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Archive for the ‘RFP, Request for Proposals’ Category

Jindal wanted it first, now Edwards pushes for state water chiller privatization despite a pair of unfavorable reports

Posted in Business, Contract, Contracts, DOA, Ethics, Finances, Governor's Office, Politicians, Privatization, RFP, Request for Proposals on May 26, 2017| 7 Comments »

It may not be as furtive as Sen. Neil Riser’s 2014 amendment to sneak a hefty retirement raise for State Police Superintendent Mike Edmonson through the legislature, but something doesn’t seem quite right about a request for proposals (RFP) due to be issued by the Division of Administration by the end of the month (Thursday).

And this time the legislature has nothing to do with it; curiously, the project was initiated by Bobby Jindal and continues to be pushed by John Bel Edwards despite two separate studies that have said it is a bad deal for the state.

A request for information (RFI) for a “public-private partnership related to the State of Louisiana’s Central Chilled Water Facilities” was issued by the Division of Administration on March 17, 2015. The Jindal administration as part of its privatization push, was exploring the feasibility of entering into an agreement whereby a private entity would take over operation of the facilities which provide chilled water to air-condition state buildings in the Capitol Complex and elsewhere.

The state currently operates two such facilities, one in South Baton Rouge and the other in North Baton Rouge.

Only two companies, Bostonia Group of Boston and Bernhard Energy of Baton Rouge, submitted proposals in May 2015 but on June 23, 2015, Glenn Frazier, director of the Office of State Buildings, issued a letter which said in part, “After thorough review of the two proposals by an evaluation committee, Bostonia Group’s proposal was rejected and Bernhard Energy was asked to present an oral presentation. After hearing Bernhard Energy’s oral presentation and reviewing there (sic) subsequent follow up information, the committee has determined that due to the exceptionally high cost, it is clearly not in the state’s best interest to enter into a public-private partnership with Bernhard for the proposed services.” OSB Review Team Report

Apparently not satisfied with that recommendation, the Jindal administration then entered into a $25,000 contract with Assaf, Simoneaux, Tauzin & Associates (AST) Engineering Consultants of Baton Rouge on October 20, 2015, for the “Evaluation and Feasibility Study” of Bernhard’s proposal.

The state currently owns all the equipment and piping for both plants. Bernhard proposed extending the piping to other non-state entities and to market the chilled water with 38 percent of the sales being credited to the state.

AST, in a June 29, 2016, letter to Bill Wilson of the Office of State Buildings (OSB), said the proposed 38 percent credit to the state “appears to be low given the fact that the state currently owns all the equipment and is producing and distributing the chilled water.”

Despite acknowledging that Bernhard had “tweaked” its initial offer to come up with a more attractive proposal, AST said the “adoption of this agreement would not be advantageous for the State of Louisiana in its current form.”

AST called the revised formula submitted by Bernhard “cumbersome,” adding that “Based on our assessment and analysis, we recommend the current response to the RFI not be accepted by the State of Louisiana as a final proposal/contract.” AST Review Team Report

Bernhard submitted four options: one calling for a 20-year contract, two for 30-year durations and the fourth for 99 years. Under terms of its proposal, Bernhard would pay the state cash up front, depending upon which option was agreed upon. Under Option One, the state would receive $9.1 million for the 20-year agreement. The state would receive $12 million under Option Two and $12 million under Option Three, each for a 30-year contract. For the 99-year agreement, the state would receive $14.5 million up front.

Bernhard would invest some $13 million in expanding the piping system in order to serve private entities in downtown Baton Rouge. The state, in turn, would purchase its chilled water from Bernhard Energy. Additionally, the state would continue to own all piping and equipment but would “retain the obligation to operate, maintain, repair, renew, and replace the Central Chilled Water Facilities (CCWF) including any improvements or new equipment installed by Bernhard.”

