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MaineHousing spent $7 million on two computer consultants

Investigations continue into fiscal mismanagement, lack of oversight

While the furor over inappropriate spending at the Maine State Housing Authority has faded, one large expense still stands out: $7.1 million has been paid over eight years to just two consultants for MaineHousing’s computer systems—and the systems are still not done.

The MaineHousing Board of Commissioners has authorized a forensic audit to determine if the $7.1 million was a legitimate expense.

With the media frenzy around the resignation of former MaineHousing executive director Dale McCormick and revelations in about inappropriate spending on travel, parties and a failed one-million-dollar “carbon credit” scheme, the MaineHousing board didn’t have time to look into all of the financial issues that came up.

But the hefty expense for computer systems leaped out at the commissioners, even before they became embroiled in the controversy over McCormick’s management of MaineHousing.

“Seven million dollars. That’s a lot of money—and it’s not done yet,” said Peter Anastos, chair of the MaineHousing board of commissioners. “We’re having a hard time figuring out where the money went.”

The board learned that MaineHousing has spent over $7 million since 2005 on two major computer systems, MERAC and ECOS. Most of that budget went to two vendors: John Joseph, principal of JAI Software in Hallowell, and Lynn Kinney of Kinney Consulting & Associates, an IT consultant.

According to its website, “JAI has successfully designed, developed, implemented and now maintains major software applications.” The only three JAI products listed on its website are MERAC, the Maine Energy Assistance and Conservation application used by MaineHousing; ECOS, the Energy Conservation Online System used by MaineHousing; and CARTS, the Community and Regional Transportation Services program that manages transportation services provided by the Kennebec Valley Community Action Program.

MERAC is a centralized application used by the MaineHousing to manage the Low Income Home Energy Assistance Program (LIHEAP).

ECOS is an application at MaineHousing that was designed to support the U.S. Department of Energy’s Low Income Weatherization Program. ECOS tracks the process from client selection and energy audit to final billing and monitoring of weatherization jobs.

“The U.S. Department of Energy has approved ECOS after an extensive review of the software and associated documentation,” according to the JAI website. “JAI prepared the documentation for this approval and assisted in fielding all technical questions from the U.S. DOE and their consultants.”

Lincoln Merrill, a MaineHousing commissioner who is president and CEO of Patriot Insurance Company, said his company, which is about the same size as MaineHousing, implemented a new, custom-built computer system that has to handle vast amounts of customer information and complicated policy data, plus it had to incorporate 10 years of information from another agency that Patriot acquired.

“We did ours for a million bucks,” he said. “They did theirs for $7 million. What in the world were they getting for that? It seemed like such a big number.”

Merrill said the commissioners knew they could not conduct an audit themselves. “We’re not experts,” Merrill said. “We don’t know what we got. We don’t know if the amount of money we paid was fair. I just know it’s a staggering amount of money for a computer system—which, by the way, still isn’t done.”

Although the computer systems work well and the staff seems to like them, the board was concerned about the high cost. “Did we pay three times more than we should have?” Merrill said.

Since he knew that MaineHousing was not always diligent in making contracts with clear costs and clear expectations, the high cost of the computer systems nagged at Merrill. “It could have allowed the opportunity for milking the system, letting projects drag on for too long or letting the expenses go too high,” he said. And the timeline for finishing the system was nebulous.

During the winter and spring of 2012, MaineHousing was caught up in a whirlwind of press coverage, after The Maine Wire revealed lavish spending on gift cards, staff parties, massages and luxury hotels, as well as millions of dollars spent on a failed “carbon credit” cap-and-trade scheme.

These reports led to questions from the Maine Senate and eventually a new law that gave the governor and legislature more oversight over the agency.

Amidst the turmoil and questions surrounding spending practices and management deficiencies at the agency, former executive director Dale McCormick resigned on March 20.

Since that time, the state’s Office of Program Evaluation & Government Accountability (OPEGA) and the U.S. Dept. of Housing and Urban Development (HUD) have initiated investigations of MSHA, and the board has been working to put financial controls in place.

