Cost overruns, botched procurement detailed in special examination of statewide broadband project
FRANKFORT, Ky. (September 27, 2018) – A special examination by Kentucky Auditor Mike Harmon’s office of KentuckyWired, the statewide broadband project announced in 2014, finds that taxpayers will be on the hook for almost $1.5 billion over 30 years for the project. That is among nine findings detailed in Auditor Harmon’s nine-month examination of the Kentucky Communications Network Authority (KCNA) and KentuckyWired. Auditor Harmon’s report will be referred to the Executive Branch Ethics Commission for further review and possible action by that agency.
Kentucky Auditor Mike Harmon
“When KentuckyWired was announced by the prior administration, Kentuckians were told they would only be responsible for a $30 million investment approved by the General Assembly in 2014, and the majority of funding would come from private investment,” Auditor Harmon said during the release of the KCNA examination. “What we now find is that, between what has been paid out thus far, what has been bonded, and what we have been obligated to by former leaders, taxpayers are responsible for 93 percent of the total cost for KentuckyWired.”
In addition, the report details that the KentuckyWired project is almost $100 million over budget for construction costs, and the original planned completion date for the project has already passed. Meanwhile, the state is making so-called “availability payments” to contractors for a network that is not available or operational. Auditor Harmon’s examination details other issues with KCNA and the KentuckyWired project, including:
Even though the report details many serious findings with the KentuckyWired project, and the General Assembly is doing its own investigation through the Program Review and Investigations Committee, Auditor Harmon says his office will continue its exam specifically covering the time frame between when the RFP was issued in 2014, and when the project agreements were signed in September 2015.
“There are questions that remain as to why the terms were changed from the original proposal that placed little burden on taxpayers to what was signed the following year that put the responsibility of almost $1.5 billion on the Commonwealth,” said Auditor Harmon. “My office will use any and all authority given to us, including if needed our subpoena powers, in an attempt to get to the bottom of what happened, and to make sure future projects are done in a responsible and transparent fashion.”
The full report can be found on the auditor’s website.
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