Unusual tendering process allows ILO to avoid standard 1% fee on $ 5.2 million contract


PROVIDENCE, RI (WPRI) – The atypical bidding process that led to the controversial OIT Group LLC state contract worth up to $ 5.2 million has also enabled the company to ‘Avoid standard fees on such contracts, found Target 12.

Avoiding the usual 1% fee on similar state contracts – known as “guiding price agreements” or MPAs – would be worth up to $ 51,708 off the maximum value of the ILO agreement. But after Target 12 asked about the exemption, the ILO on Friday announced its intention to pay the fee anyway.

The problem was exposed in the thousands of pages of documents related to the ILO agreement obtained by Target 12 as part of a request for access to public documents. The education consultancy contract has come under heavy criticism since Target 12 revealed its existence on September 7, and RI Attorney General Peter Neronha is currently investigating how it was formed.

Under a law enacted in 2017, state suppliers who procure government work under an MPA are required to pay a 1% contract fee. The fees – which are meant to fund the creation of an electronic procurement system – sparked controversy when suppliers first learned that it would go into effect.

However, an email message obtained by Target 12 shows that the ILO was not required to pay the 1% fee despite the McKee administration’s decision to award his contract as an AMP.

Nina Lennon, state interdepartmental project manager, wrote in a June 10 email to other state procurement officials: “We have created a new AMP (598) but it will not have 1%. “

Target 12 first asked the McKee administration on Monday morning to confirm that the ILO had been exempt from the 1% tax. The administration was unable to answer the question for most of the week. But on Friday, RI Administration Department spokesman Derek Gomes confirmed that the ILO was not paying the fees.

Gomes attributed this to the fact that the McKee administration initiated the procurement process for what became the ILO contract as a competitive bid intended to lead to the selection of a single supplier. (The initial contract plan was put together by Mike Magee, one of the governor’s most influential outside advisers, whose subordinate created the ILO the week McKee took office.)

As Target 12 has documented, despite two rounds of tenders in April and May, the ILO still wanted millions of dollars more than WestEd, its main rival for the contract.

Rather than award the contract to WestEd, a review team gave the go-ahead for the governor’s office to move to an AMP, allowing McKee and his advisers to negotiate the amount of money each company would get. In June, the governor’s office awarded the ILO a contract worth up to $ 5.2 million, while awarding WestEd a contract worth just under $ 1 million .

Gomes said the change in approach to how the contract is awarded is why the ILO and WestEd have avoided the 1% MPA fee.

“The provision of advisory services for the plan to reopen K-12 schools and higher education did not include administrative fee language,” Gomes told Target 12 in an email , referring to the original tender document. “When this deal was first published, the state did not envision the outcome being an MPA; therefore, standard language informing vendors of AMP fees was not included in the original solicitation document. “

Gomes added: “To unilaterally assess the 1% fee without notice to the supplier would be problematic. “

However, Gomes indicated that there are now discussions that the ILO and WestEd are paying the fees anyway.

“The two vendors approved on this MPA have since expressed interest in paying the fee, and the Department of Administration is working to determine if and how this can be done,” he told Target 12.

Less than an hour after Gomes’ email, ILO spokesperson Frank McMahon told Target 12: “The ILO has just been made aware of the problem and the ILO will pay the costs. from 1 %.

The ILO has yet to submit its first bill for the state’s payment under the contract, which is funded by federal coronavirus relief money. State officials said the ILO should invoice quarterly.

It is not known if WestEd will also start paying the AMP fees.

“Our agency first learned of the 1% charge on Wednesday, and we are currently awaiting further information from the state regarding the charge so that we can come to an agreement on how to proceed,” the door said. -WestEd’s speech, Pamela Polk, at Target 12 Friday night.

McKee strongly defended the procurement process that led to the selection of the ILO despite criticism from lawmakers and others, while also denouncing media coverage of the deal.

Ted nesi ([email protected]) is Target 12 investigative reporter and 12 News policy and business editor. He co-hosts Newsmakers and writes Nesi’s Notes on Saturdays. Connect with him on Twitter, Facebook, LinkedIn and Instagram

Eli Sherman and Tim White contributed to this report.


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