Staffing service that helped with COVID response says RI owes $275,000
The owner of an employment agency that has provided contact tracers, case investigators and other office workers for the Rhode Island Department of Health during the pandemic says the state owes her $275,000, with invoices dating to last summer.
“I did what was on the contract. They’re not holding up their end,” said Sandy Leite, owner of Colony Personnel in Warwick, which for more than a decade has provided long-term temporary employees for the Health Department, the Department of Children Youth and Families, and the Department of Corrections.
Leite said problems began after the state brought in Knowledge Services of Indiana in the summer of 2019 to process invoices from all of its vendors, something the state’s Division of Purchasing had previously handled in-house.
It became so bad that Leite had to take out business loans and maxed out a line of credit to cover her payroll. When that wasn’t enough, she put personal money into the business and at one point stopped placing employees because she could not guarantee they would be paid. She also has laid off several of her office staff.
Gov. Gina Raimondo’s Department of Administration acknowledges there have been payment delays but said it has “been working around the clock” to put in a corrective plan to make Colony and other vendors waiting for payment whole.
“We have been working diligently to identify the sources and correct [the problem],” said Christopher Piotrowski, chief of staff for the Division of Purchasing. “We’ve developed a plan to expedite weekly payments to vendors in a way that would prevent some of this backlog that’s happened from occurring.”
A partial payment went out to Leite earlier this week and Piotrowski said he hopes she will receive the balance in the next two to three weeks.
During a 45-minute telephone interview with The Hummel Report on Monday, Piotrowski, Division of Purchasing Director Nancy McIntyre and Department of Administration spokesman Robert Dulski said the state is working hard under difficult circumstances.
“We’re dedicating some resources to go back and figure out where some of these back payments are and what’s holding them up, and push this through the process as quickly as possible,” Piotrowski said.
But they would not say whether the state, or Knowledge Services, has been the problem paying Colony Personnel and other vendors money owed them. “Pointing a finger at anyone, it’s just not welcome during this time,” Dulski said.
Piotrowski attributed much of the delay to the pandemic, as well as the added workforce and paperwork the state is having to process.
“How many systems in the state are broken?” said Leite, adding that she had no issue with payments until Knowledge Services was hired, nine months before the pandemic. She rejected the assertion the backlog is COVID 19-related. “Every system we have has been broken: UHIP, the DMV. Everything we have that we roll out, nothing works. Why is that?”
The contract calls for the state to pay Knowledge Services within 20 days of a vendor submitting an invoice and the company has another 10 days to reimburse vendors like Leite. She is still waiting on payment for an invoice from July.
Colony Personnel was founded more than 30 years ago by Leite's mother. The company worked for years to get on the master list of vendors used by the state and has placed employees in a wide spectrum of state agencies for more than a decade. Leite said the state in the past had always paid her on time.
“I would get a check every week, or every other week. It worked like clockwork. We never had to go looking for money,” she said.
Leite and other vendors learned in the summer of 2019 that Knowledge Services would begin processing payments on their invoices. “[Purchasing] called us down and we met this company. Basically, you didn’t have a choice: either you wanted to work for the state or you didn’t. We were all taken aback.”
The vendors also discovered they would have to pay Knowledge Services 2.6% of what they were allocated by the state for an employee, for a service that had been provided by state government previously with no charge.
Piotrowski said Rhode Island was an outlier in handling in-house the more than 40 vendors it uses and joined with other states to bring in Knowledge Services. “It’s been a positive experience,” McIntyre said.
Piotrowski described the state’s system of handling vendors as fragmented and one that used paper timesheets instead of electronic filings. He added that the 2.6% fee Knowledge Services charges the vendors is standard in other states, and their services have taken the load off state employees.
He said the state’s use of temporary employees jumped from 100 to 500 during the pandemic. Leite’s were part of a wave of workers needed to help the Health Department shoulder new responsibilities like contact tracing.
Leite is not alone in waiting for payments, but neither McIntyre nor Piotrowski would quantify how many vendors they’ve heard from with complaints similar to Leite’s. The Hummel Report spoke with the owners of other companies who were reluctant to talk publicly because they worry about jeopardizing their contracts with the state.
Leite said she, too, was concerned about possible retribution, but feels she is at the point of having no choice other than telling her story and trying to force the issue because nothing has changed -- despite the state’s repeated assurances.
Dulski said part of the delay is a result of budget uncertainty with the state and making sure the Department of Administration meets federal guidelines for using part of the $1.25 billion in federal coronavirus aid allocated to Rhode Island that has helped pay for temporary workers.
“As a result, the administrative burden of processing these payments, partially during a time when the state lacked an operating budget, has also increased,” he said in a statement before Monday’s interview.
Meanwhile, Leite says she’s had sleepless nights trying to figure out how to keep her business afloat and pay her employees. And she’s repeatedly reached out to purchasing and Knowledge Services.
“What is going on with the payments? I can’t keep this up, I’m a small business,” she recalls telling them. “You get the same story: ‘The state system is antiquated,’ and all the excuses started. To this day it’s the same thing.”
On Oct. 15 she emailed 17 of the employees she had placed with the state. “I cannot keep paying you if I do not get reimbursed, so please tell all of your supervisors that you will not be in work after Friday and maybe they will start contacting someone to get this fixed. I do not want to do this but I cannot print money. I paid all of you since you started working and I am not getting anything back from the state or Knowledge Services.”
Two days before Christmas she emailed Piotrowski and her contact at Knowledge Services: “I am sitting here stressing how I am going to pay my people for Christmas, if they don’t get paid they can’t buy food or pay their bills or buy their kids Christmas gifts. It is a very sad situation that I am in and no one seems to care, because it does not directly affect any of you.”
Leite said another problem is that Knowledge Services sends checks via the U.S. Postal Service, sometimes for tens of thousands of dollars, instead of direct deposit, even though the state pays the company electronically. “Why would you put a check for that kind of money in the mail?” she said, adding that Knowledge Service offered her the option of electronic payment, but with a fee.
Included in the same email: an offer to expedite payment of some of the money owed to her, again for a fee. “You want me to pay on my money more fees?” she asked.
When asked whether it was appropriate for Knowledge Services to be offering to front money to vendors -- or set up electronic payment -- for a fee, Piotrowski said it was not his place to tell the company how to run its business, even though it ultimately answers to the state.
Leite said a check for $100,000 finally arrived in the mail earlier this week, less than half of what the state still owes her. When she went to cash it, the bank put a five-day hold on the money because the check came from out of state.
The Hummel Report is a 501(c)(3) nonprofit organization that relies, in part, on donations. For more information, go to HummelReport.org. Reach Jim at Jim@HummelReport.org.