In an email exchange with the state, Bernhard was told, “The concept of having a State entity, i.e., Office of State Buildings contract with Bernhard Energy and then have the state pay for the services back to Bernhard Energy does not appear to be logical from the State’s perspective. This would additionally place a state entity (Office of State Buildings) serving both a private contractor at the same time as providing services to its State tenants. Doing so could would likely result in not providing the expected service levels to the agencies we serve and it (could) direct (sic) conflict with achieving the agency mission.” StateofLACCWF.BernhardResponses.12.19.15[1852].docx.0001

Bernhard’s response was immediate and significant in that the wording of the company’s response hinted that the entire RFP process may have been rigged to benefit Bernhard:

“Bernhard is confused by the response of the State on this item. During a meeting with Bernhard representatives on September 29, 2015, the State indicated that it could operate the facilities cheaper than Bernhard. To decrease the rates under the Thermal Services Agreement, Bernhard agreed to offer a proposal whereby it subcontracted the operation and maintenance of the facilities back to the State. If the State does not wish to have the operation and maintenance of the facilities subcontracted back to it, Bernhard can retain the operation and maintenance and the costs associated with the operation and maintenance of the facilities would be recovered through the rate structure previously proposed.

“In contrast, if the State does not wish to have Bernhard operate and maintain the facilities, which was, in large part the basis of the RFP, and it is unknown why the State would have issued the RFP, and allowed Bernhard and other respondents to expend substantial sums in pursuit of this project if the State had no intention of having a third party operate and maintain the facilities.”

But if you thought the project was dead, think again.

LouisianaVoice has obtained an email from Commissioner of Administration Jay Dardenne dated April 19 of this year in which it was made evident that the governor’s office wants the public-private partnership to become reality.

Here is that email:

I have assured the Gov that we will have the RFP on the street no later than May 31. My understanding, which I communicated to him, is that we anticipate that the statewide proposal (including Capitol Park and the DOA controlled properties across the state) will probably be the first one out of the chute based on the delays created by defects in the Southern proposal which has been sent back to the school. I want to make sure that we meet or beat the May 31 deadline. I know that everyone’s focus has been on the SFO (solicitation for offers) for the PM (prescription marijuana) (properly so) but this now needs to be a top priority. Please make sure your folks understand. Thanks. Jay (emphasis ours).

Just in case you don’t believe us: DARDENNE MEMO

Jim Bernhard, who heads up Bernhard Energy, previously served as Chairman of the State Democratic Party and was mentioned as a possible candidate for governor in 2007. He built and headed the Shaw Group before it was sold to Chicago Brick & Iron (CB&I) a few years ago for $3 billion.

He and his assortment of companies have been major players in the state’s political field, contributing more than $85,000 to Gov. John Bel Edwards in 2015 and 2016 and $56,000 to former Gov. Kathleen Blanco in 2003. By contrast, campaign finance records show that he and his companies gave only $3,000 to Jindal in 2003 ($1,000) and 2007 ($2,000).

But his generosity to Blanco apparently paid huge dividends in the aftermath of Hurricane Katrina in 2005.

The Shaw Group was contracted to place tarpaulins over damaged roofs at a rate of $175 per square (one hundred square feet per square). That’s $175 for draping a ten-foot-by-ten-foot square blue tarpaulin over a damaged roof. Shaw in turn sub-contracted the work to a company called A-1 Construction at a cost of $75 a square. A-1 in turn subbed the work to Westcon Construction at $30 a square. Westcon eventually lined up the actual workers who placed the tarps at a cost of $2 a square.

Thus, the Shaw Group realized a net profit of $100 a square, A-1 made $45 dollars per square, and Westcon netted $28 dollars a square – all without ever placing the first sheet of tarpaulin. Between them, the three companies reaped profits of $173 per square after paying a paltry $2 per square. The real irony in the entire scenario was that the first three contractors – Shaw, A-1, and Westcon – didn’t even own the equipment necessary to perform tarping or debris hauling. By the time public outrage, spurred by media revelations of the fiasco, forced public bidding on tarping, forcing tarping prices down from the $3,000-plus range to $1,000, Shaw and friends had already pocketed some $300 million dollars.

The state threatened prosecution of those who it felt overcharged for a gallon of gasoline in Katrina’s aftermath but apparently looked the other way for more influential profiteers.

