Texas agency has a transparency problem
There’s a delicious irony in the news that a state contract intended to root out fraud and increase transparency in Texas’ Medicaid program might itself show the need for more transparency and oversight of the contracting process.
But it mostly stinks.
A top official at the Texas Health and Human Services Commission quietly resigned Dec. 9 after concerns were raised — mostly by news media — that he may have steered $110 million in noncompetitive contracts to a company he favored.
According to reporting by the Austin-American Statesman, the Houston Chronicle and the Texas Tribune, chief counsel for HHSC Jack Stick was involved, at least tangentially, in the awarding of a $20 million contract (and its subsequent $90 million extension) to Austin technology firm 21 Century Technologies.
On Friday, another commission official, Inspector General Doug Wilson, also resigned, this time at the request of Gov. Rick Perry. Several others were placed on paid administrative leave.
The projects were apparently awarded through a process commonly used for small technology purchases, averaging just a few thousand dollars, according to data analysis by the Houston Chronicle. That process does not require bidding and is used to purchase generic items, like printer cartridges. It also wasn’t intended to be used for large, costly projects.
Cronyism is common, even expected, in politics. But when state officials circumvent a competitive bidding process required of state contracts of that size and scope, it’s a fair assumption that more than just favoritism is to blame.
And if that’s what happened in this case, the award very likely violated state and federal rules.
The Statesman reported that Reflective Medical Information Systems, another company interested in the job, analyzed several years of HSSC data in 2011, in hopes of landing the contract.
The company says it found problems with the leadership of HSSC’s inspector general’s office, where Stick served as deputy inspector general before he was appointed top attorney at the agency.
The issues uncovered were so significant, Reflective Medical Information Systems recommended that the agency turn over Medicaid oversight to the attorney general — a proposal allegedly met with the threat of a lawsuit by the IG’s office if the findings were made public.
It won’t come as a surprise that 21CT found no such problems, perhaps because it had no previous experience with Medicaid work. Or it may be, as the Statesman reported, because the company was not held to the same standards during the procurement process.
That was also the conclusion of HSSC’s executive commissioner, Kyle Janek, who canceled the 21CT contract more than a week ago.
And this past week, the Texas Tribune reported that HSSC canceled a second contract with 21CT awarded by the Texas Department of Family and Protective Services, one of the agencies HSSC oversees.
The DFPS contract with 21CT was for a pilot program that uses Medicaid information to help state child abuse workers locate better information about families under investigation. Stick was allegedly involved, to some degree, in helping secure that deal as well.
On Thursday, state Sen. John Whitmire, D-Houston, asked the state’s public integrity unit to conduct a thorough investigation into the matter.
That request was immediately followed by a statement from Janek that he had contacted State Auditor John Keel and requested the same.
The allegations come to light as the state’s Sunset Advisory Commission, chaired by Sen. Jane Nelson, R-Flower Mound, has approved a massive reorganization of Texas’ health and human services agencies, consolidating its five agencies into one. The effort is intended to streamline programs and improve agency coordination.
Clearly, more than improved coordination is needed at Texas HHSC.
The investigation may prove only that gross mismanagement and not illegal activity is to blame. Whatever the case, HSSC has a transparency problem.
This story was originally published December 19, 2014 at 6:41 PM with the headline "Texas agency has a transparency problem."