GOAC Considers Draft Bill to Block Brinda Kuhn-Style Grant Conflict of Interest
Published 2017-08-23 by
Cory Allen Heidelberger
Aw, Brinda Kuhn! By refusing to come talk to GOAC in Pierre next week, you’re missing your chance to talk about draft legislation that could very well be called “The Brinda Kuhn Grant-Writer Conflict of Interest Act”!
No person who completes or assists with the development of a grant application or request for proposal, in either a paid or unpaid capacity, to receive state funds, including a pass-through grant, may participate in evaluating grant proposals, awarding a grant, drafting or entering into a grant agreement, evaluating grantee performance under a grant agreement, or authorizing payment under a grant agreement for that particular grant or any connected grant [Government Operations and Audit Committee, draft legislation, Section 5, printed 2017.07.05].
BC Kuhn Evaluation, LLC was a consulting firm that wrote the original grant applications for the GEAR UP, College Access, and Teacher Quality grants. In the applications, the firm included itself in each of these grants as a partner that would be providing advisory services. In the case of the GEAR UP grant, the firm also provided evaluation services which is a conflict of interest.
We were informed by Director Guericke that BC Kuhn Evaluation, LLC wrote the original grant applications for the GEAR UP, College Access, and Teacher Quality grants for no charge. He stated that it is a customary practice in education for the grant writer to then write themselves into the grant, as a partner, to be compensated for services performed. This was the case for each of these three grants. We believe this type of arrangement introduces risk as it doesn’t allow for competition in the procurement of services that are provided by the grant writer [Department of Legislative Audit, “Special Review of Mid Central Educational Cooperative,” 2017.05.19, p. 12].
Come on, Brinda Kuhn! Fly on out to Pierre and tell legislators why letting grant-writers write themselves a nice no-bid deal to participate in and evaluate grant programs.
Related: Even if the Legislature bans Kuhn and others from writing and evaluating the same grant, Brinda Kuhn can still help other evaluators learn how to evaluate GEAR UP grants. Her February 2012 slideshow describes all sorts of important metrics that GEAR UP grant recipients should be able to show (e.g., percentage of GEAR UP students passing high school math classes, enrolling in college, understanding financial aid), measures that South Dakota’s GEAR UP program struggled to meet.
Scary, now an ethics committee or a judge could actually deal with corruption because there is a law on it. How will they ever cover up the next scandal if there is a law against it. This will either improve the way things are done or put the powers that be in an awful situation in the future.
The draft legislation’s Section 5 is problematic, especially as it pertains to grant applications for federal funds. It’s common (and ethical) practice for an evaluation consultant to be named in a federal grant application and have their vitae/resume included in the application packet. This helps assure the feds that the applicant has access to high quality evaluation services. It also increases the likelihood that the proposed program design was looked at by the evaluator to assure that proper baseline data is being collected before the first evaluation visit occurs.
In addition, the proposed legislation makes a consultant’s actions potentially illegal without making the actions of the entity contracting with the consultant (or their agents) potentially illegal. In effect, it pushes accountability down and away from government.
Michael, I dig the point you make about having a good evaluator review the application to help make sure it’s designed well. I can I take it the fact that such pre-evaluation can improve the quality of grant programs outweighs the concerns about conflict of interest and creates the consensus that the practice is ethical?
Let me go step by step with some other questions:
First, is it common and ethical for consultants to do what Brinda Kuhn did: write the grant proposal and write herself in as the evaluator?
Second, given what you say about naming an evaluator to assure the feds the applicant has its poop in a group, Section 5 would still allow me to apply for a grant and name you as my grant evaluator, as long as I don’t enlist you to complete or assist with the application, right?
Third, if an applicant names an evaluator in the application, is the applicant locked in to using that evaluator? Does that mean that if I’m applying for a grant, I need to bid out and tentatively award the evaluation contract before I submit the app?
Fourth, suppose we amend Section 5 to pull the accountability back up to government: forbid the state or any state-designated grant manager from allowing a Kuhn conflict. Are there enough grant-writers and evaluators around to make that separation work?
I appreciate the fact that we’re dealing with areas that are susceptible to abuse.
The first thing I’d say is that there are few, if any, bright line distinctions here. Further, there are few, if any, absolute answers to addressing these issues that won’t have unintended and unfortunate consequences.
That leads me to my second point. Legislation drafted in response to scandal or crisis seldom addresses the root cause of the scandal or crisis. It usually goes “sideways,” much like what happens in health care when one treats symptoms rather than the disease. The treatment not only doesn’t cure the patient, it can mask symptoms and allow the disease to spread.
