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Nassau rewrote bid requirements that favored current welfare-fraud investigators' contract

John Good, a retired FBI agent seen here

John Good, a retired FBI agent seen here in his Island Park home on Friday, July 24, 2015, alleges that a contract that his private investigations firm, LMGI Ltd., had bid on in 2012 was steered to a politically connected firm by the Nassau County Department of Social Services. Credit: Steve Pfost

Nassau's social services department rewrote bid requirements for a seven-figure contract to investigate welfare fraud, allowing the company already doing the work to stay on the job amid heavy competition, records show.

The changes to the county's 2012 request for proposals amounted to just a few sentences in an almost 16-page document, but narrowed qualifications in such a way to all but eliminate bidders other than the large Uniondale security firm that had long held the contract.

Summit Security Services, which retained the pact -- worth as much as $4.5 million over six years, including renewals -- was one of Long Island's top five employers of lobbyists in the year of the award, according to state filings. It has used former Sen. Alfonse D'Amato's Park Strategies for local governments and Empire Government Strategies, run by former Assemb. Arthur "Jerry" Kremer, for state-level matters.

Records obtained by Newsday show that the few changes made between the initial RFP and one issued months later benefitted Summit more than any other of the seven original bidders -- five of which chose not to respond to the revised RFP.

One change required that the supervisory investigator have membership in the New York State Welfare Fraud Investigators Association, a professional organization, for which Summit's supervisor on the contract was on the leadership board. The social services department said Summit's membership was one of its "strengths" as it evaluated bids to the reissued RFP.

Another change replaced required experience with a "government agency" with "local social services district" of the state.

Nassau social services officials deny steering the contract, and said they were not aware of any lobbyist contact for it. However, one competitor of Summit that submitted a lower bid for the revised RFP alleges that the department manipulated the process to help secure work for a politically connected company.

Actions called 'a farce'

"This thing, in my opinion, was a farce. They had who they wanted to pick before they even started," said John Good, who co-founded the Babylon investigations firm LMGI Ltd. "We were competitive. They kept changing the rules to get us out."

Good, 79, of Island Park, a former FBI agent, headed the famed Abscam sting. It resulted in the successful prosecution of high-ranking elected officials, including Sen. Harrison Williams of New Jersey, and congressmen on public corruption charges in the late 1970s and early 1980s.

He said his experience in Nassau bolstered his "lack of faith in the system" and helped lead to his retirement late last year. Though LMGI is far smaller than Summit, the two shared a state public fraud investigations contract for the state Office of Medicaid Inspector General and its staff would have been qualified, Good said.

"We had no connections," he said of his company, which employed roughly 15 people at the time of the Nassau County bid. "But that's the way it goes."

Executives of Summit Security, which describes itself as one of the largest private security and investigative companies in the nation, with more than 3,000 employees, did not respond to several requests for comment.

"By including an unduly restrictive specification, you're thwarting the goal of competition," said Richard Rector, an attorney with the Washington, D.C., law firm DLA Piper, who specializes in federal, state and local procurement issues. "You're not achieving full and open competition; you're channeling to a preferred vendor."

He noted narrowed bid requirements could just be "a reflection of the fact that the buying agency has a preference on what they want. It may not be that anyone is being paid off," said Rector. "But either way, it's improper in most cases."

A closer look at contracts

Recent months have brought increased scrutiny on how Nassau County awards its contracts.

In a July 9 report on the county's larger contracting process, acting Nassau District Attorney Madeline Singas said through the "artful drafting" of RFPs, "skilled actors can often find a way to exclude unwanted competition." She didn't cite specific contracts with the practice.

Singas' review came after federal prosecutors charged state Sen. Dean Skelos (R-Rockville Centre), the former Senate majority leader, and his son, Adam, with conspiracy, bribery and extortion, partly connected to a $12 million Nassau contract awarded to a company that employed Adam Skelos as a consultant.

