Eastern Kentucky Lawmaker, Keith Hall, Helped Appropriate Funds For Local Projects, Then His Company Won NO Bid Contracts For Them. Go Figure!

State audit says lawmaker avoided bidding, won project
By John Cheves

A company owned by state Rep. Keith Hall, D-Phelps, collected more than $171,000 for electrical work from Mountain Water District in Pike County using a billing method that avoided competitive bidding and public discussion by the district board, State Auditor Crit Luallen said Thursday.

As the area's state representative and a member of the House Appropriations Committee, Hall also helped to allocate state funds specifically for the project he later won, Luallen said. The work was done in 2004 and 2005.

"What we've learned raises the concern that there was a deliberate attempt to keep this from being competitively bid and to keep this from being reported to the water district board, all so it could be directed to one particular individual," Luallen said.

On Thursday, Luallen's office released an audit critical of Mountain Water District, which provides water and sewer service to unincorporated parts of Pike County, and its ties to Utility Management Group, which has been paid more than $36 million since 2005 to privately manage the utility.

Luallen said she is referring the entire audit to Attorney General Jack Conway and the Public Service Commission for possible action. The section of the audit concerning Hall also has been referred to the Legislative Ethics Commission, she said.

Hall did not immediately return calls Thursday seeking comment.

Hall was elected to the Kentucky House in 2000. His company, B.M.M. Inc., previously was awarded at least $3.2 million in sewer line projects by the water district. As a lawmaker, Hall helped the water district get millions in state funds for sewer line projects in his area, which presents a conflict of interest for him, a government ethics watchdog said in 2009.

Change orders had driven up the final cost of Hall's sewer line projects by an average of 58 percent by 2009, when the Herald-Leader first reported on them.

Luallen said her staff reviewed Hall's sewer line projects and determined that they at least were bid and reported to the water district board, so auditors did not pursue them further.

By contrast, she said, Hall skipped the competitive bidding process for the electrical work necessary to connect 670 homes to sewer lines, usually charging $300 a home.

In fact, she said, the water district twice invited Hall's B.M.M. and other area companies to submit bids for the electrical work. The lowest bid was $275 a home. B.M.M. did not submit a bid either time.

"On July 26, 2004, B.M.M. submitted the first invoice for the electrical work on the project," auditors wrote in their report. "There are no records to explain why the vendors that responded to the bids were rejected or how B.M.M. eventually was selected to perform the work."

Auditors' interviews with Hall and water district officials indicate that Hall worked strictly with the district's then-superintendent, Will Brown, Luallen said. Brown refused to speak to auditors, citing litigation that he was involved in after leaving his job at the water district, she said.

Hall told auditors that Brown instructed him to submit invoices for his electrical work in increments of less than $20,000, which was the district's "small purchase authority limit." Anything below $20,000 did not have to be competitively bid or reported to the district board, Hall said.

Of Hall's 10 invoices in 2004 and 2005, six were for $19,800 or more, barely below the limit.

"Some of these invoices were splitting up work done on the same day just to keep the final price under $20,000," Luallen said.

On Thursday, Mountain Water District board chairwoman Rhonda James said she was appointed in 2008, after the period of Hall's work discussed in the audit.

"From what I can see, the board was never aware — there was nothing divulged to the board about any of that. That was all between our superintendent at the time and Mr. Hall," James said.

As long as Hall publicly bids for projects, the water district sees no reason he should not be allowed to perform work, James said. Hall's company currently is working on a long-term sewer project in the Phelps area, where Hall lives, she said. She did not know the cost.

Read more: http://www.kentucky.com/2011/01/27/1613728/state-audit-says-lawmaker-avoided.html#more#ixzz1CGZeIZ78