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I posted Aaron Regunberg’s article in The Providence Journal, in which Governor Dan McKee awarded a $5.1 million contract to a brand-new firm created by friends from Jeb Bush’s Chiefs for Change. The contract was supposedly to help schools reopen.
Take the recent story of a $5-million “school reopening” contract given to Governor McKee’s longtime financial backers at the corporate education reform group Chiefs for Change (CFC). The head of CFC, Mike Magee, has directly contributed thousands of dollars to the governor, and his brother leads the Super PAC that spent hundreds of thousands supporting McKee during my primary challenge to him in 2018. As has been reported extensively by WPRI, just two days after Mr. McKee took office, the chief operating officer and director of operations of CFC incorporated a brand-new company, ILO Group, which almost immediately received a state contract to the tune of $5.2 million — an amount many millions of dollars more than the next-highest bid.
But it’s worse than that. WPRI in Providence reported that the head of the new firm that won the contract was still employed by McKee’s friends when the contract was awarded.
PROVIDENCE, R.I. (WPRI) — The head of a newly founded consulting firm was still working for one of Gov. Dan McKee’s close confidantes at the same time that her company was finalizing a controversial state contract worth up to $5.2 million, the Target 12 Investigators have learned.
Separately, Target 12 has also learned that a key initiative the consulting firm is spearheading — the creation of alternative municipal education offices across Rhode Island — is slated to receive funding from Amazon.com under the terms of the company’s new agreement for a project in Johnston.
The consulting firm, ILO Group, has been making headlines ever since Target 12 first reported that the state awarded a lucrative contract to ILO soon after it was incorporated, despite a messy bidding process which state officials deemed unsuccessful.
The contract “had all the hallmarks of some of the deals that we’ve had in the past that come from the ‘I know a guy’ culture in Rhode Island,” said state Rep. Jason Knight, a Barrington Democrat and member of the House Oversight Committee, which is considering hearings on the contract.
ILO’s majority owner and managing partner is Julia Rafal-Baer, who was previously chief operating officer at the national education nonprofit Chiefs for Change. Chiefs for Change’s CEO is Mike Magee, a longtime adviser to McKee on education issues who worked for the governor when McKee was Cumberland mayor. Magee also served on McKee’s transition team last winter.
ILO filed incorporation papers with the Rhode Island secretary of state’s office on March 4, two days after McKee was sworn into office. But Target 12 discovered Rafal-Baer did not leave her old job when she co-founded the new firm and began bidding on the seven-figure state contract.
R.I. Board of Elections filings show Rafal-Baer continued to list Chiefs for Change as her employer, rather than ILO, when she made campaign donations during the spring. A spokesperson for ILO, Frank McMahon, confirmed Rafal-Baer kept her job at Chiefs for Change until June 28 — after ILO had won the state contract and just a few days before it took effect.
The most recent available IRS filings for Chiefs for Change show the nonprofit paid Magee $308,211 and Rafal-Baer $247,881 in 2019, making them the organization’s two highest-paid employees.
No decision yet on oversight hearings
As the bidding process began in March, Rafal-Baer had access at the highest levels.
The day after ILO’s incorporation papers were filed — March 5 — she and Magee were slated to participate in a half-hour Zoom meeting with the governor and the state purchasing agent, Nancy McIntyre, according to McKee’s schedule for that day. Also invited to the meeting were McKee’s then-chief of staff, Tony Silva, and the director of the R.I. Department of Administration, Jim Thorsen.
“The meeting was to discuss the state’s options for engaging additional support to assist with school safety related to COVID, including testing and other strategies for safe in-person learning,” said McKee spokesperson Andrea Palagi. She added that Rafal-Baer “was sent an invite for this meeting but did not attend.” The meeting was first reported by The Providence Journal.
Later in March the governor’s office solicited bids for a new education consultant to help with reopening schools and long-term policy planning.
ILO put in an initial bid of $8.8 million to do the work, while a rival firm with a two-decade track record in Rhode Island — WestEd — said it would cost only $936,000.
With the numbers so far apart, state officials reworked their request and asked for revised bids. On May 7, ILO lowered its bid to $6.5 million — but that was still far higher than WestEd’s revised bid of $3.5 million.
By late May, a four-member state review panel that included North Providence Mayor Charlie Lombardi abandoned the competitive procurement process and proposed splitting the work between the two firms. ILO got a contract for up to $5.2 million to help K-12 schools, while WestEd got $926,000 to help colleges.
The governor has emphasized that ILO is billing the state hourly for its services — at a rate of $223 an hour — and he expects the final price tag for the contract to come in “far below” the $5.2 million maximum.
Spokespersons for both organizations as well as the governor’s office have distanced Chiefs for Change and Magee from the bidding process that led to ILO’s selection. In a letter to legislators last week, McKee said Magee “has no past or current financial interest or management role in ILO,” and ILO’s spokesperson said Magee “did not participate in the preparation or submission of this proposal.”
In his letter to lawmakers, McKee said ILO “currently works with large-scale and small-scale school districts throughout the country.” When Target 12 asked for a list of the other states where ILO is working, however, a spokesperson for the company said: “It is ILO’s policy not to share the names of its clients.”
By the way, McKee’s friend Mike Magee previously was CEO of 50CAN, an organization whose sole purpose was to promote charter schools. New York BATS were none too happy with Rafal-Baer when she worked as Assistant Commissioner of Education in that state and was known as the state’s ”teacher evaluation czar.”. One of them wrote:
In reality, Dr. Rafal-Baer’s policies in NY were met with deep resistance, found “arbitrary and capricious” in state Supreme Court and suspended after costing taxpayers untold millions. Achievement gaps and school segregation widened, and teacher workforce morale has tanked, with untested, top-down initiatives the biggest reported driver of workplace stress by far.
In response to the criticism of the grant to the newly-minted ILO, Governor McKee wrote a letter to legislative leaders defending his decision to award the contract.
“While ILO is newly organized as a Rhode Island-based business, its team members have worked together for years and have an extensive background working in Rhode Island and throughout the country on education consulting projects,” McKee wrote. He noted that ILO’s managing partner – Julia Rafal-Baer, who owns a majority stake in the firm – is a Cranston resident…
But McKee didn’t mention that ILO’s proposed hourly rate for the work still totaled $228 an hour, compared to $123 for WestEd — meaning the bids were still nearly $3 million apart. Those numbers are too small and blurry to read in the supporting documents sent by the governor’s office. (Target 12 has separate copies of the original.)
In another section of the report, McKee also downplayed the overall price tag of the ILO contract, saying he doubted the firm would end up billing taxpayers for that much money in the end.
“To avoid unnecessary spending, the contract is to be billed hourly up to the amount of $5.1 million instead of a fixer retainer fee,” McKee wrote. “Based on ILO’s billable hours for work performed since the beginning of July 2021 when the contract began, we expect to remain far below this cap.”
Why teach for peanuts when you can be paid $228 an hour as a consultant? If you know the right people.