CHARLESTON, W.Va. -- Two high-ranking state government officials circumvented West Virginia purchasing laws and ignored a directive to stop construction of a $38 million microwave radio tower project funded by the federal stimulus, according to an audit released Tuesday.
State Homeland Security Director Jimmy Gianato and emergency communications director Joe Gonzalez authorized Jane Lew-based Premier Construction to build 17 emergency communications towers, even though the firm didn't have a state contract.
The 41-page audit spotlights bidding irregularities, purchasing violations and misuse of federal grant funds.
"Things obviously weren't done legally," said Legislative Auditor Aaron Allred.
Gianato and Gonzalez tapped a 2009 contract Premier had with Lewis County to build a single microwave tower in Roanoke -- and used that contract for the 17-tower stimulus-funded project.
Gonzalez, who headed the Lewis County committee that selected Premier in 2009, had a "professional relationship" with the company's owner since at least 2006, according to the audit. Premier listed Gonzalez as a reference when it submitted a bid for the Lewis County project.
At Gonzalez's request, the construction company later relocated a fire tower from Fayette County to Cass Scenic Railroad State Park, the audit revealed. The Mountain State Railroad and Logging Historical Association spearheaded the move. Gonzalez serves on the association's board of directors.
"It appears as though there has been some illegal activity," said Delegate Gary Howell, R-Mineral.
Allred said he would recommend that the U.S. Attorney's Office in Wheeling investigate the tower project for possible fraud.
"I'm not saying there was fraud. I'm not saying there wasn't," Allred said. "I can say that things look screwy. You've got millions of dollars of federal funds involved."
State officials didn't have a formal response to the audit Tuesday, saying they were reviewing the report.
"This is a complicated report that has evolved over time," said Lawrence Messina, a spokesman for the Department of Military Affairs and Public Safety.
In 2010, West Virginia received more than $126.3 million in federal stimulus funds to expand high-speed Internet.
The project included a $38 million upgrade to West Virginia's emergency communication tower network. Gianato and Gonzalez headed the project, records show. More than $10 million was set aside to build the towers, while the remaining funds paid for radio equipment.
In early 2011, Gianato and Gonzalez notified Lewis County officials about plans to use the county's contract with Premier because the federal government required that the tower project be "shovel-ready."
The stimulus guidelines included no such stipulation, according to the audit.
Tower construction didn't start until 2011, and five of the 17 towers weren't built until this year, according to the audit. The state Purchasing Division could have awarded a state contract to build the towers within 60 days, purchasing officials told auditors.
After Purchasing Director David Tincher found out about the tower project and Lewis County contract, he sent an email to Gianato and Gonzalez last March, directing them "not to proceed with construction."
"Despite Purchasing Director Tincher's recommendation to Mr. Gianato and Mr. Gonzalez advising they stop construction of the towers, this did not occur," the audit states.
Premier Construction wound up hiring five out-of-state companies to build 16 of the 17 towers. Two of those firms weren't registered with the Secretary of State to do business in West Virginia -- a violation of state law, according to the audit. Four of the five firms don't have valid contractor's licenses.