In a state drowning in consulting contracts, what’s one more?
Bobby Jindal is a lame duck governor who long ago set his sights on bigger and better things. He has abdicated every aspect of his office except the salary, free housing and state police security that go with the title. In reality, he has turned the reins of state government over to subordinates who are equally distracted in exploring their own future employment prospects.
His only concerns in almost eight years in office, besides setting himself up to run for President, have been (a) appointing generous campaign donors to positions on state boards and commissions and (b) privatizing state agencies by handing them over to political supporters.
To that end there has been a proliferation of consulting contracts during the Jindal years. The legislative auditor reported in May that there were 19,000 state contracts totaling more than $21 billion.
So as his term enters its final months and as Commissioner of Administration Kristy Nichols has less than a month before moving on to do for Ochsner Health System what she’s done for the state, what’s another $500,000?
LouisianaVoice has learned that Nichols signed off on a $497,000 contract with ComPsych Corp. and its affiliate, FMLASource, Inc. of Chicago, to administer the state’s Family and Medical Leave Act (FMLA) program. FMLA CONTRACT
It is no small irony that Nichols signed off on the contract on May 19, less than two weeks after the legislative auditor’s report of May 6 which was highly critical of the manner in which contracts are issued with little or no oversight.
The latest contract removes the responsibility for approving FMLA for state employees and hands it over to yet another private contractor.
Apparently FMLA was just one more thing the Jindal administration has determined state employees are incapable of administering—even though they have done so since the act was approved by Congress in 1993.
Because no state employees stand to lose their jobs over this latest move, the contract would seem to simply be another consulting contract doled out by the administration, obligating the state to more unnecessary expenditures.
Whether it’s farming out the Office of Risk Management, Office of Group Benefits, funding voucher and charter schools, or implementing prison or hospital privatization—it’s obvious that Jindal has been following the game plan of the American Legislative Exchange Council (ALEC) to the letter. That plan calls for privatizing virtually every facet of state government. If you don’t think the repeated cuts to higher education and health care were calculated moves toward ALEC’s goals, think again.
The contract runs from May 17, 2015 through May 16, 2016, and the state agreed to pay FMLAServices $1.45 per state employee per month up to the yearly maximum of $497,222.
Agencies for which FMLAServices will administer FMLA include the:
- Division of Administration;
- Department of Economic Development;
- Department of Corrections;
- Department of Public Safety;
- Office of Juvenile Justice;
- Department of Health and Hospitals;
- Department of Children and Family Services;
- Department of Revenue;
- Department of Transportation and Development.
The legislative auditor’s report noted that there is really no way of accurately tracking the number or amount of state contracts. STATE CONTRACTS AUDIT REPORT
“As of November 2014, Louisiana had at least 14,693 active contracts totaling approximately $21.3 billion in CFMS. However, CFMS, which is used by OCR to track and monitor Executive Branch agency contract information, does not contain every state contract.
“Although CFMS, which is a part of the Integrated Statewide Information System (ISIS), tracks most contracts, primarily Executive Branch agencies use this system. For example, Louisiana State University obtained its own procurement tracking system within the last year, and most state regulatory boards and commissions do not use CFMS (Contract Financial Management System). As a result, there is no centralized database where legislators and other stakeholders can easily determine the actual number and dollar amount of all state contracts. Therefore, the total number and dollar amount of existing state contracts as of November 2014 could be much higher.”
The audit report also said:
- State law (R.S. 39:1490) requires that OCR (Office of Contractual Review) adopt rules and regulations for the procurement, management, control, and disposition of all professional, personal, consulting, and social services contracts required by state agencies. According to OCR, it reviews these types of contracts for appropriateness of contract terms and language, signature authorities, evidence of funding and compliance with applicable laws, regulations, executive orders, and policies. OCR also reviews agencies’ procurement processes against competitive solicitation requirements of law. The contracting entity is responsible for justifying the need for the contract and conducting a cost-benefit analysis if required.
- However, state law does not require that a centralized entity approve all state contracts.
