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Archive for the ‘Privatization’ Category

State Treasurer John Kennedy adds his voice to concerns over questonable LSU hospital privatization saving claims

Posted in Contract, Contracts, Guest Columnist, Health Care, Higher Education, LSU, Privatization on October 18, 2013| 7 Comments »

The following is a press release by State Treasurer John Kenney. LouisianaVoice presents it here as a guest column that we feel underscores the concerns expressed in our Sept. 29 post entitled False prophets, false profits—and false reasons to privatize LSU Hospital System (or trolling for more Medicaid dollars)

The reason advanced by the Jindal Administration for privatizing Louisiana’s charity hospitals is that a private hospital like Lafayette General or Ochsner, for example, can manage a hospital more efficiently, and therefore cheaper, than the state.

That’s why I was taken aback when the chairman of the private entity taking over the Shreveport state hospital testified before the Joint Legislative Committee on the Budget that the private contractor’s costs to run the Shreveport facility will be the same as the state’s. Where, then, will the Jindal Administration’s promised annual savings of $150 million come from if not from achieving operational efficiencies?

Dig deeper into the details and it becomes apparent that the planned “savings” won’t result from lower costs but from getting more money from the federal government through an accounting change. This won’t make the charity hospitals or Louisiana’s Medicaid program, which pays for the hospitals, more efficient. It will just make them more expensive, fueled by additional federal (American taxpayer) money.

Here’s how the new financial strategy will work: Medicaid, which is government health insurance for the poor, is a federal-state program. The states run it but the feds put up most of the money. In Louisiana, for every $1 in state taxpayer money we contribute, the feds contribute $2. The more money we put up, the more money the federal government contributes.

Under the Charity Hospital privatization, the state will “lease” the charity hospitals to private hospitals, which then will be responsible for treating our low-income and uninsured citizens. The state will pay the private hospitals to do this with large amounts of federal money from our Medicaid program. The private hospitals will then return some of those federal dollars to the state as “lease payments.” The federal dollars paid to the state as “lease payments” now become new state dollars, which the state can use to draw down even more federal money.

This accounting maneuver is undeniably clever. The question is whether it is legal. It must be approved by the federal Centers for Medicare and Medicaid Services (CMS).

Louisiana’s track record with CMS is not good. CMS has previously rejected similar financing strategies designed to leverage federal money. In the early 1990s, for example, Louisiana and other states adopted financing strategies such as “provider taxes,” “provider donations,” and “intergovernmental transfers,” designed to launder federal Medicaid funds into state funds in order to draw down more federal funds. CMS and Congress spurned them all. (The Medicaid Disproportionate Share Hospital Payment Program: Background and Issues, The Urban Institute, No. A-14, October 1997). http://www.urban.org/publications/307025.html

In fact, Louisiana was more aggressive than most states in trying to leverage federal dollars. Our health care budget grew from $1.6 billion in 1988 to $4.48 billion in 1993, of which 90% was federal funds. The amount of money actually contributed by the state during this period declined from $595 million to $462 million. (Washington Post, Jan. 31, 1994, page A9).

When CMS and Congress stepped in to stop what then-Congressman Bob Livingston called Louisiana’s “abuse” of Medicaid financing, and, in Livingston’s words, the “unjustified and unwarranted benefits” came to an end (The Advocate, Feb. 6, 1997, page 1A). Newly-elected Gov. Mike Foster was faced with a $1 billion deficit in the health care budget. To clean up the mess, Foster appointed Bobby Jindal as DHH Secretary, who sought special relief from Congress. As The Advocate newspaper editorialized, “Louisiana pleaded guilty as charged, threw itself on the mercy of the court and got off easy,” because “the state for years ran a scam using ‘loopholes and accounting gimmicks’ to justify fantastic increases in federal payments.” (The Advocate, April 29, 1996).

Perhaps this time is different. Perhaps CMS will view the new “lease payments” being used to obtain additional federal money more favorably han the strategies CMS has rejected in the past.

One thing’s for certain, though. We need to find out. The state should seek CMS review of its new strategy immediately—not “soon” as DHH has promised—but now. Until then, our entire state health care delivery system for more than two million of our people is at financial risk.

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False prophets, false profits—and false reasons to privatize LSU Hospital System (or trolling for more Medicaid dollars)

Posted in ALEC, American Legislative Exchange Council, Boards, Contract, Contracts, Governor's Office, Health Care, Higher Education, House, Senate, Legislature, Legislators, Privatization, Public Records, Transparency on September 29, 2013| 12 Comments »

Editor’s note: This essay is more than twice the length of our usual posts but with the takeover of LSU Medical Center in Shreveport and E.A. Conway Medical Center in Monroe set to take effect on Tuesday (Oct. 1), we felt it vital to provide more detailed information about the administration’s smokescreen that it likes to call a $125 million taxpayer savings. Please take the time to read it in its entirety.