The Inspector General of HUD has ruled that MaineHousing must pay back almost $200,000 because it paid for housing assistance in units in Norway, Maine that failed to meet HUD’s standards. The Inspector General found that MaineHousing did not have adequate oversight of its contractors or their inspectors for housing units, and it did not have effective internal quality controls for its own inspectors.

As a result, taxpayers paid at least $194,956 in housing assistance payments for tenants who were living in units that failed to meet quality standards. Maine taxpayers must now pay back that money. A new executive director has been hired to run MaineHousing, internal controls are being strengthened and the board is combing through the budget.

“But this big bogey remains out there,” Merrill said.

The commissioners voted to seek an outside consulting firm to audit how much work has been done on the computer systems and what payments have been made, to review contracts and documentation and to determine if MSHA got what it paid for.

“Did we or didn’t we get what we needed, and did we get it at a fair price?” Merrill said. “If we did, fine. It may be a staggering amount of money, but if an independent firm tells us that it’s a good deal, then all right. If they tell us we got hosed, then we’ll have some further discussions about it.”

Merrill said work on the computer systems started in 2005; as of June 2012, MaineHousing has spent over $7 million. “And it’s still not done,” he said. “The spigot has not turned off yet.”

Donald F. Capoldo Jr., a MaineHousing commissioner and executive director of Plant Memorial Home in Bath, said the commissioners agreed unanimously that they should get an outside firm to do the audit.

“None of us are qualified to ascertain whether $7million paid to two vendors over a eight-year period was appropriate,” he said. “The staff seems to really like the system. It is not complete. Should it be complete? Did we get what we paid for?”

Capoldo said MaineHousing has averaged over $800,000 on computer-systems spending for each of the past two years. “And annual invoice totals are going up, not down, after eight years,” he said.

During an audit meeting in May with Baker Newman Noyes, MaineHousing’s accounting firm, the board of commissioners learned that while $100,000 was budgeted for computer services last year, $800,000 was spent.

“That actually got the board pretty excited,” Merrill said. “You budgeted $100,000, but spent $800,000 in one year? Who’s in charge here? This is unbelievable. It makes you wonder, where does the money come from?”

Since IT and computer systems are such a specialized and unique field, Capoldo said the board of commissioners felt obligated to find an outside firm that is qualified to conduct the audit.

“What concerned me was how we paid for it,” Capoldo said. “There are grants available for paying for these types of computer expenses, and those same grants provide assistance to tenants. Fuel assistance was one. That was it for me. I run a charitable low-income housing program. The numbers were staggering, and if there was any possible way to do this cheaper, we may have been able to help more people.”

Both Capoldo and Merrill said this is not a partisan issue. When the board was first appointed, Merrill said none of the commissioners knew which party the others belonged to. Although Democrats and the press portrayed the investigations into MaineHousing as a Republican “witch hunt,” the board is concentrating on getting the financial house in order so they can focus on its core mission: helping people in need.

“I pray they find nothing wrong,” Capoldo said. “I hope it is found that the system is worth what we paid and that, in the long run, it will provide more opportunities to assist low-income families.”

Merrill agreed. “We need to focus on core mission, not trading carbon credits or providing dance lessons for recently released inmates,” he said. “We’re supposed to be providing safe and affordable housing to as many people as possible.”


2 Responses to “MaineHousing spent $7 million on two computer consultants”

  • Taxpaying fool:

    What the #%&#@*#$? Perfect example of democrats controlling the purse strings and screwing over the taxpayer! Its been going in for the last 40 years! They really look out for us dont they! Socialist thieves!

  • Forced User:

    Not sure but I think this is free, but if not its certainly not millions of dollars. But I don’t think it calculates carbon credits.