- According to the CFMS User Guide, OCR is only required to approve seven of the 20 possible contract types in CFMS. The remaining 13 types accounted for 8,068 contracts totaling approximately $6.2 billion as of November 2014. Exhibit 2 lists the 20 types of contracts in
- CFMS and whether or not OCR is required to approve each type, including the total number and dollar amount of these contracts.
- In fiscal year 2014, 72 agencies approved 4,599 contracts totaling more than $278 million.
The Office of Contractual Review was since been merged with the Office of State Procurement last Jan. 1.
Louisiana Voice 
This is TOTAL insanity!
Not to mention disgusting.
I know everybody is tired of hearing me and a few others say this, but there is NO COMMON SENSE REVIEW of these contracts above the department level.
The Division of Administration review is TECHNICAL. Whether contracts are worthwhile, or not, is a decision made by individual department heads.
The legislature has, at various times, tried to inject itself into the approval process, but this is an EXECUTIVE not LEGISLATIVE responsibility.
Simple Question: When will department heads be made truly accountable for the decisions they make with regard to these contracts (or anything else, for that matter)? If history is any predictor, the answer is apparently NEVER.
Agencies have no say or control over such contracts anymore. They no longer have “back office” functions such as human resources, contract generation and review, procurement/purchasing, staff development and information technology. All those functions have been consolidated under the Division of Administration, and agency work is theoretically done by pool staff, if done at all.
Why the massive consolidation of power in the final days of the jindal reign of error?
John Kennedy was right–again. The State has privatized itself into bankruptcy. Thanks just a whole heap Legislators. You’ve really got your finger on the pulse of the beast.
That’s what people wanted when they elected Jindal. To dismantle government. People certain private sector is superior.
Right. Make the government small enough to “drown it in the bathtub” per King Norquist.
Norquist self identifies as an anarchist, based on this infamous quote. Many anarchist are terrorists. And many believe Norquist is a closet Muslim, being as how he is married to one. Which makes Norquist, the man Jindal esteems more that the citizens he pledged to serve, a Muslim terrorist!!!
Tom, correct me if I’m wrong but doesn’t the payroll system track all FMLA? So what is it that ComPsyc Corp doing under this contract?
@PB
“People certain private sector is superior.”
The Ideological Crisis Underlying Today’s Tax and Financial Policy
“It is a financial rake-off of a magnitude such as has not existed since medieval European times…”
Pretty much proves we have learned little from history and nothing from experience.
Hi Stephen,
That was a pretty quick response. If you haven’t done so, please do yourself an incredible service and read the article. The author is a highly experienced and dedicated economist.
I skimmed it and am now going through it very carefully. Thanks.
Okay, I finished a more careful and complete read and maintain my original position.
This guy certainly pushes a lot of my buttons and this is frightening stuff. In Michael Lewis’s book about the housing bubble, he wonders how we could have been so stupid. I wonder the same reading this.
That great economist The Donald would do well to read this – Oh ,wait, I forgot, The Donald already knows everything, despite the fact the $40-$50 million he inherited from his father would have grown by more than he has now had he simply put it into an index fund. At least he did some good with some of his money and he was a good entertainer while he peaked among the Republican POTUS candidates.
Thanks, again, for the link.
@earthmother
“Why the massive consolidation of power in the final days of the jindal reign of error?”
For the use of our dear Mr. Vitter. What else? The candidate who, like Obama, promises greater transparency. A transparency which, like Obama’s, we’ll never see. And whom, more likely than not, will continue the bidding of ALEC.
A vote for Vitter will continue the destruction of our state. Jindal’s tenure was the testing phase for this insanity.
These private entities are slick. Convince the state that you can perform the services for a low cost of $X million dollars. Comeback the next year and cry that you need to increase the contract costs by 1/3 to1/2. They just cannot provide those services at the original contract cost. The state has no choice. The state can’t break the contract and even if it could, the state has dismantled the governmental entity that was performing the service.
“They just cannot provide those services at the original contract cost.”
That’s simple enough. Find them in breach of contract and sue the living hoo-doo out of them. There are ways to stop dogs from sucking eggs.
