State calls for rebid of $11.4 million workforce training grant

The Bluegrass Area Development District building at 699 Perimeter Dr. in Lexington, Ky., on Monday, March 8, 2014.
The Bluegrass Area Development District building at 699 Perimeter Dr. in Lexington, Ky., on Monday, March 8, 2014. Herald-Leader Staff

The head of the state Education and Workforce Development Cabinet wants a group of elected officials to rebid an up to $11.4 million workforce training grant awarded to the Bluegrass Area Development District in early January.

In a letter dated Wednesday, Cabinet Education and Workforce Development Secretary Hal Heiner said information Bluegrass provided to the locally elected officials about its 2014 state auditor examination and investigations by two state agencies was “incomplete and inaccurate.”

Bluegrass was one of three bidders for the federal grant that provides training for under-employed and unemployed workers in the 17-county region that includes Fayette County. In addition to Heiner, one of the two other bidders has also raised questions about how the contract was awarded to the regional planning agency.

Community Action of Kentucky filed a challenge Wednesday to the awarding of the contract to Bluegrass. Community Action of Kentucky asked that Bluegrass be disqualified as a bidder because of conflicts of interest and Bluegrass’s prior poor audits.

Bluegrass represented to those that scored the bid that all issues that were part of a 2014 examination by former State Auditor Adam Edelen have been corrected and resolved. “The cabinet does not agree with this statement,” Heiner said in his letter. “The eight findings of the (examination) have not been resolved.”

The 2014 examination found the district’s relationship with the workforce board was rife with conflicts of interest. After that audit, the state created a competitive bidding process to administer workforce grants. In addition, the education cabinet and the Kentucky Department of Aging and Independent Living conducted subsequent audits and found $2.8 million in questionable costs between 2010 and 2013.

Heiner said Bluegrass also only provided one copy of the state auditor examination and the corrective action plan instead of providing copies to all of the bid reviewers. It also did not make the bid reviewers aware that there has also been an investigation by the Kentucky Department of Aging and Independent Living concerning federal and state aging money Bluegrass received to provide aging services.

Heiner said considering the omissions and possible inaccuracies, it is “recommended that a new request for proposal process be initiated and reopened for bids.”

A request for proposals to administer the grant said it involves $11.4 million to be distributed from Dec. 2015 to Sept. 30, 2017, but that figure also includes carry-over funds from 2014 and 2015. In its bid, Bluegrass said it expects to spend about $4.8 million of the grant in 2016.

David Duttlinger, the executive director of Bluegrass, said Bluegrass complied with the requirements of the bid request and was not trying to hide anything to those that scored the bid. Duttlinger said only two outstanding issues from the state audit are still unresolved. Duttlinger said the request for proposal for the grant also only required one copy of the audit be provided.

Duttlinger said Bluegrass provided the corrective action plan. But Heiner’s letter said Bluegrass did not provide a full status report on completed corrective actions, which was required under the bid.

Heiner’s letter was sent to the co-chief elected officials — Mayor Jim Gray and Boyle County Judge Executive Harold McKinney. A group of 17 locally elected officials award the workforce contract.

McKinney and Gray said Thursday they would take Heiner’s letter under review. Gray was the only locally elected official to vote against awarding Bluegrass the contract at a meeting on Jan. 7.

“The secretary has expressed concern with the RFP process that in my view needs to be addressed,” Gray said. “I have not had a chance to discuss this with Judge McKinney.”

McKinney said Thursday he will take Heiner’s suggestion under review.

“I will have to look at it and consider it,” McKinney said. “I’ll also have to get some advice from our legal counsel. We are going to do the right thing.”

Community Action of Kentucky filed its bid protest Wednesday with McKinney, Gray, the Education and Workforce Development Cabinet, the state Finance and Administration Cabinet as well as the U.S. Department of Labor.

Anna Whites, a lawyer for Community Action of Kentucky, said the Frankfort nonprofit will pursue the bid challenge in the courts if it has to.

In its bid protest, Community Action asks that Bluegrass be found ineligible as a bidder because it failed to file a letter of intent to bid on the grant, and there were conflicts of interest between the locally elected officials and Bluegrass. Bluegrass also had a previous audit that showed problems with the way it handled federal funding.

Duttlinger has said although the 17 locally elected officials who voted to award the contract to Bluegrass are on the Bluegrass board they are not the majority of the board, which has 72 members. Those elected officials are the majority of the executive committee of the Bluegrass board.

Moreover, since the 2014 examination, the board has made changes so one person can not be the chairman of the Bluegrass board and be the chief elected official. Previously, the chairperson of the Bluegrass board, which includes the top elected official in all 17 counties, selected Bluegrass to administer the grant without seeking bids. Now, there’s a competitive bidding process, and elected officials from the counties vote on the contract.

“The reason why there is no conflict of interest is because it’s no longer possible for the Bluegrass ADD chair to be the chief elected official over workforce,” Duttlinger has said.

Beth Musgrave: 859-231-3205, @HLCityhall