CHARLESTON, W.Va. — West Virginia is going to have to process new contracts to complete long-term flood relief that’s already moved at a frustratingly slow pace.
The Justice administration acknowledged the latest complication in a statement issued Wednesday evening, but expressed confidence that it will be able to move forward steadily to provide help to hundreds of vulnerable state residents.
“This will no doubt make it more challenging as we move forward because it takes time to initiate new contracts,” said Adjutant Gen. James Hoyer, the governor’s point man on flood relief. “But, it does not stop us from moving forward.
Concern over the contracts and the state’s status with HUD was so concerning that Congressman Evan Jenkins met with agency leaders to seek assurances that the federal grant would not be clawed back.
The Governor’s Office announced the latest twist as an agreement with the U.S. Department of Housing and Urban Development, which issued a letter advising what to do about the questioned contracts.
“In response to the State’s request for guidance, the Department has considered the statutory requirement for proficient procurement procedures, the importance of minimizing harm to flood-affected homeowners and the need to limit the impact of the identified deficiencies on future funded activities,” wrote Stanley Gimont, HUD’s deputy assistant secretary for grant programs.
The contracts worth millions of dollars have been under scrutiny as state officials tried to determine if they were legally executed. The Legislative Auditor last month concluded that each of the contracts should have been put out for bid through the state Division of Purchasing.
The Legislature’s Joint Committee on Flooding is meeting Thursday morning with a full agenda about what has gone wrong during two years of long-term flood relief and how it can get better. HUD has labeled West Virginia a “slow spender” for months.
A statement from Governor Gov. Jim Justice indicated that some of West Virginia’s long-term flood relief can move ahead under the original contracts, but new contracts will have to be processed in the meantime.
HUD has asked the state to limit the use of existing contracts and to begin transitioning over to using state employees that are trained and qualified to perform some of this work, Hoyer said. He expected the transition will take place and be completed within the next 30 to 90 days.
Justice made the announcement Wednesday evening: “State and HUD reach consensus on way forward for RISE program.”
The phrasing from the Governor’s Office was, that the U.S. Department of Housing and Urban Development “has issued its recommendations and guidance to the State of West Virginia on how to proceed forward with contracts related to the RISE flood recovery program.”
State officials have been seeking to assure the federal agency that they can move forward with multi-million dollar contracts for long-term flood relief that originally may have been executed unlawfully.
The state has approval to spend $149 million in flood relief grant money administered by HUD.
West Virginia’s state government entered into multiple contracts to manage the federal grants and to perform the associated construction and rehabilitation work.
The original contracts to conduct flood relief efforts expired at the end of last month, but the general counsel in the Governor’s Office says they were renewed just prior to that by the Department of Commerce.
A big question has been whether such renewals would be legal if the original contracts were deemed not to be.
State officials have been working with Housing and Urban Development for the past couple of weeks to try to reach a resolution.
“This is to ensure the proper execution of the program and that it is done in the most expeditious manner based on federal and state requirements. HUD has now issued its recommendation and guidance on the initial contracts issued under Commerce,” Governor Justice stated this evening.
“My staff, the Department of Commerce, and the General have developed a course of action to make certain the program moves forward as new contracts are put in place to serve those West Virginia families still in need.”
He said there are 130 homes in the construction management process.
From the HUD guidance issued today, the administration estimates that 66 of those homes in the construction phase can be completed under the existing contracts.
The remainder of the work will be done under new contracts and other means such as sub-grants.
“This allows for construction work to continue and cases to be loaded into the construction management process while new contracts go through the process for award,” Justice stated.
Justice said he has instructed Hoyer to make sure the process goes smoothly.
“I have directed Gen. Hoyer to ensure that processes and procedures are established and carried out in an expeditious fashion for the housing program so that it proceeds uninterrupted during this transition phase,” the governor stated.
A contract with Horne LLP, worth up to $17 million, has been in dispute for months.
An initial scope valued at $900,000 was appropriately approved by the state Division of Purchasing. But additional task orders valued at $17,817,108 created red flags with the purchasing division and the Governor’s Office, which paused the work this spring.
That contract actually expired last December. The administration has been working to renew it while dropping some of its scope. Its current status is unclear.
Then a legislative audit examined larger contracts with construction contractors, valued at $71,430,000.
Those are seven contracts with Thompson Construction Group of South Carolina ($49 million), Danhill Construction Company ($15 million), Appalachia Service Project ($3.18 million) and River Valley Remodeling ($4.25 million).
A legislative audit released last month concluded that the contracts were awarded unlawfully.
They actually were executed prior to this winter’s official release of funding from U.S. Housing and Urban Development.
And the West Virginia Development Office did not comply with the Purchasing Division statutes, the audit concluded.
“As a result, the Legislative Auditor recommends that the Development Office cease all payments under these invalid contracts,” according to the report.
“Further, the Legislative Auditor recommends that the Development Office immediately terminate all contracts which commit the expenditure of Disaster Recovery Funds that were executed prior to receiving HUD’s Authority to Use Grant Funds form.”
The evening the legislative report was released, the Governor’s Office issued a statement that said, “Legislative Auditor is Wrong on RISE.”
But the statement continued, “The report does get several things right. Numerous illegal contracts were entered into by the West Virginia Development Office, and the RISE program was mismanaged from the beginning.”