False reasons for privatizing

The governor’s stated purpose of privatization was to improve quality, improve medical education, and save the taxpayers about $125 million (The Advocate 9/4/13).  His actions, however, support none of these stated purposes.

  • Improve quality?  There are many measures of quality, safety, and patient satisfaction that Medicare and others publish (see the discussion on NOLA.com September 14, 2013 story on East Jefferson and West Jefferson Hospitals).  Through a public records request I asked DHH what measures of quality they used in concluding that quality would be improved with these privatizations.  To no surprise, they did not attempt to review any data on quality despite this being one of the governor’s primary reasons for privatizing.  If you look at Medicare’s website http://www.medicare.gov/hospitalcompare/search.html  the LSU facilities compare very favorably to the new private partners.  Furthermore, the Cooperative Endeavor Agreements (CEAs) do not have requirements of the partner hospitals to measure, report, and be held accountable for any quality measures.
  • Improve medical education?  This is vintage Jindal.  He creates a crisis to force change then regardless of the outcome, declares victory for staving off the crisis he created.  Compared to not having hospitals to train in, the partnerships are better, but the public hospital system under LSU prior to Jindal’s meddling was very supportive of medical education and programs were performing well there.  Since the governor slashed funding for the hospitals, however, the programs ran into difficulty because of the governor’s actions.
  • Save taxpayers about $125 million?  Go back to the Medicare website (http://www.medicare.gov/hospitalcompare/search.html ) and compare the cost to Medicare for care delivered around a hospital stay at the LSU hospital and at the private partner.  In every case the care associated with the LSU hospital was much cheaper than the private partner.  The truth is the governor’s team never asked the private partners what their costs were.  In response to a public records request in which I asked DHH for their analysis comparing costs, DHH was unable to provide any documents demonstrating they compared the actual cost of care at the public and private hospitals prior to entering into the CEAs.  Even though the CEAs commit the state to paying the cost of care at the private hospitals, no one from the administration bothered to ask them what their costs were.  The LSU Board signed off on these agreements without knowing this basic information – an action they were willing to take with the public’s money but that none of them would be so irresponsible to do with his own business.

Here is the breakdown for all cost to Medicare for a patient from 3 days prior to hospitalization to 30 days after the hospital stay (from the Medicare website):

LSU     Hospital Private     Partner(s)
Medical Center of Louisiana     (Charity): $16,698 Touro: $20,022
University Medical Center     (Lafayette): $11,781 Lafayette General: $18,578
Leonard Chabert (Houma): $13,356 Terrebonne General: $18,961
Ochsner: $19,571
W.O.Moss (Lake Charles): $9,299 Lake Charles Memorial: $18,262
Earl K. Long (Baton Rouge): $12,017 Our Lady of the Lake: $21,133

 

So despite the governor’s claim, DHH has no evidence that these deals will save taxpayers $125 million and in fact the public data available indicate just the opposite.  The governor’s real plan is to quietly shift this added cost from state funds to federal funds.  It may save state funds but this approach does not match his public stance on rejecting additional spending, even federal funds since those are taxpayer dollars too.

 Examining the money

Why would the state agree to pay these private partners their costs without knowing how much that is?  Why would the state move its patient care from the lower cost state providers to higher cost private providers?  One explanation is that the higher cost will be borne by the federal government, not the state.  Last year, the public hospitals were appropriated $955 million.  Commissioner of Administration, Kristy Nichols, testified that in 2014 that number will exceed $1 billion.  As reported in The Advocate (May 28, 2013), “The total operating expense associated with the privatization of the LSU hospitals will hit $1 billion during the next fiscal year, Commissioner of Administration Kristy Nichols said Thursday. That’s more than there is in the current year’s budget – $955 million for the state to operate the charity hospitals…”

The private partners will participate with the state in a financing scheme that will allow the state to withdraw its support of the LSU hospitals while increasing the flow of federal funds.  The scheme involves at least 3 different components.  In isolation, each component may be (MAY BE) deemed allowable by the federal government but viewed together they demonstrate an effort to skirt federal requirements that the state put up its fair share of funding for the Medicaid program.

  1. Supplemental or extra payments from Medicaid to private hospitals using federal Medicaid dollars
  2. Lease payments including “up front” payments, in effect, the state “borrowing” funds from a private Medicaid provider (that it just prepaid a supplement using federal funds) in order to cover a state budget shortfall
  3. The state using the private hospital lease payments as match to draw more federal funds and then paying a portion of that back the private provider.

The entire process is designed to cut out the state support and increase the federal support.

Reducing state support

In September 2011 a consulting group named Verite hired by DHH submitted a business plan review that was considered by the Joint Legislative Committee on the Budget at its September 2011 meeting when it voted to approve contracting for construction of the new hospital www.newhospital.org.  The report points out the average state funds in the Interim LSU Hospital (ILH or “Charity”) from 2006 – 2011 was $42.8 million.  It projected an average annual amount of state funds in years 2015-2020 of $52.5 million necessary to pay for the cost of caring for uninsured people.  The JLCB approved construction based on these expectations.

