As Melissa McCaw departs, Lamont steps up damage control on scandal
Gov. Ned Lamont effusively praised his departing budget director Melissa McCaw on Friday then pivoted to efforts to rebuild confidence in his administration’s oversight of state-reimbursed school construction amidst a federal criminal investigation.
At a press conference at the state Capitol a day after his return from a trade mission to Israel, the governor and the newly installed leadership of the Department of Administrative Services outlined a regimen of forensic audits and other steps to examine whether bidding laws were followed.
“Look, what we want to do today is show you that we take this seriously, give people confidence we know how to get this right,” Lamont said. “And I think you’ve heard this today that there may be some bad habits that accrued over many, many years, and we’re getting it right.”
Lamont named Jeffrey Beckham as interim secretary of the Office of Policy and Management, the fiscal and policy agency run by McCaw since the first day of the Lamont administration. McCaw, who informed Lamont the previous day that she had been hired as the finance director of East Hartford, did not attend.
The governor and others took pains to underscore that McCaw was leaving voluntarily, not due to the FBI investigation of programs that had been overseen by the deputy she personally recruited to OPM, Konstantinos Diamantis, or how she handled initial complaints over his handling of school projects.
“I think she was looking for a fresh start, and I understand what she’s doing,” Lamont said.
On the governor’s authority, his chief of staff, Paul Mounds, fired Kosta Diamantis on Oct. 28, 2021 from his politically appointed post as McCaw’s deputy and suspended him from his classified job as the director of OSCGR, the Office of School Construction Grants & Review.
The FBI had served the subpoena for Diamantis’ records eight days earlier, but Lamont said the dismissal was due to a separate ethics issue: Diamantis’ role in the hiring of his daughter, Anastasia Diamantis, by Chief State’s Attorney Richard Colangelo Jr. while Colangelo was lobbying Diamantis and McCaw for help in securing raises for prosecutors.
Lamont downplayed the impact of the subpoena on firing Diamantis, which came after a briefing by Mounds and his general counsel, Nora R. Dannehy.
“I think Nora had mentioned it to me, just in passing,” Lamont said.
The governor was specific in the steps he is taking to assess the origins and depths of the state Office of School Construction Grants & Review’s influence over the awarding of more than $1 billion in construction contracts since 2018 but less so about when he recognized the potential of scandal.
The FBI investigation has created an unexpected opportunity for Republicans and vulnerability for the governor, who began this reelection year buoyed by high approval ratings and a budget surplus. Bob Stefanowski, the presumptive GOP nominee, insisted that Friday’s events resolved nothing.
“The departure of Governor Lamont’s OPM Secretary should not signal an end to the ongoing scandal and investigation,” Stefanowski said in a statement. “We don’t yet know the full extent of corruption within the Lamont Administration, but as the people who pay their salaries, Connecticut residents have a right to know.”
The press conference Friday was the administration’s most comprehensive effort to date to outline the issues arising from Diamantis’ dismissal, the sufficiency of existing checks and balances, changes already made in contracting procedures and audits, and more changes to come.
Michelle Gilman and Noel Petra, the acting commissioner and deputy commissioner of DAS, answered questions in a public setting for the first time about the policies and procedures related to the school construction grants.
Among other changes, they said, the regular audits of the school construction grants would be conducted by a unit outside OSCGR. They also are commissioning audits of previous audits relating to school grants.
“The governor asked us to dive in, find any problems, drag them out into the light, fix them, solve them, and make sure that they never … come back again,” Petra said. “We have rebuilt the program already into a much more transparent and trustworthy program.”
At issue are at least two different questions relating to Diamantis, who was the director of the Office of School Construction Grants & Review, as well as the deputy secretary of OPM. Petra took charge of the program four months ago after Diamantis’ dismissal.
One is the propriety of municipal officials’ hiring of hazmat remediation and demolition contractors from a limited emergency bidder list maintained by the Department of Administrative Services, as opposed to open competition. To get on the list, contractors agreed to “unit pricing” meant to help small towns negotiate the cost of hazardous materials abatement.
Petra said the state contract list was intended as a means for smaller communities to quickly contract for hazardous abatement work in emergencies.
“That was really the intent of these contracts decades ago. And over the years, slowly, they started to expand them, because they’re easy to use,” Petra said. “And now we really just need to rein them in. We’ve already sent out guidance, we’ve already sent out policies to all the municipalities.”
The guidance issued this week limits the use of the emergency bid list to jobs costing less than $500,000 and those that are truly emergencies.
Diamantis played no role in who got on the list, which was compiled by the procurement office of DAS. But a contractor not on the list, which only had four contractors, complained in the spring of 2020 that Diamantis was urging municipalities to hire off the list, undermining open competitive bidding.
Petra said that work done off the emergency bidder list were not no-bid contracts, but the competition was limited.
Diamantis has said his actions were proper, intended only to help communities avoid the cost overruns common to demolition and hazardous abatement work that precedes construction projects on existing schools.
A second complaint is that Diamantis used his position to urge municipalities to hire certain construction managers and consultants, including one who had hired his daughter, Anastasia Diamantis, while she also was a state employee. Diamantis has denied exerting undue influence in contracting.
A demolition contractor, Stamford Wrecking Company, had complained to McCaw and Josh Geballe, then the commissioner of DAS, starting on April 29, 2020, that Diamantis was encouraging local school systems to hire from the emergency bidder in violation of state law.
While the Office of School Construction Grants & Review was under DAS, the Lamont administration moved the office to OPM in late 2019, a condition of Diamantis taking the deputy OPM post offered by McCaw. On Friday, Lamont and the others could offer no policy reason for the move other than accommodating McCaw and Diamantis.
Lamont said none of the questions or complaints about bidding came before him until the end of October last year, when his office began examining Diamantis over the issue of his daughter’s hiring by Colangelo.
Should he have been apprised early that Stamford Wrecking had complained that the emergency bid list was being misused?
“I think there was a red flag, and there was something untoward happening. Probably a good thing for me to notice,” Lamont said. “But look, on every single hazardous waste contracting list, I’ve got great commissioners. I rely upon my commissioners. I give them the latitude. And I think they’ve tried to do the right thing every day.”
Lamont had been urged to fire her but not only resisted but publicly praised her — as he did Friday.
“I talk to Melissa a lot. We had a close relationship,” Lamont said. Of her job, he said, “It’s a lot of pushing and shoving. It’s a tough job. You got legislators, you got commissioners, everybody, you know, wants a piece. So it was not an easy three years, and she got the job done.”
An exit strategy presented itself in recent weeks.
Michael Walsh, who had worked for McCaw as an OPM undersecretary, was elected mayor of East Hartford in November, a month after Diamantis was dismissed. His finance director retired, and Walsh had not found a successor.
Walsh said he reached out to McCaw “little more than a week ago” to talk about his need for a finance director and what he assumed was her need for a fresh start. She accepted the job while Lamont was overseas.
She informed him Thursday of her new job.