Time after time, state purchasing analysts warned that the pricey pending contracts were improper.

"This position was unbid" … "No competitive procurement was issued" … "The rates seem to be excessive" ... "The agency did not complete any competitive process" ... "This position could have been filled … with rates at least $63 less per hour."

And, time after time, their superiors at the Ohio Department of Administrative Services overrode those concerns to award millions of dollars in no-bid, information-technology contracts, frequently paying more than $200 an hour — often to a company employing one-time Administrative Services executives, a Dispatch investigation found.

The supervisors also repeatedly disregarded the agency's own purchasing policy and sidestepped approval of the bipartisan state Controlling Board that serves as a check on spending on non-competitive contracts. As a result, Ohioans likely have paid much more than if routine competitive purchasing procedures had been used by the agency with the responsibility to "guide the use of resources on behalf of the public trust."

Thousands of pages of state purchasing records since 2011 reviewed by The Dispatch show the department's own reviewers complaining about the "exceptional costs" of several no-bid contracts when less-expensive options were available.

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A spokesman for the agency said that it did nothing wrong because its awarding of no-bid contracts is lawful under a waiver of competitive selection granted by the Controlling Board for the past 45 years. But the spokesman could not point to any law or another written policy permitting the awarding of contracts, even with the waiver, without first obtaining at least three price quotes from competing suppliers, as required by the department's own policy.

Top agency officials, such as Director Robert Blair and Chief Information Officer Stuart Davis, were not made available for interviews requested by The Dispatch.

“The complexity of this subject matter does not lend itself to an interview,” wrote department spokesman Tom Hoyt.

Among the findings from The Dispatch's seven-month investigation:

• Advocate, a Columbus family of companies that has received in excess of $14 million in multiple unbid contracts since mid-2011, employs several former Department of Administrative Services IT executives who once worked closely with the state's current highest-ranking IT officials.

• Stonyhurst Consulting, based in the Washington, D.C., exurb of Middleburg, Virginia, was handed more than $3 million in unbid IT contracts — again, many over the protest of Administrative Service analysts — that included pay rates of up to $250 an hour.

• Advocate also charged hourly rates exceeding $200 an hour. In fact, when a couple of its employees transferred to the state payroll, their wages were less than a third of what Advocate had charged the state for similar services.

• Despite insisting the no-bid contracts were proper, agency officials canceled some and sought price quotes following the protests of purchasing analysts. However, department leaders gave some contracts to Advocate and Stonyhurst anyway — even though they were the highest-priced.

The Department of Administrative Services oversees or handles most state purchasing. It also serves as the state property manager and human-resources and payroll office. Its Office of Information Technology handles most software and computer-system contracts for state agencies. The state spends more than $930 million a year on those agencies’ computer and information-technology needs.

Last year, a department purchasing analyst pointed out a need to “help reduce the $75 million spent on consultants … who have since 2006 received several million dollars in unbid work,” writing that some tasks could have been done at lower cost by other companies.

Records obtained by The Dispatch under Ohio's public-records laws show that agency workers also complained over the years about executives not honoring previous assurances that future contracts would be competitively awarded. They also noted that some contracts ducked the accompanying hiring of minority-owned businesses. State law requires minority companies to receive 15 percent of state spending — a longtime priority of Gov. John Kasich.

Not following policy

The unbid contracts uncovered by The Dispatch were awarded without complying with an Administrative Services policy that since 2008 has required the agency to obtain at least three price quotes from competing suppliers, a process intended to save tax dollars by yielding lower prices through competition. The quotes are to come from pre-negotiated and pre-approved "state term schedules" that would-be contractors file with the state.

Hoyt said that policy is overridden by the agency's receipt of a waiver of competitive selection each biennium from the Controlling Board, which consists of six legislators and a Kasich appointee. The waiver permits the granting of unbid contracts for specialized work and "to provide continuity of services," Hoyt said. "It allows for a judgment call to be made by DAS."

Addressing the purchasing analysts' objections to sole-source contracts, Hoyt said they did not understand that the work was so specialized that it could not be obtained through the so-called staff augmentation contract at lower hourly rates. Analysts periodically have questioned supervisor justifications for some no-bid contracts, disagreeing that the work called for specialized expertise.

State agencies generally are required to obtain Controlling Board approval of no-bid or single-source contracts in excess of $50,000 per vendor per year. Administrative Services has not submitted any no-bid information-technology contracts for board approval during the past four years, records show.