However, the 2014 state budget includes zero state funds for ILH.  How can this be?

Here is the scheme:  The private hospital pays LSU money to lease the LSU hospital.  That money does not stay with LSU; it ends up (directly or indirectly) being used as match in the Medicaid program.  After matching those lease payments with federal funds, the total, larger amount is paid back to the private partner in the form of a Medicaid payment.   The lease payments supplant the state funds.  However, the legislative fiscal office has already raised concerns about the leases being $39 million short which is  why the Division of Administration has already begun planning on “double” lease payments this year.  http://www.nola.com/politics/index.ssf/2013/09/new_orleans_shreveport_hospita.html

For years states have devised schemes to receive additional federal funds while reducing the state contribution for Medicaid.  There is a problem with these schemes, however.  Consider this from a 2009 report by the Congressional Research Office:

“In 1991, Congress passed the Medicaid Voluntary Contribution and Provider-Specific Tax Amendments (P.L. 102-234). This bill grappled with several Medicaid funding mechanisms that were sometimes used to circumvent the state/federal shared responsibility for funding the cost of the Medicaid program. Under these funding methods, states collect funds (through taxes or other means) from providers and pay the money back to those providers as Medicaid payments, while claiming the federal matching share of those payments. States were essentially “borrowing” their required state matching amounts from the providers. Once the state share was netted out, the federal matching funds claimed could be used to raise provider payment rates, to fund other portions of the Medicaid program, or for other non-Medicaid purposes.”

https://opencrs.com/document/RS22843/

DHH’s current scheme includes a “borrowing” component that looks similar to the practices this legislation was aimed at preventing.  Medicaid rules do not allow a Medicaid provider (read “hospital” here) to voluntarily donate money to the state when they know they will get this money back plus more (the federal share) as part of an increase in their Medicaid payments.  The federal oversight agency, CMS, has already expressed concerns to state officials that these lease payments could qualify as non bona fide provider donations https://louisianavoice.com/2013/06/26/cart-ahead-of-the-horse-cms-letter-to-sen-ben-nevers-continues-to-leave-jindal-hospital-plan-approval-up-in-air/ and they will be examining the hospital leases to determine this.    If CMS determines these are conventional fair market value leases, they will allow the payments.  Beyond the basic annual lease payments, the deals include “double lease payments” and other large up front lease payments designed to fix the state’s budget problem raising the specter of non bona fide provider donations.  If these payments are deemed to be non-allowable, the federal government will recoup any federal funds that were paid as match for these state funds https://louisianavoice.com/2013/06/26/cart-ahead-of-the-horse-cms-letter-to-sen-ben-nevers-continues-to-leave-jindal-hospital-plan-approval-up-in-air/.  This will likely be resolved after Jindal leaves office and can just be added to the huge mess the state will need to clean up when he departs.  The legislature is derelict in counting on these up front lease payments for at least two reasons: First, if they are legitimate, they are still borrowing from future years, and second, there is a good chance that they are not legitimate and will not be allowed by CMS.

A key question is, “Are these fair market value leases?”  The state and the complicit private hospital want the lease amounts to be as high as possible – this is how they will maximize the fund shift from private hospital to the state; then the funds will be used to generate the maximum amount of federal match which will be paid back to the hospital.  The state did not engage in a competitive bid process to determine the value of the leased facilities.  Instead, the state identified existing in-state private hospitals that it could pay additional funds through the Medicaid program to make the funding scheme work.  After receiving large up-front extra Medicaid payments, these hospitals would agree to lease the LSU hospitals and the lease payments would be used (recycled?) as match to replace the state funds the governor cut out.  The annual lease amounts are presumably based on an appraised value of the property being leased, but the actual payments which include large up-front amounts and multiples of the annual lease amounts – have nothing to do with the value of the property and everything to do with the state’s budget holes.  Furthermore, it is all but certain that none of the hospitals would garner the large lease amounts without the corresponding agreement by DHH to pay them higher Medicaid payments once they agree to lease the facilities.

Let’s take a closer look at the New Orleans deal.

The LSU Interim Hospital will be leased by Louisiana Children’s Medical Center (LCMC), a health system that includes Children’s Hospital and Touro Infirmary.  In addition to the annual lease LCMC agreed to pay $110 million in an “up front” lease payment to be repaid by the state over the next 20 years.  LCMC is in essence loaning the state $110 million for its use in the Medicaid program.  In addition, LCMC agreed to pay an additional $143 million to the state in order to build the parking garage and clinic office building at the new hospital in New Orleans.