Any odds on who gets the contract for the water chiller?

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Handling of $250 million contract for 2016 flood recovery illustrates the extent of political corruption in Louisiana

Posted in Boards, Contract, Contracts, Corruption, Courts, Ethics, Fraud, Governor's Office, Lawsuits, Politicians, RFP, Request for Proposals on March 25, 2017| 18 Comments »

Here’s a story no one saw coming:

There’s political chicanery afoot in Baton Rouge.

Who’d-a-thunk it?

Okay all that was said tongue-in-cheek.

Unfortunately.

The truth is, we’ve become so inured to political sleaze in Louisiana politics that it’s become difficult to be either surprised or outraged, leaving only indifference as our emotion of choice.

All the ingredients are in place for graft, corruption, and exploitation and there are plenty of those more than willing to take advantage of the opportunity:

  • A contract to manage Louisiana’s flood recovery program worth anywhere from 16 percent to 22 percent of $1.6 billion in federal funds;
  • A former state senator, Larry Bankston, convicted two decades ago on two counts of racketeering who now advises the State Contractor Licensing Board that has managed to insert itself into the debate over the proposed contract;
  • Claims of bid irregularities by a losing bidder;
  • Support of that claim by Bankston who neglected to mention that his son worked for one of the losing bidders;
  • Cancellation by the state of the $250,000 contract so that it may be re-advertised;
  • A potential 2019 gubernatorial candidate questioning the propriety of Bankston’s employment by that state board;
  • Up to 150,000 homes and nearly half-a-million residents affected by Louisiana floods in 2016, many of whom are still waiting for the political inertia called Restore Louisiana to start things moving so they can get back into their flooded homes.

Anytime there’s big money involved, especially federal money, the potential always exists for political and legal jockeying and manipulation. The temptation can be overwhelming.

Stephen Winham recently wrote a column for LouisianaVoice on this very subject: https://louisianavoice.com/2017/03/18/forget-blaming-fema-guest-columnist-area-reporters-correctly-place-fault-with-state-for-flood-recovery-failures/

The fact that the plight of the state’s flood victims has been obscured, seemingly forgotten, in the process of too-long delayed recovery only makes the state of affairs all the more shameful and disgusting. But when you have no voice, you are quickly forgotten in the scramble for big bucks.

And the bigger the bucks, the more greed manifests itself. And the more the greed, the less focus there is on the victims. That’s the way it’s always been and apparently that’s the way it will always be.

And hardly addressed is the issue of just what the deliverables on such a contract would be. Here we have companies crawling all over each other in order to obtain a contract which represents 20 percent of the total allocation for flood recovery.

And those companies won’t put up the first piece of drywall or sheetrock. They won’t perform any plumbing or electrical work. They won’t install any flooring or apply the first coat of paint, nor will they hammer the first nail. In short, they will do nothing meaningful toward flood recovery other than to approve payments to those who do the actual work.

But they will collect up to 20 percent of the recovery money—likely more if they can succeed at the usual practice of coming back for a contract amendment a few months down the road.

This story has received fairly significant play in the Baton Rouge area but if you’ve not kept up with The Advocate’s coverage, here’s essentially what has transpired:

A team led by IEM, a North Carolina company affiliated with several Baton Rouge engineering and consulting firms, easily had the best score—by at least 16 points—among the five teams submitting proposals and also quoted the lowest price—$250 million.

But PDRM, led by CSRS of Baton Rouge, whose bid was $65 million higher, filed an official complaint with the State Licensing Board for Contractors, pointing out that IEM did not possess a commercial contractor’s license at the time of its bid.

The Request for Proposals issued by the state, however, said only that bidding companies had to possess a license or be able to obtain one. IEM did, in fact, obtain a license prior to the time bids were opened. Ironically, PDRM, the company which blew the whistle on IEM, did not possess a contractor’s license at the time it submitted its bid either.

Bankston, legal counsel for the licensing board, opined that eligible bidders needed a contractor’s license at the time of bid submissions—and the licensing board agreed. The following day, March 17, the state decided to CANCEL IEM’s contract and re-bid the project.

