Republican Leaders Ask Former Official To Explain Kentucky Wired Contract
Republican leaders of the state House of Representatives have asked a top official from former Gov. Steve Beshear’s administration to answer questions about Kentucky Wired, a statewide broadband project that has racked up more than $180 million in costs associated with delays.
The Kentucky Wired project is supposed to provide high speed internet to all of Kentucky’s 120 counties with a 3,200 mile-long network of fiber optic cable.
Portions of the project were scheduled to go live in 2015, but the state has had trouble securing agreements to install wires on telephone poles owned by local utilities.
After threatening to pull the plug on the project, this year the legislature gave Kentucky Wired nearly $70 million and permission to bond $120 million to compensate contractors for costs associated with the delays.
On Tuesday, state House leaders publicly requested that former Finance Secretary Lori Flanery and a lawyer who helped hammer out the contract for the public-private partnership appear before a legislative panel.
“Legislative members of the Program Review and Investigations Committee, having seen portions of that contract, approached me with concerns about how a contract that obligated so much money and included stipulations so favorable to the contractor could have been signed by the previous administration,” said House Speaker Pro Tempore David Osborne.
“I listened to their concerns and then asked Rep. Lynn Bechler, co-chair of the Committee, to get answers from those individuals directly involved in the negotiations and signing of the contract so we can get to the bottom of this.”
Most of Kentucky Wired’s initial $324 million cost was fronted by private investors led by Australian firm Macquarie Capital.
The state is obligated to pay the companies more than $30 million per year to help pay off debt associated with the project.
Initially the state was planning to offset the payments by using the network to supply internet for government buildings. But after an attempt to rebid the school districts’ internet contract in 2015, AT&T protested, saying that Kentucky Wired had an unfair advantage in the bidding process.
Bechler said that he has asked former Secretary Flanery and attorney Patrick Hughes, who helped negotiate the contract for Macquarie, to explain why the contract was structured the way it was.
“If there is a good explanation for why the contract was structured the way it is, the members of the Committee would like to know it to put our minds at ease; if there is not, then the people of the Commonwealth deserve to know it so situations like this can be avoided in the future,” Bechler said in a statement.
Flanery and Hughes did not respond to requests for comment.
Kentucky Wired is supposed to create the “middle mile” of a high-speed internet network; cities and businesses across the state would be in charge of building out the “last mile” to connect services to customers, and eventually the project is supposed to generate revenue by charging to use the network.
Earlier this year, officials said the project would go live in 2020.