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Maryland probing treatment of firm
Sparked by questions regarding the legitimacy of a firm headed by a Republican stalwart, the State Prosecutor's Office has launched an investigation into the firm's certification as a minority business and its selection as a subcontractor on a $110 million state contract.
The firm, which had its application for certification as a minority business fast-tracked, was created by GOP strategist Carol L. Hirschburg and three other women, all of whom have ties to a non-minority firm, Syscom Inc. of Baltimore.The State Prosecutor's Office began looking at Hirschburg's firm after The Sun examined whether it received preferential treatment during the Ehrlich administration.
Investigators interviewed several employees in the Maryland Department of Human Resources' procurement office Thursday and have also requested documents related to the bidding of the contract, DHR spokeswoman Elyn Garrett Jones said yesterday.
In 2005, Hirschburg's hastily formed firm, Isis Technology Consulting LLC, was fast-tracked for certification as a minority business by the Maryland Department of Transportation, the agency that oversees the the Minority Business Enterprise program.
Yesterday, a spokesperson for the Transportation Department said that the State Prosecutor's Office had requested documents related to Isis' certification as a minority business.
As a result of questions raised by The Sun concerning Isis, state Transportation Secretary John D. Porcari has ordered an audit of all applications that were fast-tracked in recent years.
In addition, Gov. Martin O'Malley has requested a thorough review of the minority business program and Comptroller Peter Franchot has asked that Porcari's staff examine all contracts executed by the agency in the last year of the Republican administration of Gov. Robert L. Ehrlich Jr.
DHR is the state agency that oversees food stamp payments, foster care and other social services. Jones said the agency is "working diligently"with the state prosecutor.
The names of the DHR employees who were interviewed were not released, but Jones confirmed that they had knowledge of the $110 million technology contract, from scope development to approval by the state Board of Public Works in June.
The chief investigator for the State Prosecutor's office, James I. Cabezas, declined to comment.
Many of those connected to the DHR contract, including the three women who started Isis with Hirschburg, have declined to comment about their experience.
Hirschburg has acknowledged that Isis' MBE application was rushed through but maintains that she did not receive special treatment and that nothing improper occurred.
She and her partners, including the wives of two Syscom executives and Syscom's vice president for human resources, left the DHR project when they failed to negotiate the deal they wanted - roughly $12 million over three years.
Kirk A. Grothe, the former head of DHR's office of technology, has also declined to discuss the contract. He is now employed by the state retirement agency.
A firm run by Grothe's former business partners, the Canton Group, was added to the DHR contract following a January 2006 pre-bid meeting between state officials and representatives of prime contractor ACS State and Local Solutions Inc.
At that meeting, Ehrlich loyalist Gregory J. Maddalone, a former ice dancer who worked on Ehrlich's 2002 campaign and later held administrative positions in several state agencies, questioned ACS about Isis, saying he wanted to make sure Isis was going to do "actual work" and that it would not be used to pass money through to another business.
Also in attendance, according to a transcript obtained by the newspaper, was Drex Ryberg, who headed Ehrlich's 2002 campaign in Frederick County. At the time, Ryberg was working as deputy chief information officer at the state department of the environment. He has since moved to DHR's office of technology to a position that allows him to oversee and manage contracts, including the one he reviewed at the January 2006 pre-bid meeting, according to Jones.
There were a total of five people on the review team, but Jones said she could not name the others because such information is confidential.
Maddalone and Ryberg were listed in the transcript as participants at the pre-bid meeting but no other members are noted. Members of the review team were either selected by Grothe, volunteers, or industry experts. Jones said only Grothe knows exactly how the five members were selected.
Six months after the meeting, which was held at the welfare agency's downtown Baltimore offices, Grothe's old firm, the Canton Group, also a certified minority business, was added to the contract, as was another minority firm, Gantech Inc. of Silver Spring.
A Canton Group official, Ethan Kazi, has defended the firm's inclusion on the technology contract.
He said that he and his brother, Aaron Kazi, bought Grothe out of his share in the business when Grothe joined DHR in 2004.
Ethan Kazi said his firm had worked with DHR before Grothe moved to the welfare agency and that ACS selected the Canton Group because of its expertise, not due to any pressure from Grothe or Maddalone. Maddalone and Aaron Kazi worked on Ehrlich's 2002 campaign.
DHR records show that since July 1, the contract's start date, the prime contractor has paid the Canton Group $643,443.