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Archive for March, 2013

FBI investigation prompts Jindal to cancel controversial CNSI contract: but now who will be thrown under the bus?

Posted in Computers, Contract, Contracts, Governor's Office, Health Care, State Agencies, Transparency on March 21, 2013| 34 Comments »

At the risk of sounding a bit smug, regular readers may remember that we had serious misgivings about that $194 million CNSI contract with the Department of Health and Hospitals (DHH) from the outset.

And so, it turns out, does the FBI.

And Gov. Bobby Jindal, much like another governor of some 2,000 years ago, thinks by washing his hands, he can absolve himself of any blame in the entire matter.

Let’s review.

In early June of 2011, DHH Secretary-designate Bruce Greenstein appeared before the Senate Governmental Affairs Committee for his confirmation hearing and things quickly went south as Greenstein and Undersecretary Jerry Phillips became involved in the old irresistible force-immovable object standoff over the identity of the winning contractor to replace a 23-year-old computer system that adjudicated health care claims and case providers.

The contract is scheduled to go into effect in 2014 but that could change now.

Greenstein and Phillips contended that because of a state statute which required the official awarding of the contract by the House and Senate Health and Welfare Committees, they were prohibited from divulging the name of the winning contractor.

Then-Sen. Rob Marionneaux (D-Livonia), who has since retired from the legislature because of term limits, told Greenstein, “One of the questions is about the company you used to work for (CNSI). Who is the company who is going to receive the contract?”

Greenstein and Phillips contended that because of a state statute which required the official awarding of the contract by the House and Senate Health and Welfare Committees, they were prohibited from divulging the name of the winning contractor.

Marionneaux argued that the statute “does not say you shall not divulge, just that shall not award the contract. We’re not here to award the contract; we just want to know who the contractor is. So, who is going to receive the contract?”

Greenstein again attempted to invoke the statute but Marionneaux interrupted him. “Are you telling me right now, today, that you’re refusing to tell this committee who’s going to receive that contract?”

“We believe that the law states that we should call on the (joint) committee and then make the announcement to that committee,” Greenstein said.

“I read the statute,” Marionneaux said. “Are you refusing to tell this committee who is going to be recommended by DHH to receive the award? Yes or no.”

“I’m not going to be able to say today,” Greenstein said.

“We’re sitting here trying to decide if you, the leader of DHH, are going to be confirmed and we have a headline in Monday’s paper that you want to keep a secret and a direct question is being asked and you refuse to answer.”

“I just don’t understand why this administration does this,” said Sen. Ed Murray (D-New Orleans). “You are, I suppose, just following directions.”

Sen. Jody Amedee (R-Gonzales) then laid the issue at the feet of Jindal when he asked Greenstein who made the decision “not to tell us this information under oath?”

“This was from my department…”

“You are the department,” Amedee interrupted. “Who is the person above you? Who is your boss?”

“The governor,” said Greenstein.

Committee Vice-Chair Karen Carter Peterson said, “You don’t want me to know, but you know. Is this what we call transparency?”

Phillips tried to intervene, saying that once the contractor’s name is made public, “it’s the equivalent of an announcement.”

“Do you make the law?” Peterson asked.

“I interpret the law,” said Phillips, who is an attorney.

“Then you’re not doing a good job. Mr. Secretary (Greenstein), I hope you’re paying attention. How many lawyers do we have on this committee? We make law and yet you choose to follow this gentleman (Phillips).”

Greenstein eventual acquiesced and admitted that his former employer, CNSI, was the winner but he insisted that he had built a “firewall” between himself and the selection process and that he had no contact with anyone from CNSI during the selection.

As the committee wound down its questioning, Peterson said, “I hope the governor is listening because what has been happening is not in the best interest of the people nor is it consistent with his purported policy of transparency.

“This gives the appearance of your wanting to hide something, particularly since we now know the contractor is your former employer and you wanted to keep that from us.”

The subsequently learned, despite Greenstein’s assurances to the contrary, that Greenstein indeed did have some contact with his old employer and in fact, implemented changes in the request for bids that allowed CNSI to submit a proposal—a proposal that actually ranked third among four bidders on the technical merits of its proposal but which won the contract based on the lowest price.

