Long Island News
Report questions LIPA consultant deals
ALBANY, N.Y. -- Federal prosecutors should examine the relationship between the Long Island Power Authority and a consultant, a state commission tasked with overseeing how New York utilities responded to Superstorm Sandy said Saturday.
The Moreland Commission, created by Gov. Andrew Cuomo just weeks after the October storm, issued its final report after reviewing more than 175,000 documents, holding 10 hearings, and interviewing more than 90 stakeholders and witnesses.
The report detailed what it called "questionable billing and reimbursement practices" between LIPA and Chicago-based Navigant Consulting Inc.
"Our extensive investigation uncovered breathtaking waste and inefficiency at LIPA that helped jack up rates for Long Island families," Benjamin Lawsky, the commission's co-chairman, said in a statement.
The commission also was critical of the utility in a previous report, saying LIPA was unprepared for Superstorm Sandy, then inept in its response, leaving many of its 1.1 million customers without power for as long as 21 days.
LIPA did not return email and phone requests seeking comment Saturday night. A message was left for the U.S. attorney's spokesman for the Eastern District of New York.
The latest report found that of the $43.4 million LIPA contracted to consultants for general consulting and engineering services between 2008 and 2011, $28 million went to Navigant - where dozens of consultants billed between $300 and $500 per hour, not including expenses. Some Navigant consultants billed more than 2,000 hours per year, including one who billed more than $4.5 million between 2008 and 2011.
The report also found that many of the consultants, some of whom were based out of state, racked up "significant" travel-related expenses, including one November 2007 reimbursement for $6,815.30 for an 11-day hotel stay in New York City, the same as $542 per day. Current state guidelines cap lodging at $295 for Manhattan stays.
"After the Commission discovered the questionable billing and reimbursement practices and was advised by a witness that there was no auditing of the practices, there was a concern that if the practices were connected they may rise to a scheme to defraud," the report said. "Once that threshold was met, the Commission found that further external investigation was warranted to determine if other Navigant consultants followed similar practices."
A Navigant spokeswoman did not respond to an email request for comment Saturday.
The report also identified possible revolving-door conflicts between Navigant and LIPA.
Michael Hervey, a former LIPA chief operating officer and acting chief executive officer, left the utility in December 2012 and went to work for Navigant in January 2013 as an energy consultant director. In 2010, he signed a $23 million contract that extended Navigant's utility contracting services with LIPA for five years, the report said.
"While it is unknown whether Hervey is currently conducting business for Navigant on behalf of LIPA, the mere fact that Hervey previously approved a government contract with the very company that now employs him is of concern," the report said.
Hervey did not return an email request for comment.
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