  • $110 million payment.  This amount is notably similar to the state fund shortfall that the governor imposed on LSU shortly after the 2013 legislative session.  Remember the meeting of LSU leadership, board members, and Alan Levine that Fred Cerise documented in the recently circulated memo https://louisianavoice.com/2013/08/21/cerise-townsend-firing-came-soon-after-fateful-2012-levine-meeting-with-lsu-officials-to-discuss-lsumc-privatization/)? The supposed purpose was to identify a way to deal with the massive budget cut that the governor was laying at LSU’s feet.  Cerise outlined the magnitude of the cut which was equivalent to $122 million in state funds and a total – including federal funds -of $329 million and the impact would result in the closure of over half of the LSU hospitals.  Those cuts were never made, yet the governor never explained how the funds were restored to LSU’s budget.  In the New Orleans CEA, LCMC agreed to make an upfront lease payment of $110 million to LSU on or before June 24, 2013.  So with one week left in the fiscal year, LCMC paid LSU $110 million to avoid the massive budget cuts that were assigned to LSU by the governor to prompt the wholesale privatization.  But the cuts were never made, savings never achieved.  Instead, the administration borrowed the money from a private partner.  These funds will be repaid to LCMC over the next 20 years.  The state “borrowed” from LCMC, a private entity, funds to be used as match in the Medicaid program  – a practice that is at the very least against the intent of the federal Medicaid regulations and which the state will be repaying for many years after Jindal is gone from office.  If CMS does not approve of this trick, the state will be repaying the federal funds too (which is a much larger amount).
  • $143 million payment for parking and clinic buildings.  When LSU finally gained legislative approval of its business plan for the new hospital in New Orleans at the JLCB on September 16, 2011, there was a gap of $130 million in funding needed to complete the project (it appears that has grown to $143 million).  LSU explained at the time that it intended to use an LSU- affiliated foundation to provide that funding.  The approval to enter into a contract for construction was based on that assumption which was included in the business plan the JLCB considered.

The motion by Senator Murray (stated at 1:08 on the video archive of September 16, 2011 by Rep. Leger) was to “authorize the Office of Facility Planning and Control to enter into contracts up to the amount of funding in place for construction and completion of UMC in New Orleans.”

LSU received a commitment from the LSU Health Sciences Center – New Orleans Foundation as stated in this excerpt from a letter from LSU President John Lombardi to Thomas Rish, the senior manager for the Division of Administration.

“The mechanism for accomplishing such financing involves the UMCMC  [University Medical Center Management Corporation] Board entering into an agreement with LSU for LSU to provide services to the UMCMC Board, as represented by that board to the Joint Legislative Committee on the Budget on September 16, 2011, and in accordance with the business plan presented in open committee hearing at that time.  In carrying out that business plan and the above-described construction, it is expected and necessary for the UMCMC Board at the appropriate time to enter into one or more agreements with one or more other affiliated entities of LSU so that the affiliated entity will have a sufficient revenue stream to support the financing of the Ambulatory Care Building and the Parking Structure.  LSU has engaged in such financing methods in the past with great success, without affecting the state tax supported debt limit or relying upon the full faith and credit of the state.”

However, the UMCMC Board subsequently refused to commit to an agreement that acknowledged its support for LSU because a plan was already underway to reconfigure the governance structure into a private entity unencumbered with the commitments to LSU, commitments that LSU and UMCMC used in gaining approval for acquisition of private property and construction.  As a result, the LSU Foundation could not obtain this funding.

The Division of Administration proceeded to enter into a contract for construction of the entire project anyway (without the funding in place) in violation of the JLCB motion that authorized contracting for up to an amount of funding in place.  As construction proceeded and desperate for a funder so it could meet its obligations to the contractor, the Administration turned to LCMC for the funds which they agreed to provide on or before June 24, 2013.

Why would LCMC, in addition to an annual rent payment for the hospital agree to pay an additional $253 million up front to the state?  Likely because the state gave them the money first.  On June 18, 2013, DHH made a series of supplemental Medicaid payments to Children’s Hospital and Touro Infirmary in the amount of $250 million.  DHH made Medicaid payments (which include federal money) to LCMC affiliates so that LCMC could return those funds to the state to use as match for more federal funds.  You have to appreciate this scheme from a governor who doesn’t like federal money.

Annual lease payments.

In addition to the $253 million up-front payments, Children’s will make its first annual lease payment this year.   But that won’t be enough money to fill the budget hole for the 2014 budget year.  Remember, any lease payment Children’s makes is to be multiplied with federal match dollars and repaid to Children’s so they have every incentive to pay as much “lease” as possible.  Given federal prohibition on “provider donations” these lease payments must be restricted to fair market value amounts.  In order to address the state budget shortfall, the state will borrow from future year lease payments and have Children’s make a “double” lease payment this year (in addition to the $110 million “up front” lease payment to be repaid over the next 20 years).  The Times Picayune reported this plan by Commissioner Nichols’s to have Children’s make a “double lease payment” of $68 million to plug the current year’s budget hole by encumbering future administrations and legislatures with a payback of state funds and potentially the federal match as well.  http://www.nola.com/politics/index.ssf/2013/09/new_orleans_shreveport_hospita.html

The state will use this $68 million to draw down additional federal funds ($107 million in federal funds based on most recent match rate for Louisiana) and pay the entire amount back to Children’s or an affiliate of Children’s for Medicaid services.  Who wouldn’t put up a double payment?  Why not triple payment?  Quadruple?  Only CMS can put the brakes on this scheme.  They have been through this type of thing before in Louisiana and so will be closely scrutinizing the entire arrangement.  Jindal is calculating that any recoupment of funds will come well after he has destroyed the public hospital system and celebrated his success.  He seems to believe he can violate the CMS provider donation provisions by simply calling the donations “lease payments.”  We’ll see if CMS agrees.