The low bid prompted howls of protests from CNSI competitors who accused the Maryland firm of low-balling its bid in order to win the contract. There was no way the company could perform terms of the contract for the amount it bid, they said.

CNSI bid $184.9 million on the 10-year contract. ACS was second with a $238 million bid and Hewlett Packard ES came in at $394 million. A fourth bidder, Molina Medicaid Solutions did not score high enough on the technical front to warrant consideration.

It turns out that the claims that CNSI low-balled its bid may have had merit. Earlier this month, state officials held up a proposed $40 million change to the contract, which had already increased to $194 million. And now we learn that the FBI has launched an investigation into the manner in which the contract was awarded

But on Thursday, only hours after word that the FBI had served a four-page subpoena on DOA was made public, word came down from the fourth floor of the State Capitol that the CNSI contract was being cancelled.

Actually, the administration has known of this probe into the proposal and the CNSI contract for some time now. The subpoena was served on DOA and signed for by DOA counsel Lesia Batiste Warren on Jan. 7.

That means that our open, transparent and accountable administration has known of this probe for nearly three months and chose to say nothing until March 21 and then only after word leaked out about the investigation.

The subpoena called upon DOA to produce:

• All documents submitted by ACS State Healthcare, Client Network Services, HP Enterprise Services, and Molina Medicaid Solutions;

• All financial information (including but not limited to financial statements, income statements, balance sheets, and statements of profit and loss) submitted by ACS, Client Network Services, HP Enterprise Services and Molina, and

• Documents sufficient to show the date and time at which each response to the proposal was received by the state.

Perhaps Jindal, remembering stories about Earl Long shouting to Leander Perez at the height of legislative debate over desegregation, “Whatcha gonna do now, Leander? The feds have the A-bomb,” realized that he would not be able to invoke his beloved deliberative process exception with the FBI and so decided on Plan B: cancel the contract.

“Based on consultation with the Attorney General’s office, today I am terminating the state’s contract with CNSI, effective immediately, announced Commissioner of Administration Kristy Nichols. “The state will work with the current contractor, Molina Medicaid Solutions, to provide services during this transition and until a new RFP (request for proposal), overseen by the Division of Administration, is completed,” she said.

“We have zero tolerance for wrongdoing, and we will continue to cooperate fully with any investigation,” she added.

Yeah, that ought to do it. Cancel the contract and everything will be okay.

The only course of action to decide on now is who to throw under the bus—Greenstein or Phillips

But it might be wise to heed the advice of one sage political observer who says to ignore what the administration says and play closer attention to what was not said.

The fact that the contract was cancelled so quickly tells us two things:

• The administration knew this was coming because you can’t simply cancel a contract of this magnitude on the spur of the moment;

• The administration is scared.

“I don’t think this is over,” our unpaid consultant said.

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Notable Quotables (in their own words)

Posted in ATC, Governor's Office, Notable Quotables, Revenue on March 21, 2013| 10 Comments »

“When you kick employee’s (sic) butts and make them work, sometimes you get a little crap on your boots.”

—Louisiana Alcohol Tobacco Control Director Troy Hebert, responding to a LouisianaVoice request for a one-on-one interview. (We assume that was our interview.)

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Lack of ATC background checks results in approval of multiple alcohol licenses to New Orleans-area felon

Posted in ATC, Legislature, Legislators, Revenue on March 20, 2013| 14 Comments »

A failure to properly conduct background checks by the Louisiana Office of Alcohol and Tobacco Control (ATC) resulted in the approval of alcohol licenses to a New Orleans-area man who was arrested on felony charges six times during 2004 and 2005, according to court records and ATC application forms.

Moreover, the number of citations issued by ATC for underage drinking during the Mardi Gras season has plummeted more than 92 percent since 2011, records show.

In an inter-office email obtained by LouisianaVoice on Wednesday, Department of Revenue (LDR) employees were informed that all outgoing emails by LDR employees to any ATC employee must copy Jarrod Coniglio, chief of staff to Secretary of Revenue Tim Barfield, and “before any current or former ATC employee is interviewed, hired or offered a position with LDR, the division director must receive approval from Jarrod Coniglio.”

