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Report: WV officials ignored purchasing law in buying communications towers

CHARLESTON, W.Va. -- Officials did not comply with state purchasing laws in the process of spending roughly $38 million in federal money on  communications towers, according to a report from the legislative auditor's office.

That's illegal, Legislative Auditor Aaron Allred said.

"Clearly, what was illegal is that they didn't bid the contract out as required by the Government Contract Act," Allred said. "That's clear. They simply broke the law."

State emergency services communications director Joe Gonzalez, homeland security director Jimmy Gianato and members of a team charged with dispersing grant funds oversaw or committed the illegal acts, Allred said.

Allred presented his office's special report on the tower purchases to the joint committee on Government Operations and Government Organizations Tuesday morning.

At least one lawmaker - Delegate Gary Howell, R-Mineral - thought it sounded like there was illegal activity. He asked the committee to look into whether it could refer the case to Northern District U.S. Attorney Bill Ihlenfeld.

"Just because it's illegal doesn't make it a crime," Allred said. "What they did definitely was illegal, in our opinion, but whether there was a crime, that's really up to the U.S. prosecutor to decide, not for us."

Allred said he thought Ihlenfeld should look at the case. A spokeswoman for Ihlenfeld's office declined comment.

Amy Shuler Goodwin, spokeswoman for Gov. Earl Ray Tomblin, said the governor's office needed time to review the report. The administration, as well as leadership in the House and Senate, pledged to work together to fix any purchasing problems and close any loopholes.

The situation stems from a $126 million federal grant. The Broadband Technology Opportunities Program aims to provide West Virginians with high-speed Internet access, a constant struggle for residents in the rural, isolated parts of the state.

Earlier in the year Allred's office also determined the state grossly overspent in purchasing massive Internet routers for locations that did not need them or could not use them. The money spent on the towers comes from the same massive pool, Allred told legislators Tuesday morning. 

The state was awarded the grant in early 2010 under the administration of then-Gov. Joe Manchin.

"When I was governor, our first responders could not communicate, and by working together, we made advancements in communications, giving them the tools they needed to save lives," Manchin said in a statement emailed by a spokesman.

Manchin also said he is proud of the new towers created with the federal grant money. They help the state's public safety network, which Manchin said is essential to the state's security.

"Myself and the people involved in this project were solely focused on improving the lives and safety of the people of West Virginia and the results are undeniable. And, that work continues," Manchin said.

In 2009, the Department of Military Affairs and Public Safety was working on implementing its own grants for construction of emergency communications towers.

The Grant Implementation Team - the entity in charge of overseeing the use of the massive federal grant - approached a state entity helping oversee emergency communications in the state. It asked if the entity wanted money from the federal grant to build 12 new communication towers and refurbish five others, according to the legislative auditor's report.

Then, instead of going through a competitive bidding process, the grant implementation team asked federal administrators to make the Lewis County Commission the sole recipient of the tower construction funds, Allred said.

Lewis County anticipated receiving grant funds from the Department of Military Affairs and Public Safety for a new tower. Gonzalez came to the county to assist with the project; eventually Premier Construction - a company based in the Lewis County town of Jane Lew - won the bid for the work, according to the auditor's report.

There was no intent the Premier contract would lead to the construction of towers with federal grant money, according to the report.

The auditor's report states there were multiple errors in awarding the original contract to Premier. County commissioners did not appear to review the bid packages, and Gonzalez was listed as a reference on part of Premier's bid for the contract, Allred's report states.

The contract with Premier was then used by the state as a gateway to give Premier the go-ahead for work on 17 other towers, Allred argues.

That goes directly against the parameters of the federal grant, the report states. The conditions of the award state any subcontracts must me be made in an open and free manner, to the maximum extent possible.

 In turn, Premier used subcontractors to erect 16 of the 17 towers made possible by the federal grant, the report states. Of the five subcontractors used, four - Allstate Tower Inc. of Kentucky, Installtek of Kentucky, Quality Tower Services of Texas and Vertical Technology Services of Maryland - are not licensed by the West Virginia Contract Licensing Board, according to a letter sent to Allred's office by Mitch Woodrum, director of licensing for the state Division of Labor.

Chelsea Ruby, spokeswoman for the division, said the board must license any contractor performing work in excess of $2,500.

The state also took money from the federal government and gave it to counties with the express intent of spending the money on state projects, the auditor argues. That's using counties as pass-through entities, completely skirting state purchasing rules, according to the report.

"Granting funds to the county rather than procuring the tower construction directly, while not technically illegal, did not align with Purchasing Division guidance and avoided the oversight of the Purchasing Division," the report states.

"This lack of Purchasing Division oversight enabled the contract to be noticed, bid and awarded in a manner inconsistent with the requirements of . . . the West Virginia Code."

State Purchasing Director David Tincher was leery of the work, according to the report. He sent an email to Gonzalez, Gianato and another official that said the state might not be following proper procedure.

In that email, Tincher said that the situation could warrant approval from the purchasing division before Premier should continue doing any construction. 

The work did not stop, according to the auditor's report.

Allred also found the state failed to put one agency explicitly in charge of the State Interoperability Radio Network, the communications network for emergency responders.

The auditor's office made several recommendations.

It believes the Legislature should consider whether the Purchasing Division should have the power to oversee state grant funds and procurements. The executive branch should actually handle federal money, but when it can't, it should set up an official process for how to hand over control of that contract.

That means prohibiting the state from using counties as a pass through by making it illegal, the report recommends.

The state should also give the Department of Military Affairs and Public Safety complete control of the State Interoperability Radio Network.

The department will welcome full control of the network, spokesman Lawrence Messina said.

Contact writer Dave Boucher at 304-348-4843 or david.boucher@dailymail.com. Follow him at www.twitter.com/Dave_Boucher1.


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