The Miami Herald

Connected company muscled state agency out of Internet contract

In 2009, with more than a quarter of all Floridians without broadband access to the Internet at home, state officials lined up to get some of the $7 billion in federal stimulus money to finance state-based programs to increase access.

Enter Connected Nation, a little known but well connected Washington-based company. It won the Florida contract to use $2.5 million to map the broadband gaps for use by policy makers and telecommunications companies.

A year later, when the state won a second grant for $6.3 million to extend the broadband efforts, Connected Nation, a non-profit company, believed it had signed up to be part of a public-private partnership with the state that entitled the firm to a no-bid shot at that money too. But the Department of Management Services, the state agency that housed the project, disagreed.

DMS said the grant requires it to use some of the money to pay for three more years of broadband mapping and the rest to expand broadband access in libraries and schools. DMS hired eight contract employees to handle administration and provide services, paying them between $72,000 and $140,000 a year until the grant ends in 2014, and defended it as an efficient use of state funds.

That began a bitter feud between Connected Nation and DMS, an agency with a lengthy history of distrust among state budget leaders. In an audacious display of lobbying clout, Connected Nation got the Legislature to force DMS off the contract and steer the second grant to the firm.

Now, the broadband mapping contract negotiations are behind schedule; the federal government has warned the state that it could lose what’s left of the grant and Florida’s broadband expansion efforts lag behind many other states.

“It’s distracted and kept us from doing as much as we might have done,’’ said Bill Price, director of Broadband Services for the state.

Brian Mefford, CEO of Connected Nation, defends his company’s efforts in Florida. “We believe in what we do and we stand behind our record of creating value for taxpayers and citizens,’’ he said.

Connected Nation has created the model for getting federal funds — winning broadband mapping contracts in 13 states. The projects are part of a $350 million federal grant to map landline and wireless services throughout the nation by collecting information from existing Internet providers and other sources. Because much of this information is competitive, many states have hired non-governmental third-parties to shield the data from public records laws so that more companies would be encouraged to share accurate information.

But Connected Nation’s officers say its broader goal is really to increase broadband usage — the same goal shared by many of its telecommunications partners such as Verizon, Comcast and AT&T.

SOME SETBACKS

Despite Connected Nation’s vast experience identifying state broadband holes, its record in Florida has not been error free. After repeated performance problems, DMS officials decided last year that they would not renew the broadband contract with Connected Nation when it expired in December and would seek new bids.

Meanwhile, Connected Nation sent its lobbying team to get the governor’s office to order DMS to halt the contract process until the program could be moved to another agency. The company then persuaded the Legislature to transfer the program to the new Department of Economic Opportunity, and the governor signed the bill authorizing the move.

Marc Slager, deputy chief of staff for Gov. Rick Scott, acknowledged he told DMS to stand down during the legislative debate. “They had already expressed their opinion and the facts of the bill and the Legislature was looking to move it to DEO,’’ he said. “We don’t need to have different people from the governor’s agencies advocating an issue.”

Now the broadband mapping duties have been temporarily handed over to the Tampa Bay Regional Planning Commission until the bidding process is complete. Connected Nation emerged as a finalist in the new bidding process, having nearly cut its price in half.

Meanwhile, Connected Nation blasted DMS and argued that the failure of the agency to steer the expanded project to them was an affront to the job-creation aims of the governor and belied the economic-development goals of 2009 legislation sponsored by Sen. Mike Haridopolos and Rep. Will Weatherford.

DMS vigorously disagreed. The contract with Connected Nation includes “no mention of a public-private partnership, nor does it define what a public-private partnership would be,’’ wrote Price, director of Broadband Services for the state in a letter to the U.S. Department of Commerce disputing the company’s claim to the grant. He is the highest paid of the temporary employees, making $140,000 a year with no benefits.

Connected Nation’s promise to create jobs in Florida also fell short. Mefford acknowledged the company did not hire anyone in Florida, but blamed it on the agency. “We didn’t go out and hire a bunch of staff because our initial relationship with DMS was scaled back so dramatically,’’ he said.

The allegation that DMS was hiring contract employees to do work that Connected Nation wanted to do was enough to persuade the Legislature’s budget staff in 2010 and 2011 to deny DMS the ability to spend the grant money.

LEGISLATIVE BATTLE

At one point, Connected Nation’s lobbyists even rewrote a budget amendment to allow it to capture the second federal grant, inserting Connected Nation as the recipient of the grant award

“Attached is a document that reflects conversations we’ve had with Chairman Weatherford, the draft language is consistent with the bill, and it is language we believe the [Legislative Budget Commission] would approve,” wrote Alli Liby-Schoonover, from Connected Nation’s lobbying firm, Cardenas Partners, in February 2011.

Documents also show that in a testy meeting in March 2011, between Connected Nation officials and the top executives at DMS , the company’s lobbyist, Slater Bayliss, warned if DMS didn’t accept the language, the company would go to the Legislature and get them to move the contract to another agency.

Mefford said the reason the company wrote the budget amendment was because DMS had been rejected twice by legislative budget staffers and DMS “they came to us and said we need you.’’

Price, the state broadband director, denies that was ever the case. “We were completely shocked because they rewrote it to take the money for themselves. The only role they had in the project was the mapping of the contract funding.”

DMS rejected the language and the Legislature finally agreed to allow DMS to spend the second grant, but only after imposing a 10 percent cap on administrative costs, or about $250,000 a year for the 2011-12 fiscal year.

This year, Connected Nation followed through on its threat and persuaded the Legislature to move the contract. Rep. Doug Holder, the Sarasota Republican who sponsored the bill to shift the agency, said he got involved at lobbyist Bayliss’ request because he believed DMS was unnecessarily expanding government.

“The idea of a government agency taking a program that could be administered by a private entity that could create revenue in the private sector was wrong,” he said.

Even if it meant no new jobs? “If Connected Nation is not going to be creating jobs for Florida then maybe we should we think about whether they should or should not get the contract,’’ he said.

In the end, the federal agency that delivers the grants will have the final say.

Anne Neville, director of the State Broadband Initiative in the U.S. Department of Commerce, warned in a December 2011 email that calling the project economic development won’t be enough. “…Economic development by itself is not a grant use,’’ she wrote. “It is an amorphous term that would need significant description for us to determine whether it met the [state broadband] requirements as provided in legislation.”

More important, she added, would be any change “so significant that it would repurpose the funds.” If that happens, she said, the grant would be canceled “and sent back to the treasury.”

Mary Ellen Klas can be reached at meklas@MiamiHerald.com and on Twitter @MaryEllenKlas




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