“The majority of the identified (no-bid) contracts are for managing large-scale, complex IT projects and programs that span several years," Hoyt said. "Items such as a pen or pencil can be compared or purchased in a like manner, apples-to-apples, while IT consulting involving specialized skills, knowledge and experience is difficult to compare in the same way.”

However, the Controlling Board waiver contains no language overriding Administrative Services' three-price-quotes policy, which its own employees have written must be followed. The agency's 127-page state procurement manual does not list any process for directly hiring “specialized” consultants through no-bid contracts. An internal department document also states that sole-source and no-quote contracts cannot be awarded in the manner used by the agency.

Davis, a 20-year agency employee who was named chief information officer in 2009 and became a deputy director two years later, gave final approval to many of the no-bid contracts. Several carried a notation by supervisors that they did not require further review by lower-ranking analysts.

On one contract, Davis said the agency simply ran out of time to seek approval of a no-bid contract.

On June 4, 2015, acquisition analyst Andrew Miller flagged a $56,250 contract for Stonyhurst. “No competitive process has been completed,” he wrote. “I would recommend that the requester seek Controlling Board approval.”

Davis responded that it was “not realistic” to seek the Controlling Board's OK because the state fiscal year was ending June 30. Davis noted that the contract request was submitted in late April, but documents show the contract did not enter the state-vetting system until June 3. The contract called for one consultant to work 250 hours, at $225 an hour, during June, an average of 62.5 hours a week.

Most of the documents about the transactions are not easily accessible by the public. Administrative Services officials took more than four months to fulfill much of The Dispatch’s request for public records concerning vendors' contracts. Some records still were being turned over last week — after nearly seven months.

A spokesperson for Kasich, who appoints the head of the Department of Administrative Services, referred questions to the agency.

The office of Inspector General Randall J. Meyer has been alerted to the no-bid contracts more than once. One complaint to Meyer's office in late 2015, later also sent to The Dispatch, was closed for “insufficient cause,” with an inspector general's office email noting that “the issues are being addressed in two separate investigations.” One of those investigations is closed and considered to be confidential; the second is ongoing, a spokesman said.

A 2014 investigation by Meyer's office also stated that at least three price quotes must be obtained from contractors under the department's policy. The probe looked at IT contracting approved by Administrative Services for the Department of Job and Family Services and suggested tighter controls and oversight. Job and Family Services Director Cynthia Dungey had complained that some contractors "would continue to report to work even if there was nothing for them to work on that day."

Advocate contracts

Columbus' Advocate Solutions, Advocate Technical and Advocate Consulting have received $44.5 million in state payments since 2011, according to Ohio Treasurer Josh Mandel’s checkbook.com website. That total reflects both no-bid and competitive contracts.

Advocate partner Mark Schriml did not respond to requests for comment.

Known as Government Consulting Resources until early 2014, Advocate is linked to a series of unbid contracts that apparently date to at least 2009 during the administration of former Gov. Ted Strickland. Then-Administrative Services Director Hugh Quill declined to comment.

Rex Plouck, a deputy chief information officer who worked alongside agency Chief Information Officer Davis before departing in late 2009, joined Advocate as vice president in early 2011. Plouck is the husband of Tracy Plouck, director of the Ohio Department of Mental Health and Addiction Services, a cabinet position under Kasich.

Since mid-2011, according to state records, Advocate has received at least $14.2 million in unbid contracts. Much of that money was for Plouck and Peter Quinn to serve as full-time "executive consultants" to Davis’ office. They are sometimes supplemented by other Advocate employees paid up to $236 an hour.

Over the years, Administrative Services employees wrote that the series of Advocate contracts were “non-bid” and “not a competitive selection.” A 2012 contract for $1.3 million, for three full-time consultants including Plouck and Quinn, was marked as “pre-approved by Stu Davis” nearly two weeks before it entered the contract-review process. The current fiscal year's contracts for four Advocate employees, provided only last week, total $1.7 million and again were flagged as improper.

Advocate’s minority-business enterprise company, Advocate Technical, received $4.2 million in contracts in 2015 and 2016 that agency analysts said were unbid. The work was to help convert hard-wired state and county phone systems to Internet-based voice systems and set up county human-services agencies' call centers.

On a $499,000 contract to Advocate Technical in early 2015, an analyst noted that three price quotes had not been obtained, and the contract also was not a special “set aside” for a minority company. Less than eight months later, on a separate $898,500 contract for Technical, an administrator again wrote that it and previous contracts “did not undergo competitive selection.”