Both have pleaded not guilty.

The company, AbTech Industries, submitted an unsolicited "conceptual proposal" to Nassau for storm-water treatment in late 2012. Nassau's storm-water treatment RFP, issued in early 2013, sought the kind of technology AbTech claimed to pioneer.

Newsday also reported in March that Nassau issued an RFP in 2013 for cleaning debris left in waters by superstorm Sandy and chose -- over firms that had years of experience -- a company that had been incorporated a month before the RFP was issued. That firm, VIP Splash Waterways Recovery Group, based in Island Park, included environmentalists who previously opposed the county on a large sewer privatization, but changed their position after receiving the $12 million storm-cleanup contract.

The same day that the contract was fully executed, VIP Splash donated $2,925 to the political club run by Rob Walker, the top aide of Nassau County Executive Edward Mangano.

The Mangano administration has not been accused of any wrongdoing. Spokesman Brian Nevin has said it "has the most transparent process known to government." Mangano earlier this month formed a new panel he said would independently review the contracting process.

For the social services contract, the cancellation of the original RFP was announced in a letter signed on behalf of department Commissioner John Imhof by his deputy, Paul Broderick. Mangano -- a Republican whose administration says it did not have a role in the changes -- has received $2,500 in political contributions from Summit and one of its executives since early 2012, according to the state Board of Elections. The company and its top leaders had contributed $26,500 to Mangano's Democratic predecessor, Thomas Suozzi.

Neither Good nor his firm have donated to a Nassau politician or party committee, state elections board records show.

RFP issued, then pulled

Social services officials issued their RFP for welfare fraud investigators on April 18, 2012. The next day, Mangano's office issued a news release that did not name Summit but touted the role of the social services department's investigations staff in uncovering "more than $175,000 in welfare fraud, waste and abuse."

Summit, which has provided welfare fraud investigators to Nassau since 2005 -- including the tenure of a smaller company that Summit had purchased in 2009 -- bid on the RFP along with LMGI and five other firms.

Records show four of the companies submitted lower daily rates for investigators than Summit. But before the department formally rated those proposals, it issued a letter in late June to cancel the RFP. "It has been determined that the department's needs are no longer adequately reflected by the RFP," stated the letter signed by Broderick for Imhof.

The new RFP was issued on Aug. 15, 2012. The next day, Mangano's office again issued a news release that did not name Summit but touted the success of social services investigations in 2012 in recovering $1 million in wrongly awarded assistance.

The new RFP was very similar to the first one, records show, with only a few new phrases. Contractors were now required to have five years of experience investigating fraud, and instead of it having to be with a "government agency," it became a state "local social services district, which is or has been a participant in the [state] Office of the Medicaid Inspector General County Demonstration Project."

This essentially disqualified firms that had not already had some kind of county level social services contract. The other key change narrowed Nassau's bidder requirements even further.

The contractor's supervisory investigator now needed to be "an active member" of the New York State Welfare Fraud Investigators Association. Summit's supervisory investigator on the Nassau contract, Michael Grennan, was then the association's second vice president.

"We amended the RFP because we realized the people who responded didn't have the expertise," Broderick said in a recent telephone interview. "Basically, we were trying to get the best value for the residents."

While the social services department's first RFP brought seven responses, the revision with the membership requirement brought two: Summit and Good's LMGI. The five companies that decided not to bid on the new RFP -- Allegiance Protection Group and Brosnan Risk Consultants, both of Manhattan; Insight Service Group of Danvers, Massachusetts; United Claims Service of Babylon; and Watch Guard 24/7 of Queens -- either declined to comment or didn't respond to requests for comment for this story.

Those firms didn't appear to have had ever received extensive county specific work, as required in the new county RFP. But LMGI said its staff of retired law enforcement officers had the relevant experience, citing a previous fraud investigations contract with the state Office of the Medicaid Inspector General that it shared with Summit.