Your questions:
1) Brinda Kuhn wrote the 2005 GEAR UP application while employed by a DC-based large nonprofit. After leaving that employment, she relocated to South Dakota and eventually (2008?) became the evaluation consultant for MidCentral.
It is not common for a consultant or other external contractor acting as the grant proposal writer to also be the external evaluator. This dual role can be done ethically as long as it’s clear that the client (in this case, SD Dept. of Ed.) is directing the consultant’s work and, preferably, is paying for the application development. In my personal opinion, the ethical challenges arise when the application drafting is free or discounted based on the consultant being “written in” for evaluation or other grant-funded services.
2) Yes, but a competent evaluator would likely demand to see the proposal and assess whether their evaluation services would be: 1) appropriate based on their expertise; and 2) likely to be successful based on the proposal design. If I make *any* suggestions, regardless of compensation or lack thereof for doing so, I become ineligible under Section 5 to provide grant-funded services.
3) Not as far as the federal government is concerned. A grant recipient may request a change at any time, and the feds are likely to approve a change assuming the new evaluator is qualified and willing to work within the budget and evaluation parameters set forth in the grant award.
It would be exceedingly difficult to bid out and award an evaluation contract before submitting the grant application because grant funds would partially or completely pay for the evaluator’s services and there is no certainty that the grant will be awarded. This would cause at least two problems. First, the applicant would assume the risk of paying the evaluator something even if the grant application is denied. Second, most grants prohibit grant funds to be used to pay for services associated with grant application development or for costs incurred before the start of the grant period. Again, this shifts all or part of the costs to the applicant’s non-grant funded budget.
4. You still have the problem of pre-award consultation, with or without compensation, from disqualifying the consultant from providing grant-funded services. As for the second part of your question, grant application preparation and evaluation consulting are different enough that there are relatively few consultants who make a practice of doing both.
Please note than, in my experience, most grant applications are prepared by staff, not consultants. This decreases the likelihood that a conflict or a dual writer-evaluator role would present itself.
I hope I’ve answered your questions. If not, or if I’ve muddied the waters, it’s unintentional. Please feel free to ask follow-up questions to clarify or add to what I’ve said. Thanks!
Thanks for the thoughtful response, Michael. To the extent that the current proposed legislation goes sideways on symptoms, what is the root disease, and what is the cure? (May I suggest electing Democrats but imposing far greater transparency to prevent unchecked monolithic power?)
I’m not sure we need to be so drastic as to elect Democrats .
Transparency (or at least disclosure) and accountability are keys to success, but they need to be focused at the top and within government first rather than be limited to the bottom and those who consult and contract with government.
What if government officials and contractors both had to disclose financial, familial, and other conflicts of interest in a manner similar to that specified in IRS regulations for those dealing with charitable organizations? I would encourage looking at IRC Section 4958, also known as “intermediate sanctions,” to see what could be adapted from it. In fact, the IRS has attached a sample conflict of interest policy to the application for tax exempt status, which I have always taken as a strong suggestion that a nonprofit should have one .
Disclosure of conflicts and identification of individuals potentially subject to conflicts wouldn’t stop “sweetheart deals,” and sourcing of contracts to favorites, but knowing about them would help the public and senior government officials keep track of them. Moreover, the review and disclosure would likely keep some of the more egregious deals from happening in the first place.
Conflicts of interest are not, in and of themselves, illegal or unethical. They happen all the time, and are more likely to occur in small communities – whether they be towns or groups of professionals in the same discipline (e.g., education). The key is to identify and manage the conflicts so that no one suffers unjustly or inequitably.
A contract requires at least two parties. Both parties should be subject to similar, if not the same, requirements and conditions. This includes protections against, and penalties for, financial crimes and torts using public funds.
My response earlier this morning is missing a couple of grinning characters that were intended to let people know I wasn’t entirely serious about electing Democrats being a drastic solution and that I smile at the idea that the IRS thinks conflict of interest policies are a good idea for nonprofits.
The response also centered on the legislation rather than the larger problem that allowed SD GEAR UP to happen. Namely, SD should have never applied for the money if its agents weren’t committed to accomplishing the program’s goals in the state. It was a failure of the state’s administrative judgement, compounded by its readiness to farm out the program and neglect it for so long.
The federal government also failed because it approved a poorly-written, hastily-written GEAR UP grant application in 2005 and approved another GEAR UP application in 2011 despite at least one poor or marginal evaluation report produced by Brinda Kuhn in 2008-2009.
My belief is that the feds were willing to accept an “approvable” application to: 1) maximize the number of states being served; and 2) include the diversity represented by SD’s GEAR UP focus on Native American students.
