South Carolina pays vendor $11M to administer federal relief spending

(The Center Square) – The vendor South Carolina has paid nearly $11 million to help disburse federal COVID-19 relief money charges the state as much as $391 an hour for some of its work.

South Carolina has paid Guidehouse Inc. $10.9 million for administration of federal Coronavirus Aid, Relief and Economic Security (CARES) Act funds sent to the state: $10.1 million through a contract signed with the company in June 2020 and about $800,000 in additional charges.

The state is paying Guidehouse with a portion of its federal pandemic relief funds.

Guidehouse is a professional management services company based in Virginia that became the successor to PricewaterhouseCooper’s public sector business in 2015. It has worked in other states to manage relief funds, including managing $4.4 billion in storm relief for New York and $1 billion in hurricane relief in Harris County, Texas, after Hurricane Harvey.

AccelerateSC – a group of business, tourism and agricultural leaders assembled by Gov. Henry McMaster to advise on COVID-19 economic issues – recommended last month the state utilize a clause in its contract with Guidehouse to continue working with vendor to the administer American Rescue Plan Act funds.

The additional $800,000 expense incurred by the state was related to the administration of CARES Act distributions for about 11,000 businesses and nonprofits – based on receipts and proof from each.

That was considered additional work compared with the initial contract, so it fell to a rate card based on the additional hours Guidehouse employees worked.

A copy of the Guidehouse contract The Center Square received from South Carolina’s State Fiscal Accountability Authority was redacted to hide the financial rates paid per employee for CARES Act work and the rates for additional work.

After The Center Square questioned the redactions, the state disclosed the rates for additional work, which ranged from $391 an hour for an engagement partner and $310 an hour for a subject matter expert and program manager/director to $50 an hour for administrative support.

Guidehouse’s work includes a guarantee the state won’t incur fines or penalties from the federal government for improper use of the funds. The CARES Act work was guaranteed up to three times the cost of the original contract, or more than $30 million. Penalties from the federal government could include having to repay the misused funds plus fines.

That same rate card would be used to administer ARPA funds if the state chooses to continue its work with Guidehouse.

During June’s accelerateSC meeting, South Carolina Department of Administration Executive Budget Director Brian Gaines encouraged the group to recommend using Guidehouse to administer ARPA funds.

“A third-party vendor, like a Guidehouse, is vitally important,” said Gaines, who detailed how Guidehouse parsed all of the details in the state’s CARES Act distributions.

Gaines said his staff was not equipped to take on the additional work with its current staffing.

South Carolina received $1.9 billion in CARES Act funds, which it allocated in two pieces of legislation that passed South Carolina’s General Assembly. The state expects to receive $2.5 billion in ARPA funding.

There are differences in the two pandemic relief distribution models that impact the scope of the work asked of Guidehouse. CARES Act funds were reimbursements based on a substantial amount of receipts and other proof.

The majority of the ARPA funds comings into the state will go directly to local entities for distribution. South Carolina counties will receive $1 billion, $191 million will go to metropolitan cities and $435 million will go to smaller cities and towns, called nonentitlement units. Those local entities, however, are eligible to use Guidehouse’s services for administration of the funds based on the rate card rates.

The ARPA money must be committed before Dec. 31, 2024, and, in specific cases of infrastructure projects, can be spent until Dec. 31, 2026.

Guidehouse has contracted work in 30 other states, including another contract in South Carolina to manage some health care funds, to collect, organize and claim federal reimbursement, which is similar to the pandemic relief fund work that it is doing in South Carolina.

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