It still lacked, however, the active association membership.

"That should have had no relevance at all," Good said, explaining why he did not have his investigators join the group because of the new requirement. "It's a fraternal organization."

County social services spokeswoman Karen Garber countered that the association "brings groups of fraud experts together, encourages collaboration between its members and shares techniques to root out fraud, waste and abuse." She said that neither Summit nor Grennan himself had input into requiring the membership of bidders.

"Because of [its] reputation and expertise of its members, it was determined that any vendor who wants to respond to the RFP be involved with this organization," Garber said in an email.

Association president John Melville said he did not know Nassau had put into its revised RFP that a supervising welfare fraud investigator be one of his group's roughly 250 members.

"I don't think we advocated for this in any way," said Melville, who works for Monroe County's human services department. "That county [Nassau] did that on their own."

A panel of social services employees reviewed Summit and LMGI's responses to the revised RFP, and in October 2012 recommended to the Mangano administration that Summit receive the two-year, $1.5 million contract. Two one-year renewals through 2015 have brought the contract's current value to $3 million -- with the potential for two more renewals that could add another $1.5 million to the pact.

LMGI Ltd. had submitted lower bids than Summit for investigators' daily pay: $255 versus $275 for the lowest level; $304 versus $350 for the second level; and $394 versus $445 for the supervisory level staff.

In picking Summit, the social services department called its cost "reasonable," and listed as two of its strengths that it already held the contract and that its supervisor belonged to the association. Imhof wrote to Mangano aides in October 2012 that the department "cannot afford lengthy transitioning to new staff unfamiliar with DSS requirements, programs, procedures and automated systems."

But Steven Kelman, a public management professor at Harvard University's Kennedy School of Government, said, "Bid specs should be developed in a way that are least-restrictive and most promote competition."

Summit, state records show, used two lobbyists, Park Strategies and Polsinelli Public Affairs, for contacting local governments during 2012, as it bid to retain its Nassau welfare fraud work. It also retained Empire Government Strategies that year to lobby state elected officials.

Park declined to comment about the nature of its local work for Summit. Polsinelli and Kremer, of Empire, did not return requests for comment.

A state database shows no record of LMGI hiring a lobbying firm since at least 2007.

Garber said Nassau's social services department "is unaware of any contact" from Park during the 2012 RFP process. A Mangano administration source said Park didn't contact it about Summit, but that lobbyists talked to county legislators in 2012.

State records show Summit in 2012 was one of the top Long Island companies in total lobbyist spending, with $204,352. In addition to its work in Nassau, the firm holds millions of dollars in security guard contracts with state agencies and colleges.

But Broderick said the social services department's only motivation was selecting the most-qualified company. "We didn't want to make an award to a company that had no experience whatsoever," he said.

Changes in the RFP

Key changes to the Nassau County Social Services Department's request for proposals for welfare fraud investigations:

Original RFP, April 2012: Contractors must possess "demonstrable successful experience investigating welfare fraud, waste and abuse for a government agency."

Revised RFP, August 2012: Contractors must possess "demonstrable (at least five years) of successful experience investigating welfare fraud, waste and abuse for a NYS local social services district (LSSD) which is or has been a participant in the NYS Office of the Medicaid Inspector General (OMIG) County Demonstration Project."

Original RFP, April 2012: "Level 3 Investigators will have a minimum of five (5) years of supervisory welfare fraud investigative experience with a government agency."

Revised RFP, August 2012: "Level 3 Investigators will have a minimum of five (5) years of supervisory welfare fraud investigative experience with an LSSD which is or has been a participant in the OMIG County Demonstration Project. The supervisory investigator must be an active member of the New York State Welfare Fraud Investigators Association (NYWFIA) and must possess an active Certified Welfare Fraud Investigator (CWFI) certificate through the United Council on Welfare Fraud (UCOWF)."

Source: Nassau County bid documents


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