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State agency in two camps over marketing contracts

CHARLESTON, W.Va. - Officials at the state Department of Health and Human Resources appear to have divided into camps months before the newly appointed head of the department put three senior officials on paid leave in mid-July.

Documents - including a March letter from the department's then-secretary and a recently filed search warrant - indicate a serious rift between DHHR's Office of Purchasing and the department's two top lawyers.

The camps first appear divided over how a multi-million contract was handled last winter. The camps grew further apart over the handling of another multi-million contract last spring and summer.

The Legislative Auditor's Office eventually recommended DHHR's purchasing office be stripped of its authority to award certain contracts without going through the state Division of Purchasing. But its officials remain at work.

DHHR's secretary, in turn, has put the lawyers on leave. They are also the targets of an internal investigation. A search warrant from that investigation said the head of the purchasing division, Bryan Rosen, accused the two lawyers of violating purchasing laws.

The two lawyers - DHHR's deputy secretary for legal affairs, Susan Perry, and its general counsel, Jennifer Taylor - are two of the three officials who remain on leave.

The third is assistant secretary John Law, who handled public relations.

In late February, DHHR's purchasing practices drew the attention of Legislative Auditor Aaron Allred.

Allred began asking then-DHHR Secretary Michael Lewis if DHHR had allowed a pending multimillion-dollar state contract to become tainted by a conflict of interest.

Allred wondered if a private contractor who worked for both the state and a company that had financial stake in the contract might have used his position to try to sway the outcome of a pending decade-long, $200 million contract.

Within weeks, Lewis decided to re-bid the contract and put procedures in place to exclude the private company from potentially benefiting from the contract.

"In our investigation of the issues that you identified for us in your previous letter, we determined that the system in place within our department to alert us to potential conflicts of interest relating to procurements was inadequate," Lewis told Allred in a March 22 letter.

The letter was quoted in an audit of the computer contract that Allred's office released last month.

In that letter, Lewis never identified who conducted the internal investigation, but he told Allred that DHHR's General Counsel's Office would help review the future bids for the computer contract.

Those events together make it appear that DHHR's purchasing division - led by Rosen - ended up in one camp and Taylor's office in another.

The camps would become more pronounced weeks later, according to a search warrant that DHHR's inspector general executed earlier this month.

The warrant alleges that Law, Perry and Taylor tried to "favor" Charleston-based Arnold Agency, which narrowly lost to Ohio-based Fahlgren Mortine.

The Arnold Agency was the lowest bidder. Fahlgren was the highest. A number of judgment calls by a DHHR evaluation team gave Fahlgren a razor-thin victory. The contract was awarded to Fahlgren in mid-July after weeks of internal delay.

Perry and Taylor are planning to file a whistleblower action against DHHR, which is now led by acting Secretary Rocco Fucillo. Fucillo took over on July 1 after Lewis stepped down for health reasons.

A lawyer for the trio calls the unusually long and detailed search warrant nothing more than a "press release" by DHHR to provide cover for itself.

But the warrant again shows Rosen, the purchasing director, and Taylor, the lawyer, at odds over a contract. The warrant shows Rosen has deputy secretary Warren Keefer lined up with him and it shows Taylor has Perry lined up with her. Documents do not make clear where Perry and Keefer aligned on the computer system contract earlier in the year.

Law, Perry and Taylor began raising questions about the marketing contract and Taylor was tasked with conducting a "legal review" of the decision to award it to Fahlgren.

On May 16, Taylor presented Perry, Rosen and Keefer with her findings, according to the search warrant.

She found the scoring of the bids had been subjective.

A recent review of bid documents by the Daily Mail also showed a number of judgment calls by the evaluation committee either helped Fahlgren or hurt the other three bidders.

But Keefer and Rosen came away from the meeting thinking that despite the issues Taylor raised, the contract should go to Fahlgren, according to the search warrant.

During the meeting, Rosen accused Taylor and Perry of violating purchasing laws, according to the search warrant.

Keefer and Rosen believed that everyone agreed at the end of the meeting to let Fahlgren get the contract, according to the search warrant.

Perry and Taylor had "agreed to stand down," Keefer said in an email later that day, according to the warrant.

But the purchasing division didn't award the contract for two more months. The reasons for the delay are not explained in the warrant. But the warrant indicates the trio on leave continued to raise questions until just before Fucillo put them on leave. Shortly after the trio was put on paid leave, DHHR formally awarded the contract to Fahlgren.

DHHR spokeswoman Marsha Dadisman, who was also the head of the committee that evaluated the marketing contract, did not comment on questions about the department's internal workings.

Contact writer Ry Rivard at ry.rivard@dailymail.com or 304-348-1796. Follow him at www.twitter.com/ryrivard.

 


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