By offering the opinion that he did, apparently disqualifying both IEM and PDRM in the process, the winning bid would have then gone to the third lowest bidder had not the administration decided to pull the plug on the whole thing and start over.

That third company whose bid was $350 million, $100 million higher than IEM, was Rebuild Louisiana Now and was led by a Texas firm called SLS. SLS also owns a company called DRC Emergency Services. Bankston’s son, Benjamin Bankston, works as regional manager for DRC. Larry Bankston said he was unaware his son’s firm had any relationship to any of the bidding companies when he wrote his opinion.

DRC had its own legal problems back in 2012 over payments and gratuities the company was accused of giving former Plaquemines Parish Sheriff Jiff Hingle after the firm received two CONTRACTS from the then-sheriff totaling more than $3 million.

In March 2002, the Louisiana Supreme Court REVOKED Bankston’s law license after his conviction on two counts of racketeering in 1997 in connection with then-State Sen. Bankston’s sham rental of his Gulf Shores condo to video poker operator Fred Goodson for $1,555 per week.

Bankston’s conviction was UPHELD by the U.S. First Circuit Court of Appeals in July 1999.

Contracting board Chairman Lee Mallett of Iowa, said he retains “full confidence” in Bankston.

Louisiana Attorney General Jeff Landry DISAGREES. But Landry’s desire to run for governor against John Bel Edwards in 2019 is the worst-kept secret in Baton Rouge, so he’s going to do and say anything he can to embarrass the governor.

U.S. Rep. Garret Graves, also being mentioned as a potential opponent for Edwards in two years and who was instrumental in obtaining federal flood recover money for Louisiana, also takes issue with the decision to cancel the IEM contract and to start the bid process all over.

“This is very disappointing news,” Graves said, adding that the decision will only serve to further delay needed flood relief funds. “It is impossible to explain to flood victims why $1.6 billion in recovery dollars are stuck in the bureaucracy while homes remain gutted, molded and uninsulated.”

Graves said obtaining the federal money “wasn’t easy and now every time we talk to the Appropriations Committee and leadership folks, they cite the fact that we haven’t spent what we already received. It’s a concern absolutely.”

That politicians, lawyers and contractors would put their own interests ahead of those of people who have been forced out of their homes—some for a year now—only serves to drive home the point that while there has been a change of administrations in Louisiana, nothing really has changed.

Yep, there’s political chicanery afoot in Baton Rouge.

Who’d-a-thunk it?

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Shades of Greenstein: OGB administrator once employed by BCBS heads evaluation committee for new contract proposals

Posted in Contract, Contracts, DHH, DOA, Ethics, Health Care, Lawsuits, OGB, Office of Group Benefits, Public Records, RFP, Request for Proposals on April 24, 2015| 5 Comments »

One might think the Jindal administration and the Office of Group Benefits (OGB) might have learned something from the Bruce Greenstein fiasco over at the Department of Health and Hospitals (DHH).

Greenstein, you will remember, was the DHH secretary when that $280 million contract was awarded by his agency to his former employer, CNSI.

That scenario could be repeated at OGB.

Even though Greenstein insisted he had established a “firewall” between himself and CNSI, it was subsequently revealed that Greenstein had hundreds of email and text message exchanges with his old bosses during the contract selection process.

That eventually led to Greenstein’s forced resignation and criminal indictment and a civil suit by CNSI the entire messy episodes are slowly making their way through the Baton Rouge District Court system.

Which brings us to OGB and its $35 million-a-year contract with Blue Cross/Blue Shield of Louisiana (BCBS) to administer OGB’s Preferred Provider Organization—a task that apparently proved somewhat daunting to BCBS during the first year of its contract, costing the contractor more than $3.1 million in performance penalties.

One of five contracts with the state totaling $1.2 billion, that three-year contract will end on Jan. 1, and OGB is currently accepting proposals for a new three-year contract.