There was no explanation why ATC employees were being singled out for such scrutiny. Apparently the powers that be at LDR are not quite up to speed on the Emancipation Proclamation.

The email also instructed that LDR regional offices “will cease requesting or utilizing any ATC agents on a cash seizures or any other field related activity.”

LDR is the umbrella agency under which ATC serves.

ATC Commissioner Troy Hebert defended his actions in an email to LouisianaVoice with the explanation that “disgruntled employees are going to complain” whenever he “kicks employee’s (sic) butts.”

Omar Hamdan was arrested for multiple counts of possession of Schedule II and Schedule IV drugs, for use of a firearm or controlled dangerous substance in the commission of a crime of violence and for bail violation.

Some of the charges against the Harvey resident, including the firearms violation, were dropped after he pled guilty to possession charges in December of 2004.

Despite his legal problems, ATC issued alcohol licenses to four convenience stores owned by Hamdan, records show.

The licenses were actually issued to Hamdan’s wife, Fatmah Hamdan, who checked “No” to the question, “Have you or your spouse ever been convicted of a felony?”

When Scott Wolfe, the individual who sold several of the convenience stores to Fatmah Hamdan, complained to ATC about the licenses issued to Hamdan, ATC at first took no action on allegations that Fatmah Hamdan was the applicant for the licenses.

State law prohibits the practice of a person interposing on behalf of another in an attempt to obtain licenses which is what Wolfe maintains Fatmah Hamdan’s applications represented.

Hebert’s office responded to Wolfe inquiry as to why the Hamdan’s were granted licenses by saying there are no background investigations conducted by his office and that applications are accepted “on the honor system.”

Even after Wolfe’s inquiry, Hebert took no action for eight months. “You could almost hear the crickets in the ATC offices,” Wolfe said.

Only after Wolfe contacted a New Orleans television station and a station reporter made his own inquiries did Hebert initiate a probe by his office and provide the public records requested by Wolfe.

But even then, ATC at first withheld some of the records requested by Wolfe, he said.

ATC, which has been embroiled in personnel issues in recent months and which has lost a couple of lawsuits brought by former agents, has seen its enforcement powers depleted significantly during Hebert’s tenure.

The agency receives grants from various federal agencies which ostensibly are to be used for enforcement purposes.

Citations issued for underage drinking during Mardi Gras, for example, have dropped off significantly since Hebert took over the agency in November of 2010, according to records provided pursuant to a public records request by LouisianaVoice.

ATC agents issued 825 Mardi Gras-related tickets during the 2011 Carnival season. That number dropped by 80.6 percent, to 160 in 2012 and this year only 62 tickets were issued for underage drinking, a drop of 92.5 percent from 2011.

Last July, Hebert appeared with New Orleans Mayor Mitch Landrieu to announce a cooperative venture between ATC and the mayor’s office in which Hebert promised to hire three new full-time agents and auxiliary agents to combat underage drinking in New Orleans. http://www.youtube.com/watch?v=x1tTdVPhNrg

To date, that grandiose promise by Hebert has remained unfulfilled. No new agents have been hired and the auxiliary agents are non-existent.

Hebert, in a March 14 email to LouisianaVoice in response to a request for a one-on-one interview, said:

“When you kick employee’s (sic) butts and make them work, sometimes you get a little crap on your boots.

“Of course these disgruntled employees are going to complain, (sic) I put a GPS on their (sic) state vehicle (sic), I stopped them from taking their state vehicle (sic) home each night, I stopped them from using state cell phones for personal use, I made them punch a time clock and I implemented a performance base (sic again) system that makes them work more productive (sigh, sic).

“As commissioner I am fighting to make sure that the taxpayers are getting their money’s worth. Incompetency and laziness will not be tolerated under my watch.”

The Commissioner has spoken. All rise.

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Notable Quotables (in their own words)

Posted in Education, Higher Education, House, Senate, Legislature, Legislators, LSU, Notable Quotables, Politicians, Revenue on March 19, 2013| 2 Comments »

“Many Legislators would rather get re-elected than make the right decision. They say they’re not going to raise taxes but they’re going to allow us to raise tuition.”

