Firm lost one recovery contract, then got another. NC officials defend decision.
Lawmakers pressed officials from North Carolina Gov. Josh Stein’s administration Thursday over the decision to award a multi-million-dollar Helene recovery contract to Horne LLP, a firm with a controversial history and ties to a top adviser overseeing recovery in Western North Carolina.
Horne is “a company we’re all familiar with,” as they were involved with the “dismal efforts in Eastern North Carolina recovery,” said Republican Sen. Brent Jackson, a co-chair of the hurricane response and recovery subcommittee within the General Assembly’s Joint Legislative Commission on Governmental Operations, known as Gov Ops.
Mississippi-based Horne LLP provided project management services from 2019 to 2022 to the N.C. Office of Recovery and Resiliency, also known as ReBuild NC, which has been harshly criticized for its housing recovery work for Matthew and Florence survivors.
But following criticism of case management, communication and recovery efforts, Horne’s contract was not renewed and ReBuild NC later brought these management services in-house.
In mid-April, Horne LLP was also ordered to pay $1.2 million to the federal government over allegations that the company received improper payments of federal disaster recovery grant funds in connection with services it provided in 2017 and 2018 in West Virginia.
Jonathan Krebs, Stein’s Western North Carolina recovery adviser, held a leadership position at Horne as recently as last year.
Inside Climate News first reported in mid-May on the decision to pick Horne and Krebs’ prior involvement with the company.
Decision to pick Horne
The U.S. Department of Housing and Urban Development approved in late April a $1.4 billion block grant to help address unmet housing, infrastructure, and economic revitalization needs in Western North Carolina. The state’s proposed plan for use of those federal funds was submitted in late March. More than $800 million of those funds will go toward reconstruction and rehabilitation of owner-occupied units.
On April 14, the state opened a Request for Proposal, or a solicitation for bids, for vendors to apply to provide the state’s case management and construction management services for the reconstruction and rehabilitation of owner-occupied units.
A separate bid for builders is expected to be awarded in June, according to documents presented by Stephanie McGarrah from the state’s commerce department, and who leads its recovery efforts.
Horne, during its time with ReBuild NC, was hired for case management — not construction management — services. In a letter to lawmakers in September 2022, Horne said that Rebuild NC did not allow it to communicate with construction managers and other state agencies. It said this affected performance.
A Horne spokesperson said they did not have a comment as they were not authorized to speak for the program.
Five companies — including Horne — applied for the case management and construction management contract this year.
On May 9, Horne LLP was awarded the $81 million contract, which spans three years.
On Thursday, during a meeting, McGarrah said that two bidders did not submit required financial documents, disqualifying them in accordance with federal regulations.
The remaining three were reviewed and evaluated, with North Carolina leaders speaking with other states to hear about their experiences with the bidding companies, reaching out to references provided, and reviewing technical details and more. Horne came out on top.
“In talking to other states and in doing our evaluation, I have to tell you, it wasn’t even close. Horne was by far the best,” she said.
“The thing is about this industry, there are only a few companies that work in this industry. My impression has been, the blame was placed by this body on NCORR, not the contractors,” she said.
She also said that Horne would be paid for outcomes rather than time spent on work, contrary to how it was with ReBuild NC.
Krebs’ connections and campaign contributions
Beyond the decision to hire Horne, lawmakers focused extensively on Krebs’ past with Horne and whether it was a conflict of interest — or had sway over the decision to contract with Horne again.
Krebs said he was an employee or consultant for Horne for nearly 16 years, having last been employed by Horne in late April 2024 — though providing some transitional services for the company for three months after he left.
He said he received his last compensation from Horne in December 2024, which was deferred compensation.
Krebs said he had “not participated in any procurement decisions. I have intentionally not been involved in saying good things or bad things.”
“My job is to define what it is we’re trying to accomplish, how we’re going to go about doing it and focusing on the process,” he said.
But questioned by Rep. Brenden Jones, Krebs said he worked with a team that helped draft the Request for Proposal.
Jones called that a conflict of interest, but Krebs defended his participation, saying his role as technical adviser was to provide guidance.
Jones, the House majority leader, also pressed Krebs on his political contributions, with State Board of Elections data showing that his most recent contribution was $29,000 on Oct. 23, 2024, to the NC Democratic Leadership Committee. Krebs also made donations to Stein, most recently $6,400 on June 28.
For the payment to the NCDLC, Krebs listed his employer as Horne.
“Tell me how this is not an example of absolute pay-to-play politics?” questioned Jones.
Krebs replied that the paperwork for the October donation shows that the contribution had been made earlier, at an event hosted in March for then-candidate Stein.
“The receipt was in March. I was an employee of Horne in March. I completed that. I didn’t turn in my paperwork. That was just a mistake on my end. Their campaign reached out” to fix the paperwork, he said.
Krebs said his political contributions “certainly led me to the introduction with (Stein).”
“I don’t give money to everybody,” but “look for folks that are contributing in a way that I think is meaningful … I met the governor in December of 2023 and was impressed by somebody that genuinely believes that if he just does good work, that the rest will work itself out.”
“I put my money where my mouth is and when I saw an opportunity,” he followed it, he said.
Rep. Mike Schietzelt, a Republican from Wake Forest, focused on the donation that appeared to be given in October.
“Looking at the paper trail right now, it looks like you left (Horne), started a consulting firm, consulted for Horne, and in October of 2024 — while people in Western North Carolina are still collecting their dead and trying to put their lives back together and preparing for a winter — that you saw an opportunity,” he said.
“The optics are terrible,” Schietzelt said.
Krebs said he “was trying not to be offended” by those accusations.
Timeline for home repairs and rebuilds
While most of the committee members focused on Horne and Krebs, McGarrah was asked about the timeline for getting people back into homes.
She said, “We are going to move that much more quickly. And by quickly, I mean quickly in terms of federal revenue, not quickly in terms of what it feels like to be in Western North Carolina.” She said she expected housing needs to be met in three to four years, with infrastructure needs taking longer.
Sen. Ralph Hise, a Spruce Pine Republican, said the people affected “didn’t want to hear” that it would take “three to four years to rebuild their housing.”
“I would begin to emphasize anything we could do to make that number less for finishing, we’ll be fully in support of,” he said.