Let’s review:

  1. The state is building a replacement hospital for Charity Hospital in New Orleans using $474 million in federal funds from FEMA and $300 million in other hurricane recovery funds.
  2. The state agreed to lease this facility built with federal funds to a private entity that is a Medicaid provider.
  3. Those lease dollars will be used annually as match in the Medicaid program to draw additional federal dollars.  “Monetizing” an asset built with federal funds, the state will generate additional federal funds as match dollars to support the operation. This will allow the Division of Administration to renege in its commitment of state funds to LSU (which the legislature accepted in the business plan submitted to JLCB as a condition for approval of construction).
  4. In addition, the state made a $250 million Medicaid payment to the private provider on June 18, 2013.  This Medicaid payment included roughly 2/3 federal funds.
  5. The private provider then made a $253 million payment back to the state on June 24, 2013.
    1. $110 million of that payment was directly or indirectly used as match in the Medicaid program to draw more federal money by which LSU was able to meet its budget for 2013.
    2. $143 million of that payment is targeted to complete construction of the new hospital in New Orleans (and qualify as all future rent payments for LCMC) that will be operated as a private facility.

That’s a lot of recycling federal dollars and private handouts, even for Louisiana.  Surely the governor must be proud of this innovation in financing.  Why is he not clearly explaining it to the public?

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Sur-prise sur-prise, Gomer: Deloitte wins IT contract after spending year consulting with state on consolidation plan

Posted in ALEC, American Legislative Exchange Council, Computers, Governor's Office, IT, Privatization, RFP, Request for Proposals on September 5, 2013| 10 Comments »

As anticipated, Deloitte Consulting, which met regularly with state officials over the past year to assist in planning for a comprehensive consolidation of information technology (IT) services for the Division of Administration, was named winner of the contract for “Information Technology Planning and Management Support Services,” according to an email announcement by the Division of Administration (DOA) that went out to IT employees Thursday morning.

The announcement, which did not mention a contract amount, came only hours after LouisianaVoice indicated that Deloitte had the inside track for the contract on the strength of its working with state officials in the planning of a request for proposals (RFP) for the work.

The email said that the evaluation of proposals was complete and that work under the contract is slated to begin on Monday, September 16.

The announcement cited five other states with full IT consolidation. These included Michigan, Utah, Colorado, New Hampshire and New Mexico. It also listed eight other states with limited IT consolidation: Alaska, Arizona, Kentucky, Massachusetts, Minnesota, Nevada, New Jersey and North Carolina.

The email, however, made no mention of the massive cost overruns experienced by several states in attempts at computer conversion and IT consolidation, including North Carolina, one of those put forward by the administration as an example:

  • North Carolina, one of the states cited as a model by the email has seen costs of a contract to modernize only one system, one to process the state’s Medicaid payments, go from the original $265 million to nearly $900 million;
  • California pulled the plug on its court computer system that was to connect all 58 of the state’s counties when the price tag leapt from $260 million to more than $500 million—with only seven courts using the system before the project was terminated.
  • Tennessee experienced repeated delays, missed deadlines and cost overruns and finally stopped work after seven years of development of its Vision Integration Platform (VIP). As is becoming more and more common with bad news, the announcement came late on a Friday in order to have minimal political impact. Tennessee also experienced problems with its much ballyhooed IT state projects that affected the Department of Children’s Services, the Department of Labor and Workforce Development and the state’s Project Edison payroll system. Tennessee Republican Gov. Bill Haslam, by the way, announced last April that all of the state’s 1,600 information technology workers would be required to reapply for their jobs.
  • A consolidated service and network support project was supposed to consolidate IT services for 20 state agencies in Wisconsin at a cost of $12.8 million but cost overruns ran the price to more than $200 million, wiping out anticipated savings.
  • In Virginia a 10-year, $2.3 billion contract with Northrop Grumman to consolidate the state’s computer systems has been an ongoing nightmare of cost overruns and missed deadlines

The email touted lower overall operating costs through leveraging volume procurement, elimination of duplication, data center virtualization and standardization of IT architecture statewide.

It also said the project’s approach strategies would include capitalizing on vendor experience in other states, phased approach to consolidation of staff, agency involvement in the process and effective communication with agency staff regarding consolidation goals.