“Federal revenue for higher education is double what the states are doing now. I don’t have faith in legislators but I do have faith in them wanting federal money.”

“The power of Washington to hold states accountable may be the most important answer that we have. The more federal dollars are attached to state behavior, the less likely state legislatures are going to remove themselves from funding responsibility.”

—F. King Alexander, President of University of California Long Beach and more recently LSU President-designate, speaking on “Strategies for Fiscal Housekeeping” at the 14th Annual Travers Conference on Ethics and Accountability in Government Financing California, Feb. 11, 2011.

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LSU president-designate Alexander runs organization that capitalizes on Oxford University name despite no affiliation

Posted in Boards, Education, Governor's Office, Higher Education, LSU on March 19, 2013| 7 Comments »

Did the LSU Board of Supervisors opt for Dr. Jekyll and Mr. Hyde in its selection of F. King Alexander, 50, as the next LSU president?

Will the LSU faithful, so alarmed at the prospects of an appointment of Secretary of Economic Development Stephen Moret to the position, end up wishing he had gotten it after all?

Most important of all, with academics, integrity and healthcare already sacrificed at the Altar of Jindal, will the LSU football program survive?

Perhaps these and other questions will be answered in due course but for the time being, let’s take a look at the paradox that is F. King Alexander.

The first issues that must be addressed are his credentials and his motivation for coming to LSU.

The politically-charged atmosphere in Louisiana in general and LSU in particular is such that one must question the wisdom of anyone wanting to walk into such a volatile situation. The mere fact that one would even apply for the position would seem to call his or qualifications into question.

The LSU student newspaper, The Reveille, was contemplating filing a lawsuit—and still might do so—to learn who all the applicants were. But considering who the winner was the paper’s editors may wish to reconsider its efforts to learn who the losers were.

On the one hand, there is the F. King Alexander who two years ago admonished state governments for “backing out of their responsibility” to keep public colleges working and affordable.

On the other hand, there is the F. King Alexander who operates what critics describe as a “vanity” conference operation that capitalizes on the Oxford University name without the benefit of its being officially affiliated with the English school.

The Baton Rouge Advocate describes Alexander as “a nationally respected up and comer” and his 28-minute speech in February of 2011at The 14th Annual Travers Conference on Ethics and Accountability in Government Financing California: Strategies for Fiscal Housekeeping was a direct assault on state governments’ failure to adequately fund state colleges, thus allowing private universities and for-profit colleges to syphon students away from public institutions.

His talk was a blistering attack on states that he said have taken federal funds for higher education while at the same time, cutting state appropriations by like amounts. Meanwhile, federal grants continue to increase for private schools.

It was the kind of rhetoric that college professors will embrace enthusiastically but the kind that got Alexander’s predecessor, John Lombardi canned by the Board of Supervisors—at the direction of Jindal who doesn’t like to be criticized by subordinates.

Then there is Alexander’s Oxford Round Table connection.

The Oxford Round Table is a series of interdisciplinary conferences that was founded by Alexander’s father, Kern Alexander but now run by F. King Alexander and his wife.

The purpose of the Oxford Round Table is “to promote education, art, science, religion and charity by means of academic conferences and publication of scholarly papers,” according to an online profile.

The organization has incorporated, dissolved and reincorporated several times in different states, including Kentucky, Illinois and Florida—both as a for-profit and as a non-profit. In 2008, the non-profit Oxford Round Table, Ltd. was established in the United Kingdom.

A 2009 report was critical of the organization because, the report said, it does not make its lack of academic connection to Oxford University clear.

Two years earlier, Times Higher Education reported that the organization had been criticized because it was trading on the name of Oxford University and failed to properly inform invitees that it had no formal academic links to the university.

The Oxford Round Table also has attracted controversy in at least three states, including Louisiana, over the cost of school boards’ paying for administrators to attend its conferences. This led to a successful legislative effort to tighten travel rules for school board members statewide, according to a 2003 New Orleans Times-Picayune story.

It remains to be seen if Alexander will bring his pro-funding rhetoric with him or whether his Oxford Round Table will set up shop in Baton Rouge—or both.

Either way, it should be interesting—like perhaps a reprise of the old Carol Burnett Show skit As the Stomach Turns.

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