In mid-2015, Administrative Services sought price quotes from minority-owned companies to help refine a Medicaid payment system and hired consultants from three businesses, including Advocate Technical. Advocate's employee was ranked third among the three hired and was paid Advocate’s quoted rate of $140 an hour. The higher-rated workers from two other companies were paid $63 an hour and $91 an hour. Advocate ultimately was paid about $320,000 for the work.

In June 2016, an agency analyst wrote that a $159-an-hour, $349,800 contract for an Advocate Technical employee to work on Medicaid and governor's Office of Health Transformation projects would bring her total unbid work to about $2 million since 2012. She originally was hired under a $25,000 contract that did not require bidding because it was so small.

Revolving door in reverse

The high cost of Advocate employees is underscored by a pair of instances in which the consultants later were hired by the state to perform similar duties — but at a sharply lower cost to taxpayers.

Gregory Jackson, one of Davis' predecessors as the state’s chief information officer for five years, left his state job in 2005. He was employed by Advocate beginning in September 2012, and through an unbid contract approved by Administrative Services, immediately became interim chief information officer at the Ohio Department of Medicaid.



The company received more than $913,000, charging $218 an hour for Jackson’s full-time services until May 2015, when he departed both Advocate and the Medicaid department. Jackson then returned to the state 10 months later as a full-time state employee in a similar job as head of information services at the Department of Job and Family Services.

His hourly state salary of $67.31 — which yields $140,000 a year — represents less than a third of what Advocate was paid for his services. Advocate was paid $453,400 in its last contract for the services of Jackson, who listed a salary of $180,000 a year at Advocate on his state employment application. Jackson declined a request for an interview.

Under a similar contract — involving a competitive process that solicited one other contender — Advocate “client partner” Doug Lumpkin was hired in March 2013 at $193.50 an hour to work full time to manage IT projects at the Department of Job and Family Services. Advocate ultimately was paid about $340,000 for his services.

When Lumpkin was hired as an Ohio Job and Family Services deputy director in charge of innovation in August 2014, he was paid $60.58 an hour — a rate that equates to $126,000 a year, less than a third of that charged by Advocate. Lumpkin was Franklin County Job and Family Services director from 2005 to 2008 and then state director in 2009-10. Lumpkin, who did not disclose his Advocate salary in the space provided on his state job application, also declined an interview.

Peter McGeoch, Administrative Services' IT director in the 1990s and an Advocate employee, worked at the Ohio Department of Higher Education through an unbid contract. His duties included advising Chancellor John Carey on IT issues. Records show McGeoch was hired for $150 an hour, for a total of $77,400, to work for three months ending in September 2016. A spokesman for Carey said McGeoch continued his work at $150 an hour under an extension with Advocate before departing in January. Advocate also was paid $456,000 in 2014 and 2015 for general consulting services provided by McGeoch.

Stonyhurst contracts

The husband-and-wife team of Steven Zielenski and Jonelle St. John worked for a state IT contractor called Top5 before forming their own company, Stonyhurst Consulting.

State purchasing analysts complained that the company’s first contract in 2015 for $128,100 to help with IT optimization efforts was unbid. Most of the company’s subsequent contracts also were flagged as “unbid” — a total of nearly $3.2 million in all.

For example, a mid-2016 contract for $596,000 to assist Davis’ office in optimizing state IT efforts was approved by Davis despite an analyst pointing out: "No competitive procurement was issued in order to procure these services."

Zielenski was paid $250 an hour for 2,045 hours of work between July 1, 2015, and June 30, 2016, for a total of $511,250, according to state records. His 2,045 hours of work fell 35 hours short of an average of 40 hours a week for 52 weeks — all while apparently commuting from his home in Virginia.

Though totaling only $63,000, a March 2016 contract with Stonyhurst drew multiple purchasing analyst comments: “The agency did not complete any competitive process, nor did they engage in (cost) negotiations,” wrote one.

Another agency staffer observed that using an existing contract with pre-set lower prices would “provide the state with exceptional cost savings” while the Stonyhurst rate of $225 an hour “represents an exceptional cost.”

Asked for comment, Zielenski responded in an email: “Stonyhurst LLC maintains strict confidentiality with respect to all our clients and our business relationships with them.”

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rludlow@dispatch.com

@RandyLudlow