No-Bid ‘Emergency’ Contract Could Cost $965 Million

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Brian M. Rosenthal
Austin Bureau Reporter, Houston Chronicle

AUSTIN – Texas health officials last year used the firing of the state’s contractor for processing Medicaid claims to justify giving a no-bid “emergency” deal for more money to a company whose lobbying team included several former appointees of then-Gov. Rick Perry, records show.

The company, management consulting firm Accenture, which was removed from a similar project here in 2009, was the biggest subcontractor under the fired vendor. It was not running Medicaid claims processing for any other state.

Although the company received the contract on an emergency basis, shielding the deal from review boards and competitive bidding requirements, it got a three-year term with options for two more years, according to records obtained by the Houston Chronicle.

The options make the contract worth up to $965 million, with an annual value of $192 million –14 percent more than what fired vendor Xerox made last year.

The deal also includes far fewer performance benchmarks: Xerox was sacked for not meeting some of the 249 performance requirements in its contract, but the agreement with Accenture includes just 39 requirements.

Stephanie Goodman, a spokeswoman for the Texas Health and Human Services Commission, which awarded the contract, described it as a logical decision to elevate the top subcontractor to allow the continuation of Medicaid services during a competitive rebidding of the contract. The price increase was due to new requirements in the Affordable Care Act, she said, and the reduction in performance rules was due to a streamlining of metrics.

Goodman would not release information about the status of the bidding process or why it would take three years, citing a need for secrecy to ensure fairness.

Several experts told the Chronicle that procurement for a project as complicated as Medicaid claims processing need not take three years – especially because records show the state started laying the groundwork to transition the contract in 2011.

The state health commission announced the emergency deal last May, but had not mentioned many specifics about the contract, which is among the most lucrative in Texas government.

Lawmakers in recent weeks have heavily scrutinized another health commission contract for a $110 million Medicaid fraud detection system from Austin technology company 21CT, which has triggered a criminal investigation and forced four resignations.

Read more from the Houston Chronicle.

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