Now that Deloitte has been chosen for the contract, the next steps, according to the DOA announcement will be the selection of a project team, education of the vendor on Louisiana’s IT infrastructure and operations, survey and assessment, development of a plan of operational changes, and the request of software and hardware inventory.

Nothing was mentioned in the approach strategies about impending layoffs of state employees but that is a near certainty given the track record of other privatization/consolidation schemes rolled out by the administration.

And while DOA assures us that 36 states were reviewed in reaching the decision to consolidate the state’s IT services, one has to wonder if any time was spent examining other states in an effort to determine the cause of massive cost overruns, delays and missed deadlines.

Or is this simply yet another program fronted by Gov. Bobby Jindal but being pushed by the American Legislative Exchange Council?

This is not to say IT consolidation is the wrong thing but with the state’s budget already in the tank, it seems that a more open discussion, more sunshine as it were, would be appropriate before plunging into something that could ultimately break the bank—and still leave us with an inoperative system.

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State misses IT consolidation contract deadline; DOA met with 3 potential vendors before RFP release; legal eagles playing with semantics in effort to stall records requests

Posted in Contract, Contracts, Ethics, IT, Privatization, RFP, Request for Proposals, State Agencies on September 3, 2013| 11 Comments »

The Division of Administration (DOA) is more than two weeks late in announcing the awarding of a contract and nearly a week late on the effective date of a contract for the consolidation of the information technology (IT) departments of more than 20 departments within the state’s Executive Branch.

The Request for Proposals (RFP) for Information Technology Planning and Management Support Services was first issued on June 28 with a July 31 deadline for the submission of proposals.

Oral interviews were to be held on Aug. 14, according to the RFP, with the announcement of intent to award set for Aug. 16 and the contract work to begin on Aug. 30. The mere fact that the announcement of intent to award was set for only two days after oral interviews smacks of a done deal; how else could the administration make a decision of this magnitude (hundreds of millions of dollars) after only two days of interviews? How could an intelligent decision be made on such complex, complicated proposals in a mere two weeks’ time?

Interim Chief Information Officer Richard “Dickie” Howze, at a meeting of Council of Information Service Directors, stressed two main points, according to those in attendance. First, he said, IBM had not already been selected (strange how he would deny something before it had been alleged) and second, the consolidation goal was not to fire people. Yeah, right.

Howze also distributed a memorandum cautioning DOA section heads and Council of Information Services directors against any contact with vendors who are potential proposers or who may be part of a proposal as a subcontractor. “If you work with a contractor who is a potential proposer, there shall be no private communications, discussion of the upcoming process, timelines, RFP content, evaluation or award,” the memo said.

“Additionally, it is not appropriate for any current state employee to provide a reference for a vendor responding to this procurement.

“These restrictions will remain in effect until the contract(s) has been awarded and the protest period has past (sic). Anyone failing to follow this policy may face disciplinary action, up to and including termination.”

Amazing what the CNSI debacle can do in helping public officials find their moral compasses, isn’t it?

Those restrictions may have been in place with the awarding of the $200 million CNSI contract by the Department of Health and Hospitals but apparently someone neglected to get the word to then-DHH Secretary Bruce Greenstein who maintained constant contact with his old bosses at CNSI right through the billing, selection and contract awarding process. Now the FBI is investigating that contract, Greenstein is gone, and the folks at DOA appear to have learned from that experience.

Or have they?

Howze, in laying out the ground rules for the current RFP, neglected to address a pre-RFP request by DOA for presentations from IBM, Deloitte and Northrop Grumman to discuss what those companies could do for the state.

Is it possible that these three players may have gained some insight and advantage in those meetings? Who attended from the state and should they now be terminated as per Howze’s memo?

We’re just sayin’….

Meanwhile, DOA’s legal staff appears to have gone into a stall mode over public records requests by LouisianaVoice, apparently preferring to bicker over semantics rather than providing public records.

On Monday, LouisianaVoice submitted the following request to DOA:

“Pursuant to the Public Records Act of Louisiana (R.S. 44:1 et seq.), I respectfully request the following information:

“According to the Request for Proposal (RFP# 107-28062013001) for Information Technology Planning and Management Support Services, under Section 1.6 (Calendar of Events), the ‘Announcement of Intent to Award’ was scheduled to be made on Aug. 16, 2013 and the ‘Contract Begin Date’ was Aug. 30, 2013.

“In accordance to that information and pursuant to the Public Records laws of the State of Louisiana, please provide me immediately with:

  • “The name and address of the winning bidder;
  • “The name of the company to whom the contract was awarded;
  • “The amount of the winning bid;
  • “The amount of the actual contract;
  • “Also, please provide me the opportunity to review all the proposals submitted in response to RFP#: 107-28062013001.

