The State Auditor's Office has rejected a $62,500 bill from a Fairfax, Va.-based consulting firm hired to advise state Commerce Secretary Keith Burdette and Gov. Earl Ray Tomblin on the state's use of $126.3 million in federal stimulus funds to expand high-speed Internet.
The Auditor's Office found that ICF International billed the state at rates as high as $255 an hour, even though the firm signed a contract to charge no more than $148 an hour.
"Basically, the company submitted four separate hourly rates, but the contract has only one hourly rate," said Justin Southern, spokesman for State Auditor Glen Gainer's office. "We pull every contract and read it to make sure the billing amount coincides with the price on the contract."
Burdette, who has past financial ties to ICF's lead consultant on the West Virginia contract, said he directed ICF on Monday to submit a new invoice with a fixed hourly rate at $148.
"It was a format error. That's all it was," Burdette said. "They didn't have a blended rate. They will resubmit."
Last month, ICF billed the state Development Office for 332 hours, which totaled $62,542.
ICF charged the state different hourly rates depending on which employee worked on the West Virginia broadband contract - two technical specialists at $100 an hour, a manager at $140 an hour, a senior technical specialist at $200 an hour, and two senior directors at $255 an hour.
The combined, or blended, rate for the six employees was $175 an hour.
At the higher hourly rate, ICF wound up billing the state for $9,000 more than the contract allows.
Two Department of Commerce administrators - Deputy Secretary Angel Moore and Small Business Development Deputy Director Jamie Gaucher - signed off on ICF's invoice and submitted it for payment to the Auditor's Office.
Moore and Gaucher served on the five-member review committee that awarded the contract to ICF at the $148 hourly rate.
ICF's $62,500 bill included $3,800 in travel expenses, which included airfare, mileage, meals, parking fees and lodging at the Charleston Marriott.
The company's consultants have held meetings with state officials in recent weeks, but the firm hasn't delivered any written reports, Burdette said.
ICF International spokesman Steve Anderson referred questions Monday to Gaucher at the Development Office.
Gaucher said ICF's cost proposal included different hourly rates for eight or nine employees, whose rates averaged $148 an hour.
ICF's first invoice exceeded that average because higher-paid employees have been working on the West Virginia contract in recent months, he said. ICF was expected to submit future invoices with lower hourly rates, so the final average rate would be $148 over the life of the contract, Gaucher said.
The company has submitted three additional bills to the Development Office, but those invoices haven't been forwarded to the Auditor's Office for payment.
The Auditor's office rejected ICF's initial payment request on May 4. ICF's lead consultant on the West Virginia contract, Keith Montgomery, would not comment Monday on the Auditor's decision.
"I don't have any comment on that," said Montgomery, whose 77 hours of work on the West Virginia contract was billed at $255 an hour. "I don't have any information to comment on."
In 2005 and 2006, Burdette worked as a paid lobbyist for iTown Communications. Montgomery was the former president and CEO of iTown.
For years, Burdette publicly lobbied city and county officials in West Virginia to sign contracts with iTown, which offered to provide government-subsidized broadband Internet services to rural towns and counties. At the time, Burdette also served as director of the Wood County Development Authority.
"He used to be the person we used for advisory services for Wood County," Montgomery said.
ITown went out of business several years ago. "We shut it down," Montgomery said Monday.
ICF was the second-lowest bidder for the broadband advising contract, but was awarded the job after the five-member review committee - appointed by Burdette - gave ICF's proposal the highest score.
Montgomery is a native of Vienna, in Wood County. Burdette lives in Vienna. His lobbying firm, the Burdette Group, was based in Vienna.
"I like Keith [Montgomery], but I wouldn't say he's a close, personal friend," said Burdette about his relationship to Montgomery on Monday.
Last week, Burdette said ICF would review how state officials were spending more than $126.3 million in federal economic stimulus funds to expand high-speed Internet in West Virginia. The review is expected to include a financial audit.
Burdette's announcement followed Gazette reports that state officials are using $24 million from the stimulus grant to put 1,000 high-powered Internet routers in small libraries, elementary schools and health clinics, even though the equipment is designed to serve major research universities, medical centers and large corporations.
The state purchased the Cisco series 3945 routers, even though a state Office of Technology administrator warned that the pricey devices "may be grossly oversized," according to an email obtained by the Gazette. The routers cost $22,600 each.
The newspaper also reported that the state has 366 routers in storage - nearly two years after purchasing them. The devices direct data, such as email and web pages, from one computer network to another. As part of its West Virginia contract, ICF also is working on several additional projects, including an analysis of the state's broadband infrastructure.
Reach Eric Eyre at firstname.lastname@example.org
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