State contracts typically HAD a cancellation clause stating that either party could terminate a contract with thirty days’ notice for any reason, and the state reserved the right to terminate if funds were not or were no longer available to pay the costs of the contract. (I once cancelled a contract with a politically connected entity for specific non-performance.) Who knows what language is contained in this administration’s contracts?? He’s given everything else away, what’s a measly half million here and half million there?
AsYouLikeIt, after reading earthmother’s response to your comment, I realized that we are talking about two different types of contracts. I am speaking about those types of contracts to privatize the prison operations and charity hospitals. A perfect example of what I am talking about happened earlier this year. A private entity came to the legislature and asked for capital outlay money. A request far and above the agreed upon contract amount to operate the hospital. It appears they wanted to do some additions and wanted to build some new structures. At least the legislature was smart enough to say no. Any additions or new construction cost has to be borne by the private entity. One legislator put it this way: We are the landlord and yes we are responsible for making sure your air and heat work,but if you want a swimming pool, that’s on you. .
You mean there are no H.R. folks in the state who can manage an FMLA program?
The contract also states: “Navigate employees through the FMLA process…to enable them to get healthy and back to work.” So what about if the employee is using FMLA for a sick (covered) relative? Are state employees eligible for FMLA use for that?
The state’s payroll T&A process isn’t able to keep track of hours used for FMLA?
This was just a gimme to someone. It’s pathetic.
Fredster, you are SOO right—another pathetic gimme. When informed about this contract back in May (a done deal, we had no choice…and no HR staff) people in our agency went ballistic. Another huge waste while we are staring down the barrel of our fourth major layoff under this mal-administration.
State employees are eligible for FMLA to care for close relatives. Eligibility requirements for FMLA are simple and easy to understand and determine. It doesn’t take a genius to send out and accept the forms, process the paperwork up the line and send replies to employees. And it’s not so time-consuming as to require an outside contractor.
As for the contract helping “Navigate employees through the FMLA process…to enable them to get healthy and back to work.” – WHOA! Are the contractor’s employees medical professionals? Doctors, RNs, nurse practitioners, physicians’ assistants, etc.? Employees on FMLA are released to return to work by their doctors who determine if they are able to meet essential functions; need temporary light duty, etc. Paper pushers should not have anything to do with medical decisions. Yes, there ARE abuses but those issues will not be resolved by clerks in faraway states reading paperwork. Having had considerable training and some personal experience with FMLA, I don’t see huge problems needing “navigation” – explanations, yes; big complicated mystique, no.
And BTW, state employees who are out on sick leave for three consecutive days – unplanned, like an illness, no advance notice such as a planned surgery – are automatically placed on FMLA.
@earthmother
“…cancellation clause…”
I’ve done these types of contracts in private, small business activities. They were in essence contracts that aren’t contracts. The only reason I used them were because of numerous contingencies that would have added expenses well over the contracted amounts and where added legal expenses would have limited business activity. But this was in a small business scenario where unexpected expense could have ended the small business entirely.
It would appear then that the state is issuing these with the implication that it may well not be able to fulfill it’s obligations under a definitive period contract. The state then is essentially providing a guaranteed profit situation to the private entity while retaining unacknowledged liabilities. This leaves the private entity relatively risk-free, which in an insurance situation is completely nonsensical because that’s what an insurance entity does; it assumes risk allowing the policy holder to limit risk.
In finding such contractual situations within insurance agreements, one’s mind immediately reaches to quid pro quo. If you’re not limiting liability, exactly what are you doing???
Oh. And in an administrative services contract, what is a public entity doing letting an extremely short-term contract in a continuing need scenario. Are they anticipating the end of government? It’s utter nonsense. The shrinking government ideology doesn’t fit the situation at all. But a ‘no government’ one would.
@Stephen Winham
“Pretty much proves we have learned little from history and nothing from experience.”
I have no argument with that at all. The problem is that we are so inundated w/ propaganda from such entities as the Chamber of Commerce it causes us to forget empirical facts.
That particular author is well grounded in those empirical facts of finance. You can read further articles should you wish here. He writes of his background here.
My career pursuits had caused me to be away from Louisiana for quite extended periods. I didn’t realize you were a former BD. You will find that most of my comments will be directed towards dispelling the financial myths with which we are being propagandized.
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