    The Weatherization Assistant is an energy audit software tool developed for the DOE Weatherization Assistance Program by the Oak Ridge National Laboratory. The Weatherization Assistant contains the National Energy Audit Tool (NEAT) for site-built single-family houses and the Manufactured Home Energy Audit (MHEA) for mobile homes. In addition, Version 8 of the Weatherization Assistant provides expanded optional capabilities that are useful in implementing and administering weatherization programs, including agency-related contact information, client data intake, recording of health and safety issues, recording of diagnostic measurements, work orders, status tracking, simplified cost accounting, inventory control, report generation, site mapping, and digital photo storage. The Weatherization Assistant Features provides a more detailed description of the Weatherization Assistant and the Update History identifies the improvements made in recent versions of the program. Click on one of the links above to download the Weatherization Assistant program, optional files needed to use the Graphic Information System (GIS), manuals for the Weatherization Assistant, and other support material. Assistance may be obtained from Contact and Support.

    The Weatherization Assistant is a family of easy-to-use but advanced computer audit software programs that select energy-efficiency retrofit measures for homes to be weatherized. The Weatherization Assistant is designed to assist states and local weatherization agencies implement the U.S. Department of Energy (DOE) Weatherization Assistance Program. It serves as the umbrella program for the National Energy Audit Tool (NEAT) and the Manufactured Home Energy Audit (MHEA).
    The Weatherization Assistant features a Windows graphical user interface. Data input is provided to the program through Microsoft Access® forms which can be used in either â??formâ?? view (data are displayed on forms which are filled in) or â??datasheetâ?? view (as would be seen in a spreadsheet application). All input and output data are stored in a relational database, enabling interaction with other management or financial database tools. Context-sensitive help is available for all input fields.
    In addition to serving as the umbrella program for NEAT and MHEA, the Weatherization Assistant (Version 8) provides many optional features that are useful in implementing and administering weatherization programs. These optional features include:
    â?¢ Extensive contact information for agency personnel, clients, contractors, and material suppliers;
    â?¢ Expanded client application information;
    â?¢ Recording of health and safety issues, with automatic generation of health and safety retrofit measures if desired;
    â?¢ Recording of space-heating system, water heater, and blower door diagnostic measurements;
    â?¢ Detailed work orders which can be generated either automatically from NEAT or MHEA recommendations or from user-defined listings of measures;
    â?¢ Status tracking of clients, applications, audits, work orders, inspections, and contractor payments;
    â?¢ Tracking of payments and balances in multiple funding sources;
    â?¢ An inventory of materials and supplies automatically updated by completed work orders;
    â?¢ Report generation;
    â?¢ A Geographic Information System (GIS) which allows mapping of each individual dwelling or any group of dwellings; and
    â?¢ Ability to attach digital photos to each client, audit, or work order.
    NEAT and MHEA
    NEAT is specifically designed for site-built single-family houses while MHEA is designed specifically for mobile homes. The unique construction characteristics of mobile homes require evaluating and installing measures specifically for such homes in order to obtain effective weatherization with high energy and dollar savings. NEAT and MHEA evaluate each home individually after taking into account local weather conditions, retrofit measure costs, fuel costs, and specific construction details of the home. After describing envelope components, heating and cooling systems, and base load equipment (e.g., refrigerators, water heaters, lighting), NEAT and MHEA produce a prioritized list of cost-effective weatherization measures customized for the dwelling being evaluated. The output includes estimates of the dollar value for the projected energy savings, savings-to-investment ratios (SIRs), installation costs, a list of the quantities of the major materials necessary to perform the recommended weatherization retrofits, and design heating and cooling loads needed to size any replacement equipment.
    NEAT was developed by the Oak Ridge National Laboratory. NEAT was formally introduced in the summer of 1993 and was already being used by local weatherization agencies throughout 20 states by 1994. During 1995, NEAT was used by approximately 500 local weatherization agencies in 30 states to make retrofit decisions for more than 80,000 low-income dwellings. Based on field tests in Wisconsin, New York, and North Carolina, NEAT has helped energy auditors improve average space-heating energy savings by 18 to 25% over standard measure selection methods.
    MHEA was originally developed by the National Renewable Energy Laboratory. Modifications and conversion to a Windows-based program were performed by the Oak Ridge National Laboratory, which now maintains and supports the software. MHEA stands apart from other building energy analysis tools in many ways. Input and calculations incorporated into the software address constructions unique to mobile homes such as bellied floors and bowstring roofs. The retrofit measures evaluated by MHEA are all applicable to mobile homes. Help messages describe

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