Senators Grill Company Overseeing Educational Grants

Sen. Kenneth L. Gittens

Government officials said they didn’t trust Bazilio Cobb Associates, a fiduciary agent contracted to manage the U.S. Department of Education grants for the Virgin Islands Department of Education, with one lawmaker accusing the company of “milking” the USVI for millions of dollars.

After the territorial government finished a three-year compliance agreement with the U.S. Department of Education, during which they were responsible for developing solutions to problems the territory was experiencing in managing grant funds, the U.S. Department of Education found the V.I. government failed to meet the terms and imposed special conditions. One of those conditions was that the V.I. government had to contract a third-party fiduciary agent in order to be eligible to receive certain federal grant funds.

Bazilio Cobb Associates was contracted 10 years ago and still maintains its role as overseers of all U.S. Department of Education grants for programs managed by the local Department of Education and the Virgin Islands Department of Human Services.

“You guys have failed the Virgin Islands miserably,” Sen. Kenneth Gittens said during Tuesday’s Committee on Education and Workforce Development meeting. He urged his fellow senators to look at who they are doing business with and told Ralph Bazilio, CEO of Bazilio Cobb Associates, “All you guys are doing is milking us for millions of dollars.”

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Senators demanded to know why it has taken so long to come out of the status of “high-risk grantee,” why the list of special conditions put on local government has continued to increase each year and what value has been added by contracting with Bazilio Cobb Associates.

“Over the years, we have made a significant impact on the government’s management of U.S. Department of Education grants. The result has been the receipt of hundreds of millions of grant dollars and the continuation of funding from the U.S. Department of Education,” Bazilio said. He added that currently local government has available over $30 million in grants with additional grants expected this year totaling nearly $16 million.

Bazilio said it is because of the confidence the U.S. Department of Education has in Bazilio Cobb Associates that the V.I. government continues to be funded through these grants.

Sen. Novelle Francis Jr., along with other senators, was under the impression that it was the responsibility of Bazilio Cobb Associates to help the V.I. Department of Education to meet the special conditions imposed upon the government and to help them clear the “high-risk grantee” status.

But Jenifer O’Neal, director of the Office of Management and Budget, said it is not necessarily part of Bazilio’s contract to help Education shake its “high-risk grantee” status.

Bazilio said his company has designed a “self-contained model” as a means out of the third-party situation imposed upon the government for being deemed a “high-risk grantee.”

Bazilio said there was never a way for the department to get out of the status and no plan created until his company proposed one.

“In 2019, we reignited a plan which we first introduced in 2015 to assist the government in graduating from the third-party fiduciary agent requirement,” Bazilio said.

The plan consists of three steps, starting with the creation of a unit of local government staff that is trained by Bazilio’s company to perform all the current functions the firm handles.

Second, Bazilio said, would be correcting control weaknesses noted in independent audits at related agencies. The third step would be to reintegrate the supply chain management functions into the applicable agencies, like the V.I. Department of Education.

Though senators were skeptical, Bazilio said the first step is aimed to be completed by June 30, 2020, and he believes the company is performing above and beyond the duty of their contract.

This did little to appease senators who also wondered why the list of special conditions, required by the U.S. Department of Education, continued to grow.

“These special conditions should be tied to your contract,” Sen. Donna Frett-Gregory said. She asked O’Neal if the conditions were appended to the contract of the third-party fiduciary agent.

O’Neal said, “It is not part of their contract,” but the company does have milestones it must meet.

This aggravated Frett-Gregory who raised her voice when she said, “I’m going to tell you right now then, we have confusion. Every time a new addendum is made to this special condition document their contract needs to be modified. The reason why we have a compliance agreement and a third-party fiduciary is to support all of the conditions. And what is very concerning is we have been a part of third-party fiduciary for all of nine and a half to thirteen years and we are still getting additional special conditions. We don’t see anything wrong with that picture?”

O’Neal said the contract was created before she stepped into her position, but she believes by the end of the year it is possible that the Virgin Islands can be free of the stipulation requiring a third-party fiduciary agent.

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