GOP strategist Carol L. Hirschburg said yesterday that she is cooperating with the state prosecutor's office in its review of a $110 million technology contract at the Maryland Department of Human Resources and is confident that she is not the focus of the investigation.
Hirschburg, the president of Isis Technology Consulting LLC, said in a press release that investigators told her during a March 14 interview that they have "grave concerns" about "some people presently and formerly associated" with the Canton Group of Baltimore, another firm that was part of the contract.
Canton Group executive Ethan Kazi said yesterday that he hoped investigators would "act responsibly" and look at the entire contract and its many participants, including Isis.
"We welcome any inquiry because the Canton Group has a proven track record in Maryland," said Kazi, who founded the firm with his brother, Aaron Kazi, and the former head of the office of technology for DHR, Kirk Grothe.
Hirschburg said the Canton Group was "suspiciously" added to the $110 million contract after the deal was awarded to ACS State and Local Solutions Inc. Documents provided by DHR show that the Canton Group, a certified minority business, as well as Isis and two other minority firms, were part of the team when the contract was approved by the state Board of Public Works in June.
Ethan Kazi has said that he and his brother bought Grothe out of his share in the business when he joined DHR in 2004, and that Grothe did not send work to the Canton Group. Allegations of such referrals were investigated twice by the state inspector general and found to be false.
Grothe, who left DHR earlier this year for a position with the state retirement agency, has declined to comment.
In another development, ACS announced yesterday that company officials will review campaign contributions made to ACS employee and former Republican Howard County Councilman Christopher J. Merdon, who lost a bid for county executive last year. State records show that Merdon received roughly $18,000 from firms or representatives of firms that were eventually included on the state contract, including Hirschburg and one of her Isis partners.
"ACS takes ethics issues very seriously and we are looking into the matter," said spokesman David Shapiro, regarding the contributions. Merdon was one of as many as 12 ACS officials who helped select minority and non-minority subcontractors for the DHR contract, Shapiro said.
Merdon did not respond to an e-mail from The Sun requesting comment on the campaign contributions.
In her statement, Hirschburg said she was contacted by members of the state prosecutor's office because they thought she "might have information that would assist them in their investigation." She said she met with investigators "without hesitation," and that she hoped details of the meeting might "right the wrong" that has been done to her.
State Prosecutor Robert A. Rohrbaugh said he could not confirm his office's meeting with Hirschburg nor the details of the conversation between her and members of his staff. Chief Investigator James I. Cabezas, who Hirschburg said met with her, also declined to speak about the investigation into the technology contract and the firms involved.
Hirschburg's comments about the investigation follow articles in The Sun that detailed her efforts to get a piece of the $110 million contract - examining her firm's application for and eventual certification as a woman-owned business through the Maryland Department of Transportation, which oversees the state's Minority Business Enterprise program.
Hirschburg requested that her application for minority certification be rushed through so that she could participate in the contract bid with ACS, a request that was granted. Other applications have also been fast-tracked, but state officials are now investigating why Isis and others received such treatment and whether it was appropriate.
In addition to Hirschburg, Isis is composed of three other women, all of whom are tied by marriage or employment to a non-minority technology firm called Syscom Inc. The Baltimore firm has a long history of providing technology employees to DHR and is also a subcontractor on the $110 million contract.
State transportation officials are reviewing fast-tracked minority applications, and Gov. Martin O'Malley has requested an overall review of the minority business program. Comptroller Peter Franchot has also asked for a close look at all contracts hurriedly approved by the transportation agency in the last year of the Republican administration of Gov. Robert L. Ehrlich Jr.
Isis dropped out of the DHR project in January when Hirschburg could not negotiate a favorable rate with ACS. She has said ACS told her she would be guaranteed a $12.1 million slice of the contract, but an ACS official has said that Hirschburg was told her firm would have to compete with other minority firms.
State campaign finance records show Merdon's campaign received $3,300 from Hirschburg and Isis between 2004 and 2006. That includes a $2,000 contribution in June, the same month that ACS won the DHR contract. Hirschburg said there is no correlation between that event and her contribution.
"It is no secret that I support Republican candidates and urge others to support them also," said Hirschburg, who has been active in the Republican Party in Maryland for many years.
A review of state records also shows that Merdon received a total of $7,200 from Syscom, its founder, Theodore Bayer, and Bayer's wife, Dr. Joseline Bayer, who is also an investor in Isis. Theodore Bayer did not respond to a phone message.
Merdon also received contributions from Gantech Inc., a minority firm with offices in Baltimore that was added as a subcontractor to the contract between January and June of last year. Gantech owner Thomas Laskowski, his wife and his company gave Merdon a total of nearly $8,000 between 2004 and 2006, state records show.
Laskowski denied any connection between the contributions and his firm's inclusion on the DHR job. He said his firm had worked with ACS before the DHR contract and that he has been friends with Merdon for several years. Laskowski said he has also made contributions to Democrats and charitable causes.
"We were making the contributions to Chris as a friend and client," Laskowski said. "I support his ambitions."