OGB issued its request for proposals (RFP) on March 13, giving an April 20 deadline for proposals but that deadline was extended to April 30 in an addendum issued on Wednesday (April 22). OGB RFP

LouisianaVoice, however, has learned that OGB Administrator Elise Cazes has been put in charge of the evaluation committee which will make recommendations on awarding a winner of the new contract.

The problem? Cazes was appointed Group Benefits Administrator on June 23, 2014.

Cazes was previously employed by BCBS of Louisiana, raising the possibility of a conflict of interests. https://louisianavoice.com/2014/07/26/ogb-laying-of-24-more-blow-softened-when-ceo-assures-affected-employees-losing-their-jobs-not-like-losing-a-child/

She earns $106,000 per year in her current position.

Not only does she head up the evaluation committee, but she also was given the responsibility of naming other members of the committee. To date, the name of only one other evaluation committee member, OGB Interim Deputy Director Bill Guerra, has been revealed.

At the same time, LouisianaVoice has learned that BCBS in 2013 was fined more than $3.1 million for performance deficiencies in connection with its contract with OGB. BLUE CROSS PENALTIES

BCBS was paid slightly more than $32.2 million to administer the PPO plan for calendar year 2013, the first year of its current contract.

Under terms of its contract with OGB, BCBS could be fined up to $9.7 million for failure to meet a variety of standards. Those include:

  • General Standards (10 percent of total medical administrative fees): $3.52 million;
  • Data Submission Standards: $10,000 per day, or a maximum of $20,000;
  • Mental Health & Substance Abuse (MH&SA) Standards (17.5 percent of total medical administrative fees): $6.2 million.

The actual penalties imposed for 2013, according to OGB’s own report, and the breakdown included:

  • Average speed to answer phones (39 seconds against an industry standard of less than three seconds): $352,325;
  • Claims Accuracy: $352,325
  • Membership Identification Cards Timeliness: $352,325;
  • Data Submission Timeliness: $20,000 (the maximum amount allowed);
  • MH&SA Appeals: $528,487;
  • MH&SA Ambulatory Follow-Up: $528,487;
  • MH&SA Medical Integration: $528,487;
  • MH&SA Member Satisfaction Survey Score: $528,487

TOTAL: $3.19 million.

In explaining the deficiency report, OGB noted that the contract between BCBS and OGB “contains 26 performance goals (called service level agreements, or SLAs) related to customer service and claims processing. During 2013 Blue Cross experienced challenges in meeting a handful of these goals.”

The report indicated that “all issues” had been resolved and that OGB and BCBS were “fully prepared for excellent performance during the 2014 calendar year.”

But LouisianaVoice recently received the following email from a retiree which would seem to indicate otherwise:

“Here’s a laugh; Look at the insurance health cards my wife and I received thus far:

  • Received 3/6/15:  deductible—$300
  • Received 03/09/15: insured deductible—$600
  • Received (date unknown): insured deductible—$600
  • Received 03/20/15: insured deductible—$1800
  • Received 03/20/15: spouse deductible—$600
  • Received 03/27/15: spouse deductible—$600
  • Received 03/27/15: insured deductible—$1800
  • Received 04/04/15: insured deductible—$600. 

“Do I get to pick our deductible from these cards?  You can tell that BCBSLA and OGB are on top of this matter, right? I plan to make a personal visit to the OGB office probably next week and show them this trash and find out what our deductible(s) really are. Do you think they know? I will ask while I am (at the OGB office) for the real executive director at OGB (to) please stand up.

“Our online monthly premium is a different figure from the letter received in the mail today from OGB. I am ready for someone to figure out what’s going on, and do something logically and correctly.  Health insurance is a serious matter for people and they are playing with us. Everything needs to be corrected and cleaned up for all state employees (retirees and actives).

“OGB use to be correct on these technical matters and they had in the past straightened out BCBSLA for me several times on what was to be paid, etc. Now OGB has gone crazy too! I guess it’s from all the new executives at the top.” 

