CONCORD - In response to $370,000 in questionable payments made to John Stephen and the Lucas Group for so-called volunteer work, Rhode Island's Lt. Governor Elizabeth Roberts is calling on lawmakers to fine public officials who violate bidding laws. The Rhode Island Attorney General has also been investigating the payments.
John Stephen, working for the Lucas Group, consulted with Rhode Island on its Medicaid program. Rhode Island officials - including secretary of the Office of Health and Human Services, Gary Alexander, who campaigned with Stephen and held a fundraiser for him - publicly stated for months that the work was on a volunteer basis.
It was later publicly revealed that John Stephen and the Lucas Group received $370,000 for this so-called "volunteer" work - money that was awarded without any competitive bidding process.
Rhode Island's Lt. Governor Elizabeth Roberts yesterday urged the Rhode Island Assembly to put in place stiff penalties for violating the state's competitive bidding requirements.
"I was shocked to learn that a company that offered services voluntarily to the state, that never went through an open, public-bidding process and never had a contract from the state, was able to turn around and secure payment, and the state had no recourse," Roberts said, according to the Providence Journal.
"John Stephen charged Rhode Island taxpayers $370,000 for volunteer work?" asked Raymond Buckley, chairman of the New Hampshire Democratic Party. "If that's what John Stephen charges for 'volunteer' work there is no way New Hampshire taxpayers can afford to elect him Governor."
"It is not surprising that the Rhode Island legislature has to consider changing its laws because of John Stephen's behavior. New Hampshire taxpayers can't afford John Stephen's type of no -bid, no-ethics arrangements that benefit him and his political cronies.
"John Stephen worked for state government for years. He should know about competitive bidding. He should also know that volunteers are not supposed to get paid for their volunteer work for the state. John Stephen obviously doesn't think those laws apply if they stand in the way of his personal gain. New Hampshire can't afford someone like John Stephen who thinks ethics and the law doesn't apply to him."
The scandal is reminiscent of those in the Administration of Stephen's mentor, Craig Benson. Benson paid tens of thousands of taxpayer dollars to a so-called volunteer named Linda Pepin.
"John Stephen apparently learned everything he knows about ethics from Craig Benson - something that should scare the people of New Hampshire," Buckley said.
The Providence Journal Story follows.
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R.I. General Assembly bills would close no-bid loophole
01:00 AM EST on Friday, March 12, 2010
By Katherine Gregg
Journal State House Bureau
PROVIDENCE - Lt. Gov. Elizabeth Roberts is asking lawmakers to close the loophole that allowed the Carcieri administration to make a $370,000 settlement payment to the Lucas Group for no-bid Medicaid consulting services that top aides to the governor had, for months, insisted were provided voluntarily.
Bills introduced in the House and Senate, at Roberts' behest, call for stiff penalties - including fines of up to $5,000 and possible dismissal - of any state employee "who has knowingly and willingly approved, authorized, accepted, or supervised the receipt from any person or business of any goods or services for which the state may be billed" without following the bidding requirements in state purchasing law.
The legislation would also prohibit the payment to any "person or business that provides goods or services to any state agency without possessing a lawfully authorized written contract."
The Carcieri administration had maintained for months that consultants working for the Lucas Group had volunteered their time. But in June, the administration agreed to pay a $370,000 settlement to the firm for its "significant" work on a "global waiver" giving Rhode Island unprecedented freedom in how it spends its Medicaid dollars on health care for the poor, the elderly and the disabled.
One partner in the Lucas Group was John Stephen, a former New Hampshire health and human services commissioner and failed GOP congressional candidate in New Hampshire. Rhode Island's secretary of the Office of Health and Human Services, Gary Alexander, campaigned with Stephen and held a fundraiser for him.
In response to inquiries from The Journal about the June settlement, the administration subsequently acknowledged that the governor's then-chief of staff, Brian Stern, was intimately aware of the extent to which the state relied on a team of consultants, without a contract, to negotiate the terms of the Medicaid agreement with the federal government in the final days of the Bush administration.
"As negotiations heightened and demand for information increased significantly, the relationship moved from informal assistance to a more definitive work plan as it became clear that the expertise and specialized human resources of the Lucas Group were needed to achieve the waiver," Carcieri spokeswoman Amy Kempe said in response to Journal inquiries.
But, "no formal contract was ever signed and [no] formal purchase order was ever issued to the Lucas Group for payment and no payment to them was made until the settlement was reached," she acknowledged.
Stern was subsequently nominated by Carcieri - and approved by the state Senate - for a Superior Court judgeship.
"I was shocked to learn that a company that offered services voluntarily to the state, that never went through an open, public-bidding process and never had a contract from the state, was able to turn around and secure payment, and the state had no recourse," Roberts said. "This bill will ensure that this scenario will not happen again."
Describing himself as outraged, Attorney General Patrick C. Lynch promised in June to launch an investigation. His investigation has not yet resulted in any action or written findings by his office.
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