Holding senior state administration officials accountable for both the financial performance and programmatic success of the federal grants administered by their departments would be a big step in the right direction. Such a step might make it less likely a future SD cabinet secretary would sign a federal grant application they had no connection with or commitment to good stewardship.
Porter Lansing
I wondered Michael, but did quickly realize the sarcasm. Upon reflection, I hope Queen Anne was being a bit veiled in her humor, also. :o)
Not sarcasm – just a little good-natured fun. I write for a left-wing publication and I married a Democrat, so I’m not irremediably partisan. Just replying lightheartedly to Cory’s suggestion.
Porter Lansing
I read just about every thing on your blog and learn a lot. Thanks.
Thanks for those instructive responses, Michael… as well as for the “drastic” humor. :-)
In GEAR UP, it’s important to remember that the problem was much bigger than conflict of interest. Lots of conflicts of interest signaled the deeper corruption going on. Actually, as I think of it, I’d think a really good thief would have meticulously avoided all the other obvious conflicts of interest to keep anyone from really digging into what was going on and finding the really lucrative scam. But then in South Dakota, one-party rule has lulled everyone, even the crooks, into complacent sloppiness, into an assumption that no one will impose strict oversight.
Note Michael’s last point about holding top state officials accountable for the grants they sign off on. Schopp says that no GEAR UP money is missing and that every reimbursement her DOE signed off on was proper, but the deeper issue is that her predecessor Rick Melmer shoved this federal grant down the ladder to a tiny co-op far from Pierre and she let it stay there, even though she had at least three year’s worth of signals that the co-op was messing things up.
I agree that SD GEAR UP goes a lot deeper and broader than conflicts of interest. My advice related to conflicts is limited to the thrust of the proposed legislation. It partly makes my point that legislation proposed in the wake of scandal is unlikely to address root causes and rather focus on symptoms.
BTW, Rick Melmer had no thought of applying for GEAR UP funds in 2005 until he received a call from a large nonprofit in DC that offered to help SD (and other states) prepare applications. By the time Melmer agreed to go after the money, it was less than two weeks before the grant deadline. In other words, someone else asked SD to “take a flyer” at some federal money, and they “won”.
There was no ideological investment in the federal goals for GEAR UP from the start. My understanding is that GEAR UP money was a way to continue the Native American summer program at the School of Mines previously funded by NASA.
This is why I focus on specific leadership accountability for programmatic as well as financial performance of grant-funded programs. SD GEAR UP’s problems didn’t start in 2015 or even in 2011-2012; they started in 2005 before the state’s first application was even submitted to the feds.
Excellent historical point on South Dakota’s lack of deep commitment at the top to the federal GEAR UP goals. Do you have posts on your blog documenting that history?
If by “my blog,” you’re referring to The Nonprofit Quarterly (NPQ), that’s an interesting question. Though some identify it as a blog, those associated with it consider it a journalistic news and opinion site affiliated with a quarterly print magazine published by a nonprofit organization since the 1990s. NPQ isn’t my blog, though I have written hundreds of articles and features for the site and have served as consulting editor for more than 18 months.
As such, I don’t have the unfettered freedom at NPQ to write what I know and think without being able to adhere to journalistic standards; e.g., quoting sources and citing documents.
I should write down my own recollections, if only to attach it to my ever-growing library of SD GEAR UP materials.
That is what I meant, Michael! I apologize for over-attributing NPQ to you and underqualifying it as a blog instead of an online journal supplement. :-)
Scary, now an ethics committee or a judge could actually deal with corruption because there is a law on it. How will they ever cover up the next scandal if there is a law against it. This will either improve the way things are done or put the powers that be in an awful situation in the future.
The draft legislation’s Section 5 is problematic, especially as it pertains to grant applications for federal funds. It’s common (and ethical) practice for an evaluation consultant to be named in a federal grant application and have their vitae/resume included in the application packet. This helps assure the feds that the applicant has access to high quality evaluation services. It also increases the likelihood that the proposed program design was looked at by the evaluator to assure that proper baseline data is being collected before the first evaluation visit occurs.
In addition, the proposed legislation makes a consultant’s actions potentially illegal without making the actions of the entity contracting with the consultant (or their agents) potentially illegal. In effect, it pushes accountability down and away from government.
Michael, I dig the point you make about having a good evaluator review the application to help make sure it’s designed well. I can I take it the fact that such pre-evaluation can improve the quality of grant programs outweighs the concerns about conflict of interest and creates the consensus that the practice is ethical?
Let me go step by step with some other questions:
First, is it common and ethical for consultants to do what Brinda Kuhn did: write the grant proposal and write herself in as the evaluator?
