 to $17 million.

Abraham said West Virginia Commerce officials allowed the Horne contract to be expanded over time.

“Purchasing denied that in writing,” Abraham said. “The person who received that in Commerce did not communicate that to the staff responsible for contracting with outside vendors. So, not knowing that, they went ahead and ran what I’ll call an internal RFP (request for proposal), and bid it out and had multiple bids on what would later become phases 3 through 8. Horne again was the successful bidder, and that project was $17 million.

“We determined that was not lawful,” Abraham said. “Commerce may have believed that they did it right by bidding it out, but procedurally, they didn’t.”

Because of those findings, the Commerce Department was told to “stop what they were doing in respect to the RISE program,” Abraham said.

After the initial investigation, which was reported to the general counsel’s office, the issue was reported to the Attorney General, through his chief of staff. It was also reported to the legislative auditor’s office. Abraham also personally updated Senate President Mitch Carmichael and Tim Armstead, Speaker of the House.

“We advised every outside source we possibly could, under the direction of the governor” Abraham said.

Abraham said dysfunction was discovered in how the Commerce Department procured the contract.

“They bid out the contract as changes to the original contract, which is not allowed,” Abraham explained, adding that the contract may also have been back dated.

Some construction had been paused as well, because of impermissible actions taken by Commerce Department staff, Abraham said.

There is an effort to reinstitute the services of Horne LLP, Abraham said, adding he believes that by discovering this and pushing the pause button, and coming up with a fix, West Virginia may avoid federal penalties for misspent funds.

“The potential of millions of dollars being pulled back (from the federal government) has been stopped because we are doing things right,” Abraham said.

“Governor Justice has made it known from day one,” Abraham added, “He insists on transparency and accountability.”

In a further effort to be transparent and perhaps secure the trust of federal officials, a contingent of state officials went to Washington, D.C. in April to report their findings and make a presentation of how it intends to remedy the situation, Abraham said. They met with the assistant secretary and staff members of HUD.

Adjutant General James Hoyer and Bray Cary, senior advisor to Gov. Justice, joined Abraham on the trip.

“We explained to them what our investigation had revealed and discussed the remedies we see as a way forward, to get West Virginia back on track,” Abraham said. “I think they were shocked that we came in to report ourselves, because I don’t think that happens often. But that’s the Governor’s position. We don’t hide things and hope they go away. That’s not how we do business.”

Going forward, Abraham said, the plan is to get Rise West Virginia operating again and reinstitute services as soon as possible.

The governor wants to expedite the efforts, but also make sure it’s done right,” Abraham said.


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