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Supervised Y2K testing investigated

Wilmington finance chief hired Md. firm for costly job

By STEVEN CHURCH Staff reporter 03/11/2000

A former Wilmington official named in two federal grand-jury subpoenas had wide authority over the city's $653,000 Y2K efforts, about which the U.S. attorney is demanding information.

Former Finance Director Kevin Bernard hired a Baltimore consultant and a Maryland company to test city computers in 1999, city officials said.

Federal investigators want to review those contracts, along with two computers used by Bernard and a garbage bag filled with documents Bernard allegedly shredded his last day on the job. But the focus of the inquiry remains unclear.

The U.S. attorney sent two subpoenas to the city -- dated Feb. 28 and March 6 -- ordering officials to turn over the documents and the computers by Tuesday.

Marlaw Systems Technology Inc. of Silver Spring, Md., was paid $638,000, and computer consultant Demetrius Stewart was paid $15,000, according to city records. The subpoenas sought records related to Marlaw, Stewart and Bernard.

Spokesmen for the FBI and the U.S. attorney would not comment on the subpoenas. Stewart and Bernard could not be reached Friday for comment.

Marlaw co-owner Gloria Lawlah-Walker said her company had not heard from the FBI and she said she would be surprised if the FBI contacted it because Marlaw didn't do anything improper.

"This was not our first Y2K contract, so we gave the city the expertise they needed," she said.

The payments to Marlaw came after City Council members boosted Y2K funding sixfold in November.

Stewart was paid with three checks dated in late 1998 and early 1999, according to city records.

Federal investigators want to examine the contract Bernard negotiated with Marlaw in 1998 and any contract he might have given to Stewart.

Bernard quit his job with the city in January after he was rebuked by Mayor James H. Sills Jr. for not catching credit card abuses by other top city officials. On his last day of work, City Solicitor Carolyn Schlecker said, Bernard shredded a bag full of documents. She said she made him stop and then took the bag from him.

Council member Ted Blunt, who heads the city's finance committee, Friday called for tighter controls on payments to vendors such as Marlaw.

Sills' top aide, Arthur Boswell, said the city's internal checks and balances should prevent someone from writing a contract, signing it and then alone authorizing the payments on it.

Boswell said the council authorized Bernard to handle the Y2K contract with Marlaw. The council never voted on the contract because it was scheduled to last less than a year, the threshold for council involvement.

The contract also was exempt from competitive bidding because it was a professional services contract. City rules give department heads wide discretion over who is awarded such work.

Boswell said he doesn't remember reviewing the Marlaw contract and doesn't know who, other than Bernard, might have signed it. He said the city cannot make the contract public now because the U.S. attorney has subpoenaed it.

Sills said based on what he knows so far, the administration did a good job of overseeing Bernard's work.

"We don't know what the allegations are yet," Sills said.

Bernard headed Wilmington's efforts to prevent the Y2K bug from causing problems in city computers Jan. 1.

In 1998, officials budgeted $140,000 to fix potential Y2K problems. That summer, Bernard began negotiating the contract with Marlaw, said company co-owner Lawlah-Walker. But the company didn't begin any work until July 1999, she said.

By then, it was obvious that more money would be needed, Boswell said.

Bernard apparently transferred $204,000 from the city's water and sewer fund -- which had a surplus -- to a special Y2K account, city officials said.

Bernard reported to Boswell, and Boswell said he doesn't remember approving the transfer.

"I should have known about that," Boswell said.

When council members protested, that money was returned to the water and sewer fund.

Then, after meeting with Bernard, the City Council voted in November to increase the total amount of money dedicated to the Y2K effort to $890,000.

-- (, March 11, 2000

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