Second, given what you say about naming an evaluator to assure the feds the applicant has its poop in a group, Section 5 would still allow me to apply for a grant and name you as my grant evaluator, as long as I don’t enlist you to complete or assist with the application, right?
Third, if an applicant names an evaluator in the application, is the applicant locked in to using that evaluator? Does that mean that if I’m applying for a grant, I need to bid out and tentatively award the evaluation contract before I submit the app?
Fourth, suppose we amend Section 5 to pull the accountability back up to government: forbid the state or any state-designated grant manager from allowing a Kuhn conflict. Are there enough grant-writers and evaluators around to make that separation work?
Cory:
I appreciate the fact that we’re dealing with areas that are susceptible to abuse.
The first thing I’d say is that there are few, if any, bright line distinctions here. Further, there are few, if any, absolute answers to addressing these issues that won’t have unintended and unfortunate consequences.
That leads me to my second point. Legislation drafted in response to scandal or crisis seldom addresses the root cause of the scandal or crisis. It usually goes “sideways,” much like what happens in health care when one treats symptoms rather than the disease. The treatment not only doesn’t cure the patient, it can mask symptoms and allow the disease to spread.
Your questions:
1) Brinda Kuhn wrote the 2005 GEAR UP application while employed by a DC-based large nonprofit. After leaving that employment, she relocated to South Dakota and eventually (2008?) became the evaluation consultant for MidCentral.
It is not common for a consultant or other external contractor acting as the grant proposal writer to also be the external evaluator. This dual role can be done ethically as long as it’s clear that the client (in this case, SD Dept. of Ed.) is directing the consultant’s work and, preferably, is paying for the application development. In my personal opinion, the ethical challenges arise when the application drafting is free or discounted based on the consultant being “written in” for evaluation or other grant-funded services.
2) Yes, but a competent evaluator would likely demand to see the proposal and assess whether their evaluation services would be: 1) appropriate based on their expertise; and 2) likely to be successful based on the proposal design. If I make *any* suggestions, regardless of compensation or lack thereof for doing so, I become ineligible under Section 5 to provide grant-funded services.
3) Not as far as the federal government is concerned. A grant recipient may request a change at any time, and the feds are likely to approve a change assuming the new evaluator is qualified and willing to work within the budget and evaluation parameters set forth in the grant award.
It would be exceedingly difficult to bid out and award an evaluation contract before submitting the grant application because grant funds would partially or completely pay for the evaluator’s services and there is no certainty that the grant will be awarded. This would cause at least two problems. First, the applicant would assume the risk of paying the evaluator something even if the grant application is denied. Second, most grants prohibit grant funds to be used to pay for services associated with grant application development or for costs incurred before the start of the grant period. Again, this shifts all or part of the costs to the applicant’s non-grant funded budget.
4. You still have the problem of pre-award consultation, with or without compensation, from disqualifying the consultant from providing grant-funded services. As for the second part of your question, grant application preparation and evaluation consulting are different enough that there are relatively few consultants who make a practice of doing both.
Please note than, in my experience, most grant applications are prepared by staff, not consultants. This decreases the likelihood that a conflict or a dual writer-evaluator role would present itself.
I hope I’ve answered your questions. If not, or if I’ve muddied the waters, it’s unintentional. Please feel free to ask follow-up questions to clarify or add to what I’ve said. Thanks!
Thanks for the thoughtful response, Michael. To the extent that the current proposed legislation goes sideways on symptoms, what is the root disease, and what is the cure? (May I suggest electing Democrats but imposing far greater transparency to prevent unchecked monolithic power?)
I’m not sure we need to be so drastic as to elect Democrats .
Transparency (or at least disclosure) and accountability are keys to success, but they need to be focused at the top and within government first rather than be limited to the bottom and those who consult and contract with government.
What if government officials and contractors both had to disclose financial, familial, and other conflicts of interest in a manner similar to that specified in IRS regulations for those dealing with charitable organizations? I would encourage looking at IRC Section 4958, also known as “intermediate sanctions,” to see what could be adapted from it. In fact, the IRS has attached a sample conflict of interest policy to the application for tax exempt status, which I have always taken as a strong suggestion that a nonprofit should have one .
Disclosure of conflicts and identification of individuals potentially subject to conflicts wouldn’t stop “sweetheart deals,” and sourcing of contracts to favorites, but knowing about them would help the public and senior government officials keep track of them. Moreover, the review and disclosure would likely keep some of the more egregious deals from happening in the first place.
Conflicts of interest are not, in and of themselves, illegal or unethical. They happen all the time, and are more likely to occur in small communities – whether they be towns or groups of professionals in the same discipline (e.g., education). The key is to identify and manage the conflicts so that no one suffers unjustly or inequitably.