The response we received on Tuesday from attorney Joshua Paul Melder said:

“We have received your public records request regarding Request for Proposal No. 107-28062013001. You have requested information rather than documents, therefore the Public Records Act is inapplicable. Nevertheless, in an effort to be helpful we have identified some documents that may contain the information you seek, including the Notice of Intent to Award the Contract and the proposals submitted for the RFP.  Please advise if you would like to inspect these documents and we will collect them for copying or for your review.

“The contract has not been executed yet, however, we will be happy to provide a copy to you upon its final execution.”

At least he did extend an offer to provide a copy of the contract upon its execution, whenever that may be.

We fired off our response:

“You have a very narrow definition of what is public record and what is information, one which does not square with the law as set forth in RS 44:2 (a). The Public Records Act (RS 44:2 (a) is quite broad in its definition of public records. You should familiarize yourself with it. As a courtesy, I am attaching the definition below:”

RS 44: (2)(a)  All books, records, writings, accounts, letters and letter books, maps, drawings, photographs, cards, tapes, recordings, memoranda, and papers, and all copies, duplicates, photographs, including microfilm, or other reproductions thereof, or any other documentary materials, regardless of physical form or characteristics, including information contained in electronic data processing equipment, having been used, being in use, or prepared, possessed, or retained for use in the conduct, transaction, or performance of any business, transaction, work, duty, or function which was conducted, transacted, or performed by or under the authority of the constitution or laws of this state, or by or under the authority of any ordinance, regulation, mandate, or order of any public body or concerning the receipt or payment of any money received or paid by or under the authority of the constitution or the laws of this state, are “public records”, except as otherwise provided in this Chapter or the Constitution of Louisiana.

“I’m reasonably certain what I am seeking will fall within the public records law as defined above.”

However, just to demonstrate that we can be flexible, we are altering the wording somewhat and re-submitting our request thus:

According to the Request for Proposal (RFP# 107-28062013001) for Information Technology Planning and Management Support Services, under Section 1.6 (Calendar of Events), the “Announcement of Intent to Award” was scheduled to be made on Aug. 16, 2013 and the “Contract Begin Date” was Aug. 30, 2013.

In accordance to that information and pursuant to the Public Records laws of the State of Louisiana, please provide me upon final execution with:

  • Documents containing the name and address of the winning bidder;
  • Documents containing the name of the company to whom the contract was awarded;
  • Documents containing the amount of the winning bid;
  • Documents containing the amount of the actual contract;
  • Also, please provide me the opportunity to review all documents containing the proposals submitted in response to RFP#: 107-28062013001.

If it’s semantics they want, it’s semantics they’ll get.

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Our random observations on freedom of expression, ATC, questionable meeting and action by Jindal’s LSU Board

Posted in ATC, Attorney General, Boards, Ethics, Governor's Office, Health Care, Politicians, Privatization, State Agencies, Transparency on August 26, 2013| 15 Comments »

We’ve come across a few odds and ends lying around that we feel might warrant a second look.

Another take on blood tests and one-vehicle accidents

First we would like to acknowledge that we initially wrote a piece based on erroneous information from certain people whose judgment we trusted but who were wrong. Because of their advice, we also were wrong in saying that blood alcohol tests are “routine procedure” in one vehicle accidents. It turns out that is not the case and we respectfully defer to the state trooper who investigated Attorney General Buddy Caldwell’s accident last week. The trooper said in his report that Caldwell did not appear to be impaired and accordingly, he did not take a blood sample for testing. We have been informed by State Police and others that it is not “routine procedure” to take blood tests in single-vehicle accidents.

ATC moves in with State Police, not so the ATC director

The Louisiana Office of Alcohol and Tobacco Control has been moved from its former headquarters at United Plaza on Essen Lane in Baton Rouge to the Louisiana State Police compound on Independence Boulevard, ostensibly to save money.

ATC Director Troy Hebert and his administrative assistant Jessica Starns, however, were allowed to remain at the United Plaza offices and to even rent additional space for Hebert’s office.

What’s with that? Shouldn’t an agency director be physically located at the same address as his employees and not several miles across town? That would be like having a governor who spends all his time in other states. Oh, wait. We already have that, don’t we?

Baton Rouge publisher opposes freedom of expression

Normally, a member of the Fourth Estate would be up in arms at any suggestion at muzzling a critic of government, a suggestion any publisher, editor of reporter would quickly point to as a threat to the First Amendment’s guarantee of freedom of speech.

Such is not the case of one Baton Rouge publisher, we’re told. Reports have it that this publisher, a staunch supporter of Gov. Bobby Jindal, has gone on rampages in his office, ranting to his subordinates and anyone else who will listen that he wants Robert Mann stripped of his tenure at LSU—and fired.

Mann, who has worked with three U.S. senators (Russell Long, Bennett Johnston and John Breaux) and former Gov. Kathleen Blanco, currently holds the Manship Chair in Journalism at the Manship School of Mass Communication at LSU.

