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DHHS adviser made $228,000 in eight months

An adviser to state Health and Human Services Secretary Aldona Wos has been paid more than $228,000 by the state for eight months of work.

The state Department of Health and Human Services signed a personal services contract with Joe Hauck to serve as “senior adviser” at the agency. The initial contract was extended at least four times between March 1 and Aug. 1, and was modified at least once to pay him more “due to increased hours of work per day,” according to a state Department of Health and Human Services contracts website.

According to DHHS, Hauck started under contract in January to work in Wos’ office. The contract is now set to expire Nov. 30, and it is capped at $310,000.

In a written response to questions, DHHS spokesman Ricky Diaz said, “Joe assisted the Secretary in quickly assembling a top-notch management team in order to reorganize, redirect and restructure the Department. At the beginning of the administration, the Department was void of leadership. This is a time-limited job to get immediate results.”

The DHHS contracts website, which is called Open Window and promises “Openness, Transparency and Performance Management,” provides few contract details, but state records show Hauck collected $228,375 in payments between Feb. 25 and Aug. 16.

Hauck came to DHHS from New Breed Logistics, where Wos’ husband is CEO. Hauck is vice president of marketing and communications, and is on leave from the company. Wos was a campaign fundraiser for Gov. Pat McCrory, and New Breed employees were prime contributors. Hauck gave $6,500 to McCrory’s campaign in 2011 and 2012.

Diaz said in an email that Hauck “is an accomplished leader with 35 years of executive management experience across the entire spectrum of business operations and communications disciplines. He provides solid business insight with the ability to ascertain and analyze organizational requirements, forecast goals, streamline operations, and execute new program concepts.”

Diaz wrote that Hauck came up with a plan to save $5 million “without reductions in services rendered,” but did not specify the plan or the services.

Kim Genardo, McCrory’s spokeswoman, said Hauck “provides a helluva lot of good service.”

In an email, Genardo said no one in McCrory’s office approved the contract. “DHHS followed all policy and procedure as it relates to Joe Hauck’s personal service contract,” she wrote.

“Everyone was well aware” that Hauck worked at New Breed Logistics, Genardo added. She described the relationship as “very transparent.”

The payments raised more questions for legislators critical of raises and high salaries at DHHS. The department’s salaries have been under a spotlight recently for high salaries paid to two 24-year-olds who worked for McCrory’s campaign, and for the top salaries paid to new agency executives.

Merritt also on contract

DHHS also has hired Les Merritt, a former state auditor under a personal services contract in its division of mental health. The DHHS website gives no details on Merritt’s contract, but he was paid a total of $58,500 in June and July, according to state records. The agency sent out a press release in May announcing Merritt would “provide financial expertise to the Department’s Division of Mental Health.” Hauck and Merritt could not be reached for comment. Merritt, a Republican, was elected state auditor in 2004 and served one term.

Diaz said Merritt “was brought in to solve a multitude of financial and operational problems with the Division of Mental Health. This is a time-limited job designed to get immediate results.”

Since Merritt and Hauck are contract workers, payments to them are not included as part of the DHHS payroll.

No-bid, personal services contracts are not unusual in state government. But it is unclear how many exist. Sam Byassee, state procurement officer in the state Department of Administration, said there is generally a $5,000 cap on no-bid contracts, but state rules include a long list of exemptions. Personal services contracts under DHHS are unlikely to come through his office, he said.

At least until 2005, DHHS had a policy for personal services contracts that said “contracted positions should not be paid at a rate greater than a similar state position performing the same task,” but added that the agency secretary could overrule that policy.

Diaz, in his email, said “DHHS complied with previously-existing policies and procedures.”

Top earner

Hauck’s contract makes him a top earner at DHHS, far outpacing doctors on salary who work at the state’s psychiatric hospitals or salaried employees at DHHS headquarters with similar titles. Chief policy adviser Matt McKillip makes $87,500 a year. Chief of staff Mark Payne makes $144,000 a year.

McKillip and Diaz, who makes $85,000, are the 24-year-old former McCrory campaign staffers that have been the focus of questions about DHHS salaries.

In the last few months, DHHS has created high-paying state jobs and has hired employees to top positions at significantly higher salaries than their predecessors.

House Minority Leader Larry Hall, a Durham Democrat, said the personal services contracts reinforce the need for legislators to hold hearings on DHHS salaries and promotions.

“Now we’re finding out that work that would have been done by state employees is going to private contractors, apparently,’ Hall said.

“We would like to know how much we pay for those contracts, what services should be contracted out, and what is the bidding process.”

Hall wanted legislators to hold committee meeting this week on DHHS pay issues, but GOP leaders didn’t organize one.

Republican Rep. Nelson Dollar of Cary, a chief budget writer, said he needed to know more about what Hauck is doing before he could talk about his contract.

“I’d have to talk to the secretary and go back and look at the particular situation,” he said.

Database editor David Raynor contributed.

Bonner: 919-829-4821
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