A contract requires at least two parties. Both parties should be subject to similar, if not the same, requirements and conditions. This includes protections against, and penalties for, financial crimes and torts using public funds.
My response earlier this morning is missing a couple of grinning characters that were intended to let people know I wasn’t entirely serious about electing Democrats being a drastic solution and that I smile at the idea that the IRS thinks conflict of interest policies are a good idea for nonprofits.
The response also centered on the legislation rather than the larger problem that allowed SD GEAR UP to happen. Namely, SD should have never applied for the money if its agents weren’t committed to accomplishing the program’s goals in the state. It was a failure of the state’s administrative judgement, compounded by its readiness to farm out the program and neglect it for so long.
The federal government also failed because it approved a poorly-written, hastily-written GEAR UP grant application in 2005 and approved another GEAR UP application in 2011 despite at least one poor or marginal evaluation report produced by Brinda Kuhn in 2008-2009.
My belief is that the feds were willing to accept an “approvable” application to: 1) maximize the number of states being served; and 2) include the diversity represented by SD’s GEAR UP focus on Native American students.
Holding senior state administration officials accountable for both the financial performance and programmatic success of the federal grants administered by their departments would be a big step in the right direction. Such a step might make it less likely a future SD cabinet secretary would sign a federal grant application they had no connection with or commitment to good stewardship.
I wondered Michael, but did quickly realize the sarcasm. Upon reflection, I hope Queen Anne was being a bit veiled in her humor, also. :o)
Porter:
Not sarcasm – just a little good-natured fun. I write for a left-wing publication and I married a Democrat, so I’m not irremediably partisan. Just replying lightheartedly to Cory’s suggestion.
I read just about every thing on your blog and learn a lot. Thanks.
Thanks for those instructive responses, Michael… as well as for the “drastic” humor. :-)
In GEAR UP, it’s important to remember that the problem was much bigger than conflict of interest. Lots of conflicts of interest signaled the deeper corruption going on. Actually, as I think of it, I’d think a really good thief would have meticulously avoided all the other obvious conflicts of interest to keep anyone from really digging into what was going on and finding the really lucrative scam. But then in South Dakota, one-party rule has lulled everyone, even the crooks, into complacent sloppiness, into an assumption that no one will impose strict oversight.
Note Michael’s last point about holding top state officials accountable for the grants they sign off on. Schopp says that no GEAR UP money is missing and that every reimbursement her DOE signed off on was proper, but the deeper issue is that her predecessor Rick Melmer shoved this federal grant down the ladder to a tiny co-op far from Pierre and she let it stay there, even though she had at least three year’s worth of signals that the co-op was messing things up.
Cory:
I appreciate the conversation.
I agree that SD GEAR UP goes a lot deeper and broader than conflicts of interest. My advice related to conflicts is limited to the thrust of the proposed legislation. It partly makes my point that legislation proposed in the wake of scandal is unlikely to address root causes and rather focus on symptoms.
BTW, Rick Melmer had no thought of applying for GEAR UP funds in 2005 until he received a call from a large nonprofit in DC that offered to help SD (and other states) prepare applications. By the time Melmer agreed to go after the money, it was less than two weeks before the grant deadline. In other words, someone else asked SD to “take a flyer” at some federal money, and they “won”.
There was no ideological investment in the federal goals for GEAR UP from the start. My understanding is that GEAR UP money was a way to continue the Native American summer program at the School of Mines previously funded by NASA.
This is why I focus on specific leadership accountability for programmatic as well as financial performance of grant-funded programs. SD GEAR UP’s problems didn’t start in 2015 or even in 2011-2012; they started in 2005 before the state’s first application was even submitted to the feds.
Excellent historical point on South Dakota’s lack of deep commitment at the top to the federal GEAR UP goals. Do you have posts on your blog documenting that history?
If by “my blog,” you’re referring to The Nonprofit Quarterly (NPQ), that’s an interesting question. Though some identify it as a blog, those associated with it consider it a journalistic news and opinion site affiliated with a quarterly print magazine published by a nonprofit organization since the 1990s. NPQ isn’t my blog, though I have written hundreds of articles and features for the site and have served as consulting editor for more than 18 months.
As such, I don’t have the unfettered freedom at NPQ to write what I know and think without being able to adhere to journalistic standards; e.g., quoting sources and citing documents.
I should write down my own recollections, if only to attach it to my ever-growing library of SD GEAR UP materials.
That is what I meant, Michael! I apologize for over-attributing NPQ to you and underqualifying it as a blog instead of an online journal supplement. :-)