An Ehrlich administration loyalist questioned the legitimacy of a firm headed by GOP strategist Carol L. Hirschburg during a pre-bid session held before the firm's inclusion in a $110 million technology contract with the Maryland Department of Human Resources, according to a transcript of the meeting obtained by The Sun.
During the January 2006 meeting, former state transportation administrator Gregory J. Maddalone asked whether Hirschburg's firm would perform "actual work" or merely function as a shell "to funnel [money] through.""Why did you choose to submit them?" Maddalone asked representatives of prime contractor ACS State and Local Solutions Inc., referring to Hirschburg and her partners' firm, Isis Technology Consulting LLC. "Was there no other women-owned [firm] that you could utilize?"
Maddalone is a former professional ice dancer who held several positions in the administration of former Gov. Robert L. Ehrlich Jr. Maddalone also formed a short-lived business with Ehrlich operative Joseph Steffen.
Hirschburg's firm was hastily formed and its application for certification as a woman-owned business was fast-tracked by state officials. In a recent interview, Hirschburg acknowledged that the application was rushed through, but she maintained that she did not receive special treatment and that nothing improper occurred.
During the pre-bid meeting, Maddalone questioned the qualifications of Hirschburg's firm, the transcript shows, but he failed to mention his ties to another minority firm, the Canton Group, which eventually won a spot on the technology contract.
Questions about Hirschburg's fast-tracking experience -- her firm was one of several hundred fast-tracked in recent years -- resulted in an audit of such applications by the Maryland Department of Transportation, which oversees the state's Minority Business Enterprise program. Transportation Secretary John D. Porcari has said he wants to make sure no one is getting special treatment.
Hirschburg, who left the DHR project this year after she failed to negotiate the terms she wanted with ACS, pulled Isis out of the minority business program March 1, the day The Sun ran an article detailing her efforts to secure a $12 million piece of the contract.
Even so, state records show that Isis, a technology recruiting firm, was paid $150,046, including $7,792.56 last month. According to ACS, Isis took on two existing contract employees at DHR, which required no recruitment.
Hirschburg has repeatedly declined to expound on her experiences at DHR, but a transcript of the January 2006 pre-bid meeting, which documents Maddalone's rapid-fire questioning, sheds new light on the contract saga, as do Maddalone's connections to the Canton Group.
Maddalone worked with Aaron Kazi, a partner at the Canton Group, on Ehrlich's 2002 political campaign. Not long after, Maddalone and Steffen formed a business called MadJoe Enterprises. Steffen, who resigned from his state job in 2005 after he admitted spreading rumors about then-Baltimore Mayor Martin O'Malley's marriage, worked as a consultant on Kazi's campaign for Harford County Council president last year.
Kazi also has ties to the former head of DHR's information technology office, Kirk Grothe, who was a partner at the Canton Group with Kazi before he took the state job in 2004.
Turhan Robinson, an assistant attorney general who works at DHR and monitors contract negotiations, said he was aware of Grothe's ties to the Canton Group -- the state inspector general's office twice reviewed allegations that Grothe had sent Kazi work and dismissed the allegations as groundless both times -- but said he was unaware of Maddalone's connection to Kazi.
Robinson said he carefully briefed Maddalone before he joined the review team -- members of which were either selected by Grothe, joined as volunteers, or were added because of their expertise. Review teams typically consist of three to five members, Robinson said.
The DHR attorney said Maddalone signed a statement in which he promised to recuse himself if he had a conflict of interest.
"I take that document at face value," said Robinson, who added that if he found evidence of collusion he would take it to the attorney general's criminal investigation unit. "I would be very irritated," he said.
Maddalone did not return telephone calls and Grothe, who recently left DHR for a job at the state retirement agency, declined to comment.
A spokesman for Kazi, his brother and business partner, Ethan Kazi, said the brothers didn't know that Maddalone was on the review team. Ethan Kazi said the Canton Group worked as a minority subcontractor at DHR before Grothe's arrival, and that the prime contractor, ACS, asked the Canton Group to participate on the technology contract because of the firm's expertise.
Ethan Kazi said Grothe was bought out of his portion of the firm when he joined DHR.
Ethan Kazi provided The Sun with a copy of a Sept. 22, 2005, letter from the State Ethics Commission that cleared the way for the firm to bid on DHR contracts. The letter, from General Counsel Robert A. Hahn, stated that as long as Grothe had no financial interest in the Canton Group, the firm could bid on DHR jobs.
A spokesman for ACS said the firm has worked with the Canton Group since 2003, and that there was no pressure to use the Baltimore company on the DHR project. "They are a very reliable partner, with broad experience and a proven track record of success," ACS spokesman David Shapiro said of the Canton Group.
At the pre-bid meeting last year, it was Isis' track record, or lack thereof, that interested Maddalone.
Hirschburg started the firm in 2005 with three other women, all of whom have direct ties to Syscom, a nonminority firm that has worked for more than a decade at DHR. Isis' top investor is Dr. Joseline Bayer, the wife of Syscom founder Theodore Bayer. The firm's secretary, Victoria Anzmann, is married to Syscom executive Mark Anzmann, and its vice president and treasurer, Verna Willes, is Syscom's human resources chief.
In January 2006, Isis was one of two minority firms that ACS wanted to use to meet the state's 35 percent minority participation goal. The other firm, Maricom Systems Inc., which is headed by an African-American, is still on the contract today.
During the meeting, Maddalone, who has since left his job at the transportation agency, raised doubts about Isis' ability to get the job done.
"I think what we're looking for is ... what type of previous work experience has this company provided ... that would ensure that [the state] is getting exactly what it needs," Maddalone asked ACS official Christopher J. Merdon, a former Republican Howard County councilman who knows Hirschburg from political circles and played a role in bringing her firm to the bid.
At that point, Isis was set to split with Maricom about a $91 million portion of the contract over five years for providing IT recruitment and other services, according to DHR officials. The contract was eventually scaled back to three years and the total price tag reduced to $110 million at the request of federal partners, officials said.
Maddalone -- who referred to Isis' large chunk of the contract more than once during the meeting -- said he wanted to be sure that "we're not just using this [firm] ... to funnel [money] through."
ACS officials told Maddalone they wanted to mentor Isis, but Maddalone kept probing. Near the end of the meeting, after a series of questions about Isis, Merdon states that ACS would be "happy to revisit" minority participation.
About six months later, when the contract between ACS and the state was approved by the state Board of Public Works, the Canton Group, as well as another minority firm, Gantech Inc. of Silver Spring, were added to the list of minority firms with Maricom and Isis.
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