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HUD says it didn’t know about WV’s final $6.7 million payment to flood contractor

CHARLESTON, W.Va. — The U.S. Department of Housing and Urban Development says it did not know about West Virginia’s final, $6.7 million payment to a flood relief consultant.

“The fact that this payment was made at all came as a surprise to us,” said HUD spokesman Brian Sullivan.

West Virginia has drawn down $150 million in community development block grants for disaster relief through the U.S. Department of Housing and Urban Development.

Officials from HUD were just in West Virginia last week to provide guidance on best practices.

“We just came back from a trip where we provide technical assistance on a broad number of issues on the procedures and the process so that everybody including West Virginia taxpayers can be assured that they’re following an established process,” Sullivan said.

“Seemed the perfect time to tell us about something.”

He added, “Just say it out loud. That always works.”

Instead, Sullivan said, officials from the federal agency learned about the payment through a MetroNews story. 

Horne LLP, the consultant that was at the center of contract controversy over West Virginia’s response to long-term flood relief, was issued a $6,739,575 check from the state on Nov. 2.

That was notable because several state offices had earlier declared a contract extension for Horne to be unlawful.

That included the state Division of Purchasing and, later, the Legislative Auditor.

The original Horne scope of work of $900,000 grew to a potential $18 million through additional task orders.

Gov. Jim Justice and his staff eventually halted the contract in an action that was widely described as “the pause.”

The final payment to Horne, which was approved by the state Division of Purchasing as an emergency contract on June 19, was for work the consultant had completed up to that point.

The state Auditor last month questioned the final payment — wondering, among other questions, whether the payment complied with HUD guidance and federal law.

Auditor J.B. McCuskey specifically asked about communication with HUD:

“Does this new contract, procurement, and payment request comply with HUD guidance and federal law? In as much as your office has been in communication with HUD, you are in the best position to affirm this conformity to federal law and guidelines.”

Governor Justice responded in part, “Yes, the new contract, procurement, and payment request comply with HUD,” providing little elaboration.

Jeff Wood, director of Development and Intergovernmental Relations for the state Adjutant General’s Office, also indicated in an interview last week that the state followed HUD guidance.

He made specific reference to a letter sent by HUD last July, providing guidance on flood relief contracts.

“We made sure there was a way we could make this payment work and meet all the legalities,” Wood said.

HUD’s Sullivan said the agency isn’t necessarily questioning the final payment to Horne.

Sullivan wanted to clarify that the federal agency didn’t go so far as to provide an official approval.

“When West Virginia leaders tell you they coordinated with us,” he said, “it’s probably a veiled reference to how earlier in the year we tried to get a better understanding of their contracting and procurement procedures.”

Wood, in a telephone interview today, said the federal agency had been informed earlier in the year about West Virginia’s plans to make a final payment to Horne.

“We had talked to them to let them know this would be coming through,” Wood said. “We have several conversations with them about RISE and that had been brought up.”

But he acknowledged the topic did not come up during last week’s visit by HUD representatives.

“I don’t know if it was just a lapse or what the case was,” he said. “They reviewed the entire RISE program. There were a lot of different topics brought up. It wasn’t intentional.

“We didn’t hide it from them, and maybe it’s a situation where I could have communicated a little bit more clearly.”

He said no one would have expected HUD to provide approval. Although the money flows from the federal government, West Virginia uses its own purchasing procedures.

“They anticipate us being able to utilize those funds in our state apparatus,” Wood said.

“They expect us to be able to do these things on our own and they come back in and monitor and make sure we’re doing things correctly.”





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