Frostburg State University may have violated state ethics laws and university system rules by awarding a $2 million construction contract to a developer connected to a school advisory board member, according to the Office of Legislative Audits.
The Western Maryland school also failed to gain approval for the construction contract from the university system or the Board of Public Works, auditors found in a report released Wednesday.
It claims Frostburg selected a building site for its off-the-grid Sustainable Energy Research Facility, completed last fall, knowing that it would require the use of a particular developer who had subleased the location, "rather than allow a competitive bid process."
The developer then chose a general contracting company run by a member of Frostburg's board of visitors, which advised the school's president until the group was suspended in October for unrelated reasons.
State ethics laws prevent board members from having a "financial interest in or being employed by an entity negotiating a contract with the agency with which the member is affiliated," auditors wrote.
Neither the developer nor the board member, whose companies have a long relationship working together on prior projects at Frostburg and beyond, was named in the report. A Frostburg university website about the facility identifies the developer as Academic Privatization LLC, based in Raleigh, N.C., and the general contractor as the Belt Group, which includes Carl Belt Inc. and is run by board member Carl "Buck" Belt Jr.
Frostburg said in a written response to the audit that it planned to refer the matter to the state ethics commission, as the auditors recommended, for guidance, noting that "at this point and time, a conclusion as to whether actual conflict of interest occurred has not been determined."
In a statement to The Baltimore Sun, Frostburg said, "These regular legislative audits serve as a useful opportunity to examine our operations and procedures in a constantly changing terrain. Frostburg State University is always committed to being good stewards of the funds and information entrusted to us."
A message left with Carl Belt Inc. was not immediately returned Wednesday.
Glenn Weaver, director of development at Academic Privatization, emphatically said there was no wrongdoing by the businesses and surmised that the whole matter appeared to be a problem of the university system not having been given enough information about the project.
He said school officials came to his company, which already had a building on school property it rented, after soliciting bids from others and determining that they couldn't afford them. The process from there was long and exhausting, involving multiple plans for facilities and a slashing of fees by Academic Privatization and others in order to get the job done.
Many were happy to do it, he said, because it was such groundbreaking work: building a self-sustained facility that was off the electrical and gas grids.
"Lots of people put tremendous amounts of time into this when they really did not make any money at all. Many of us actually lost money. We knew that going in and wanted to see it developed because we thought it was good for the campus and good for the community," Weaver said. "This is not really building a building, this was inventing a machine."
He added that there was "no wrongdoing by anybody. … It appears that the entire issue is simply that the UM system was not given sufficient details to see the logic and the progression of the project."
In its audit response, included in the report, Frostburg acknowledged that it did not receive appropriate approvals and said it will do so going forward.
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