Lamont administration awards $4M worth of no-bid contracts to handle unemployment benefits; unions protest

The administration of Gov. Ned Lamont has invoked emergency powers to enter no-bid contracts totaling about $4 million with two private corporations to handle Pandemic Unemployment Assistance (PUA) applications and track benefits overpayments for the state Department of Labor — and state employee unions are blasting the move.

Union officials say that the administration is overusing the emergency powers that the legislature has granted the governor during the coronavirus pandemic.

“I fully support … no-bid contracting for PPE and other things that will save lives,” said Sal Luciano, president of the Connecticut AFL-CIO. “If it keeps someone from dying, who cares if a face mask costs an extra dime?”

But he said the state shouldn’t be privatizing administrative functions that aren’t life-and-death matters.

“We understand the governor has certain rights to exercise executive authority to protect people during the pandemic,” Luciano said. “But we don’t believe state agencies have the right to fast-track deals that will create a shadow government of private companies chasing profits at the public’s expense.”

By hiring the outside firms, Luciano said Friday that the administration is bypassing clean contracting safeguards and putting citizens’ personal information, including Social Security numbers and birth dates, in the hands of contractor employees who lack the same level of accountability as government workers.

Those contracted employees are even using state email addresses ending with “,” giving the misleading impression that they are government employees, he said.

“They’re not properly identified,” Luciano said. “It’s like they have a tin badge and are calling themselves a sheriff when they’re not.”

However, Deputy Labor Commissioner Daryle Dudzinski said the emergency contracts are urgently needed.

“Over the past six months, the CT Department of Labor has received 950,000 applications for unemployment benefits; this is more than six years of applications in six months. There is no doubt that we have to bring interim staff on board,” he said. “At the height of the pandemic, people were waiting for more than a month to hear back from us about their benefits — yet we struggled to keep up, even offering continued overtime opportunities to CTDOL staff that went unfilled.”

Dudzinski said labor department staffers have been “working very long hours and as much overtime as they could manage for six months, but the demand is beyond what we have ever experienced. We continue to have hundreds of thousands of weekly claims, new federal programs to implement, and economic recovery work going on with business and industry. For those who are unemployed or underemployed due to COVID, this is still very much a crisis in need of a solution.”

Multimillion-dollar pacts

The Lamont administration says it hired the two contractors in August under the authority of the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act for “emergency staffing as needed.” They are:

Protiviti, a subsidiary of the Robert Half International temporary staffing firm. It is “providing expert assistance to the agency’s Benefit Payment Control Unit — they are the unit that detects, prevents and responds to overpayments and fraud. The vendor works on the pre-determination side detecting possible overpayments, but they do not create final decisions — approval or denials, nor do they offer frontline customer service to claimants,” labor department spokeswoman Juliet Manalan said. The $4.6 million contract was signed Aug. 10 and was to run through next May 30, but Manalan said it will have to be terminated Dec. 31, when the CARES Act expires.

Maximus, a Virginia-based government services management consulting firm, which signed a contract Aug. 26 to handle PUA application intake. “Vendor staff is highly trained and assigned short-term project-based work to help clear the Pandemic Unemployment Assistance (PUA) application backlog,” Manalan said. The contract cost was originally negotiated at $2.8 million for six months, but “we will have to terminate the contract on Dec 31, 2020,” Manalan said.

The early termination of both contracts at year’s end would cut their combined cost from the original total of $7.4 million down to something more than $4 million.

The latter of the two contractors, Maximus, is a sore point with state employee unions, who point at a 1997 fiasco in which then-Gov. John Rowland’s administration hired the company to handle a program to help poor families pay for child care. The contract costs increased so drastically that state auditors said the experience should serve as a caution to agencies considering contracts with private vendors to provide state services. If the state mishandles things as it did in that $12.8 million arrangement, it “could face serious problems in terms of controlling its budget and the actual costs of providing a service,” the auditors wrote at the time.

The company also was involved in a security breach incident in 2014 involving its contract to run the phone call center at Access Health CT’s downtown Hartford office. A Maximus employee left a backpack containing a note pad with hundreds of names, birth dates and Social Security numbers of Access Health CT customers outside, in front of New York Deli & More, 240 Trumbull Street.

Somebody found it and turned it in to the House Republicans’ office at the state Capitol complex, but the House Republicans’ leader at the time, Rep. Larry Cafero said afterward: “This disturbing development highlights the concerns we raised three months ago during a hearing that we were afraid something like this might happen. We were told by Access Health CT overseers that … the security situation was in hand. Clearly, that was not the case.”

A letter to Lamont

Now similar warnings are coming not only from Luciano, but two other union officials whose organizations fall under the umbrella of the statewide AFL-CIO.

“Maximus has a long history of poaching safety net services throughout the country and in Connecticut, where it infamously bungled the distribution of child care benefits. … Handing [DOL client’s privileged] information to a private entity that we all know will cut corners to increase profits will only lead to additional problems for the agency in the long term,” Council 4 AFSCME Executive Director Jody Barr and Xavier Gordon, president of AFSCME labor department Local 269, wrote in a letter to Lamont in recent days.

Beyond what Barr wrote, he said in a statement that “we can’t think of a more reckless path to follow than to hire a company like Maximus without giving legislators and the Contracting Standards Board a heads-up or consulting with our front-line members at the Department of Labor. This contract must be terminated.”

The Contracting Standards Board was created after the 2004 corruption scandal surrounding Rowland to review contracts with outside vendors. Luciano, who is one of organized labor’s representatives on that watchdog board, said “the supposed savings” from the deal with Maximus, for example, are “nowhere near the 10% benchmark” that would be required for the board’s approval. But the Lamont administration bypassed the board, he said, and its members “never even had an opportunity to do a cost-benefit analysis.”

Manalan said the labor department “worked closely with the Office of Labor Relations, the Office of Policy and Management and the Department of Administrative Services to execute these contracts … quickly and get interim staff deployed to help mitigate the economic crisis caused by COVID. The governor’s executive orders ensured that due to the pandemic crisis, this assistance was expedited.”

Dudzinski, the deputy labor commissioner, said that “with the support of the governor and CARES Act funding, we were able to hire interim staff to assist us in handling an overwhelming workload. These staff are trained, experienced and can address complex unemployment claims issues — help for our customers and reinforcements for our permanent staff.”

Jon Lender is a reporter on The Courant’s investigative desk, with a focus on government and politics. Contact him at, 860-241-6524, or c/o The Hartford Courant, 285 Broad St., Hartford, CT 06115 and find him on Twitter@jonlender.


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