A journalist and political historian, Mann also just happens to author a controversial political blog called Something Like the Truth http://bobmannblog.com/ in which he generally takes the Jindal administration to task for its roughshod trampling of all who dare disagree with him, be they state civil service employees, doctors, college presidents or legislators.

Mann is careful to feature a prominent disclaimer which says, “Opinions expressed on this blog are solely those of the author, not LSU, the Manship School nor the Reilly Center for Media & Public Affairs.”

But that apparently is not enough for this publisher, who dutifully prints every inane press release by the governor that purports to make the state look good despite reams of negative national surveys on poverty, obesity and health care.

So much for a fair and independent press serving as a watchdog on behalf of the citizenry. We’re just sayin’…

Cerise Memo: LSU Board quorum?

Remember our story last week about that July 2012 meeting in the LSU President’s conference room where former Department of Health and Hospitals Secretary Alan Levine pitched the privatization plan for LSU’s 10-hospital system?

There was a key sentence then-head of the LSU Health Care System Dr. Fred Cerise included in his memorialization of that meeting regarding Levine’s presentation:

“The LSU board members present indicated they want LSU’s management to pursue this strategy,” the Cerise Memo said.

But wait. The LSU Board of Supervisors consists of 15 voting members, all appointed by the governor, and one student member who has no vote.

The Louisiana Open Meetings Law, R.S. 42: 4.2, headed “Public policy for open meetings; liberal construction,” reads thusly:

  • “Meeting” means the convening of a quorum of a public body to deliberate or act on a matter over which the public body has supervision, control, jurisdiction, or advisory power. It shall also mean the convening of a quorum of a public body by the public body or by another public official to receive information regarding a matter over which the public body has supervision, control, jurisdiction, or advisory power.
  • “Public body” means village, town, and city governing authorities; parish governing authorities; school boards and boards of levee and port commissioners; boards of publicly operated utilities; planning, zoning, and airport commissions; and any other state, parish, municipal, or special district boards, commissions, or authorities, and those of any political subdivision thereof, where such body possesses policy making, advisory, or administrative functions, including any committee or subcommittee of any of these bodies enumerated in this paragraph.
  • “Quorum” means a simple majority of the total membership of a public body.

The statute further stipulates that “every meeting of any public body shall be open to the public unless closed pursuant to R.S. 42.6, R.S. 42:6.1 or R.S. 42:6.2.”

First of all, R.S. 42:6 clearly states that a public body “may hold executive session upon an affirmative vote …of two-thirds of its constituent members present.”

R.S. 42:6.1 simply lists the reasons an executive session may be held which you may explore in greater detail here: http://www.lawserver.com/law/state/louisiana/la-laws/louisiana_revised_statutes_42-6-1

R.S. 42:6.2, re-designated as R.S. 42:18 in 2010, applies only to the Legislature. http://www.legis.state.la.us/lss/lss.asp?doc=99494

But let’s return to R.S. 42:4.2, that pesky little law about quorums.

Remember, the Cerise Memo said that the “LSU board members present” indicated their desire for the LSU administration to move forward with the Levine proposal.

Remember also, the LSU Board of Supervisors is comprised of 15 voting members.

But there were only four members of the LSU board present at that meeting, according to Cerise’s notes. They included Rolfe McCollister, Bobby Yarborough, Dr. John George and Scott Ballard.

Hardly a quorum.

But then, it was the likely intent of those present to avoid having a quorum because a quorum (eight voting members, in this case) would necessitate public notices of such a meeting and making said meeting open to the public.

Obviously, that was not the wish of the board members who did attend. They wanted, above all else, to avoid a full quorum so that the meeting could be conducted in secret.

If you check out our masthead, we recently added an anonymous quote:

  • It is understandable when a child is afraid of the dark but unforgivable when a man fears the light.

Former U.S. Supreme Court Justice Louis Brandeis (Nov. 13, 1856-Oct. 5, 1941) is credited with coining the phrase, “Sunlight is the best disinfectant.”

But in avoiding the necessity of opening up that July 17, 2012, meeting to the public by purposely skirting the requirement of a quorum so as not to qualify as an official meeting, those four board members were legally barred from taking any official action.

Yet, that minor point of law did little to deter them from directing the LSU administration to pursue Levine’s plan.

Yes, we are fully aware that the four board members not only spoke for the entire board but for Gov. Bobby Jindal as well. As Elliott Stonecipher recently noted in his blog Forward Now, state ethic laws prohibited Levine from conducting business with the State for two years after his departure as DHH Secretary. http://forward-now.com/?p=8403

Levine’s last day at DHH was July 16, 2010. The meeting at which he presented his plan to LSU administrators and board members was on July 17, 2012.

And we don’t believe in coincidences. And anyone who doesn’t believe Levine was in constant contact with the administration in the days, weeks and months leading up to that July 17 meeting is…well, a fool.

Such is the Gold Standard of Ethics that Jindal has bestowed upon the people of Louisiana.

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