Projo 7 to 7 News Blog

He also asked them to "kindly identify the source of the funds that will be used to pay for this settlement since, as I understand it, no funds were appropriated in the budget for these services... nor was the expense incurred through normal purchasing channels.''
Speaking for him, spokesman Michael Healey said that Lynch "probably like every Rhode Islander...was shocked by this news.''

"If somebody has failed to follow the DOA's purchasing rules and regulations in approving this money, there needs to be some accountability, because in the context of our state's budget struggles, on its face it's inexplicable,'' Healey said.

But "first things first,'' Healey said. "Right now we're not ready to indicate whether or not a full criminal investigation is warranted. We do think, though, that several questions need to be answered...First, if the money has already been paid, who paid it: DHS, the Governor's office or some other agency?

"Second, were the DOA purchasing rules and regulations followed properly? Was whatever agreement that the two sides entered into a binding and valid agreement or was it a handshake deal? Third, were the Lucas Group's services procured properly...according to established DOA procedures? Last, and on the same theme, we've been led to believe that the Lucas Group was providing its services voluntarily. If so, why was the settlement payment approved/made?''

On that same theme, Sen J. Michael Lenihan, the chairman of the Senate government-oversight committee that spent months probing an earlier no-bid state staffing contract with the Foxboro-based Smart Staffing, said he knows of no law that would allow the Republican Carcieri administration to make a settlement payment to a consultant with no contract with the state.

"It is puzzling to say the least,'' said Lenihan, a Democrat from East Greenwich.

He said he has asked his State House legal counsel to "gather as much information as possible,'' in anticipation of "likely'' hearings, even after the legislature adjourns for the year.

"I don't know really what they did and how they paid $370,000 as part of the settlement of a non-contract. We're going to try and fill in the blanks.''

The governor's office did not respond to requests for comment on the growing controversy.

But Roberts said: "Circumventing procurement rules, bypassing contract procedures, misleading the public and employing cronyism at any level is unacceptable, and undermines the public's confidence in government, especially at this crucial time."

When Stephen's name first surfaced months ago, along with that of The Lucas Group, Carcieri spokeswoman Amy Kempe said the company was working on the state's global Medicaid waiver negotiations with federal officials on a "voluntary basis. ... We are not engaged with Lucas ... It's strictly voluntarily offering advice and guidance."

On its Web page, however, the Lucas Group took credit for having "originated" and "constructed" and then "led" the negotiations with federal officials that resulted in Rhode Island winning the far-reaching Medicaid waiver in the final days of the Bush administration.

The waiver is expected to save the state $7 million this year and hundreds of millions of dollars over the next five years by steering the elderly away from nursing homes, redefining who is sick enough to be eligible for certain services and creating treatment networks for the people enrolled in this state and federal-financed medical program for the elderly, the disabled and the poor.

Not until last Friday, did the Carcieri administration acknowledge the extent of the company's role. A statement by the governor's office said: "The Lucas Group requested payments totaling $468,127 for services the company performed in assisting the state on the Global Medicaid Waiver and identifying significant savings initiatives and reforms."

"After several months of disagreement ... [and] intensive mediation facilitated by retired Associate Justice, Richard Israel ... the Office of the Governor agreed that even though no formal contract had been signed by the time the waiver was completed, the state did benefit, and payment to the Lucas Group is appropriate under the circumstances."
The agreement appears to have been signed on Thursday by both Alexander and Sasse.

Asked for comment Monday on Lynch's letter, Carcieri spokeswoman Kempe said: "We received the letter late this afternoon and reviewing it. We will respond to the Attorney General accordingly."