NEG report finds NHHC not in compliance with contract
Non-compliance by the Native Hawaiian Holding Company (NHHC) has been cited in the Final Summary Report for the National Emergency Grant (NEG) prepared by the Social Policy Research Associates based in Oakland, CA.
NHHC signed a contract with NEG to provide training and employment for the contact center industry for 900 NEG participants and authorized it to operate job placement and supportive services in a setting that would serve as part of the Workforce Investment Act (WIA) Workforce System.
Based on SPR’s working with the NEG program, a final set of recommendations have been made for consideration by DHR and territorial leaders, as they work to create new opportunities for American Samoan to work, learn, and build businesses that help their communities thrive.
The report summarizes the NHHC contract and program activities during the final phase of the NEG. “None of the proposals received were ultimately responsive to the request for proposals,” the report states. “Staff spent significant time negotiating program designs with the hope that they could combine different elements from the proposed approaches and forge new contractor partnerships.
“Eventually, all applicants withdrew their proposals and at the same time, NHHC contacted the program indicating that the company would have applied if it had seen the original Request for Proposal in advance of the deadline, and asked if a proposal could still be reviewed.”
The NEG program agreed to review a proposal submitted by NHHC, some level of due diligence was performed – in partnership with the American Samoa Procurement Office – to insure that NHHC had performed well on past similar contracts. This effort included an off-island visit by NEG staff and their University of Hawaii advisors and ASG procurement office staff to meet with NHHC officials (in San Diego, CA).
According to the report, the contract was signed with NHHC in February 2012 in the amount of $4,705,461 but start-up activities delayed the delivery of services to the public which did not begin until May 2012 (after SPR’s data collection activities intended to inform the program review were complete). Several job fairs organized during summer 2012 were successful and a one-stop center was opened during that same time.
However, staff were not receiving reporting and billing information in a complete, accurate, or timely way and began providing technical assistance to help the contractor (NHHC) comply with the terms of the contract.
The report points to a check issued to NHHC at beginning of the contract in the amount of $1,568,487 to support start up activities. NEG staff attempted to hold the second payment of $1,568,487 in July 2012 but the check was inadvertently issued and released by the ASG Treasury and by October 2012, several complaints were received by NEG participants about NHHC, at which point the program began a formal correspondence with NHHC about needed course corrections.
The report notes that NEG staff initiated weekly meetings with the contractor to address administrative and programmatic compliance issues and by November 2012, a series of demands, including a return of the second $1,568,487 payment, were made by the NEG program to NHHC and an outline of the consequences of non-compliance was provided.
The report further states that the “heated correspondence” continued until March 2013, when the NEG program was informed that Mr. Quin Rudin – Executive Vice President of NHHC, signatory to NEG contracts, and NHHC’s NEG project manager and primary point of contact – had been indicted and was in prison awaiting trial for fraud involving Cisco Systems, among other firms.
“The NEG program promptly denied the NHHC contract extension, refused the final payment, launched an effort to mitigate the negative effects on the program and participants, and requested a formal investigation from both the American Samoa Attorney General and the US Department of Labor. Such an investigation was subsequently initiated and is still ongoing.”
To date, Department of Human Resources director Sonny Thompson is holding off on making the last payment of $1.5million to NHHC citing “questionable costs and failure to comply with conditions of the contract” for the $3 million that was already paid out. This Final Summary of NEG Project Findings and Report was sent to Thompson last month and Governor Lolo Matalasi Moliga has been briefed.
In 2009, American Samoa received a $25 million NEG from the USDOL to help the territory recover from the Sept. 29 tsunami and DHR was charged with planning and implementing the NEG program, which was comprised of two phases - the first being the employment of 2,361 people for clean-up and recovery activities through June 2010.
The second phase required a workforce development strategy aimed at helping those who had lost jobs or income in connection with the tsunami, to transition to new jobs, launch new enterprises, or enroll in training that prepared them for new careers.
The government reached out to Social Policy Research in Spring of 2012 to conduct a review of the NEG program, which was extended through June 2013. After the initial review was complete, SPR was further commissioned for additional technical assistance in connection with a challenging contract and first-time contractor.
The report states that the NEG program was new to DHR and to the territory which had little experience managing a workforce program and no Department of Labor with an existing infrastructure from which to build. It presented opportunities to use new tools and technologies and work with data that might also be useful to existing programs, such as the Workforce Investment Act or Summer Youth Employment programs which is also managed by DHR.
SPR’s Technical Assistance program review occurred during the summer of 2012 and included program and performance data through August 2012, which was extended to December 2012 and then, using a series of smaller extensions, through June 2013. During the extension period, SPR were engaged by the program to provide technical assistance pursuant to a “troubled contract” with Native Hawaiian Holding Company (NHHC), the primary contractor responsible for delivering the final phase of the program.
The report recommended process improvements that could help the territory improve its operational capacity, avoiding or mitigating the negative effects or challenges like those posed by the NHHC contract in the future.
Samoa News will report on the second part of the NEG Final Report in later editions.
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