 

 

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Buck Consultants had contract with MedImpact at time it recommended MedImpact for major contract in Alabama; later repeated recommendation for $500M OGB contract

Posted in Contract, Contracts, Ethics, Health Care, Lawsuits, OGB, Office of Group Benefits, Public Records, RFP, Request for Proposals on February 20, 2015| 7 Comments »

What began as an 18-month $350 million contract with a San Diego firm with ties to former U.S. House Speaker Newt Gingrich has morphed into a 15-month $500 million agreement with the Office of Group Benefits OGB to administer the state’s prescription drug program for more than 220,000 state employees, retirees and dependents.

But details have emerged that raise questions about a possible conflict of interests involving a consulting firm retained by a teachers benefits program in Alabama and OGB in Louisiana which ultimately recommended awarding contracts to the same company by both states.

OGB’s contract with MedImpact was originally for $350 million and was to run from Jan. 1, 2014 through June 30 of this year but has been amended to $500 million and the terms shortened to March 31, which equates to an increase of about 74 percent.

Gingrich launched the Center for Health Transformation as part of an ambitious consulting and communications conglomerate to let consumers, not health maintenance organizations (HMOs), choose their doctors, medical treatments and hospitals. http://hl-isy.com/Products-and-Services/Pharmacy-Benefit-Evaluator/PBE-Abstracts/2012/MedImpact

But Gingrich failed to reveal that his idea would be financially beneficial to drug manufacturers, health insurers and other health care professionals who paid up to $200,000 annually to participate in the center’s operations.

MedImpact was one of those companies.

Gingrich’s taking money from organizations and then using the weight of his name to advance their interests was described as “a massive financial conflict of interest” by Sid Wolfe, director of health research for the watchdog group Public Citizen. http://www.washingtonpost.com/wp-dyn/content/article/2007/06/10/AR2007061000484.html

Even former Congressman Billy Tauzin of Louisiana has entered the picture as co-chair of Medicine Access and Compliance Coalition (MACC), an assortment of health care providers who advocate lower drug prices through the federal 340B Program. http://www.huffingtonpost.com/2013/08/13/billy-tauzin-drugs_n_3719468.html

Section 340B of the Public Health Service Act requires pharmaceutical manufacturers participating in the Medicaid drug rebate program to provide outpatient drugs at discounted prices to taxpayer-supported health care facilities that provide care for uninsured and low-income people. http://www.aha.org/content/13/fs-340b.pdf

Despite the magnitude of the MedImpact contract, it is the company’s connections to Buck Consultants, hired by the state to select the winner from among four proposals for that contract, which appears more than a little questionable.

OGB’s Notice of Intent to Contract for the Pharmacy Benefits Management (PBM) service, obtained from the Division of Administration (DOA) nearly four months after requested by LouisianaVoice—and then only after we filed a lawsuit against DOA—says, “Representatives of Buck Consultants, OGB’s actuarial consulting firm, provided assistance to the (selection) committee throughout the review and evaluation process.”

Buck Consultants, readers may remember, figured prominently in the controversy over DOA’s mishandling of OGB and the dissipation of more than half of OGB’s $500 million reserve fund.

Commissioner of Administration Kristy Nichols told a legislative committee that Buck Consultants had recommended that the state lower premiums for members of OGB, a move that led directly to the evaporation of the reserve fund. Communications between Buck and DOA obtained by LouisianaVoice, however, refuted Nichols’ claim.

Four firms submitted proposals to administer the prescription drug program for OGB. They were CVS Caremark, Express Scripts, Catamaran and MedImpact. CVS was disqualified because of sanctions imposed on the company in January of 2013 by the Center for Medicare and Medicaid Services (CMS).

Catamaran was the previous contractor but the company and the state have been involved in extended litigation which is expected to continue at least through June 30 of this year.

“As indicated in the Buck report, the proposal submitted by MedImpact has been determined to be the most advantageous to the state…,” said the Notice of Intent to Contract. “Accordingly, the committee recommends that the contract …be awarded to MedImpact.”

The connections between MedImpact and Buck, a global human resource benefit consulting firm that is part of the Xerox conglomerate, however raise conflict of interests issue—a relationship that LouisianaVoice traced back to the awarding of a contract to MedImpact in 2010 to administer the pharmaceutical benefits program for Alabama public school teachers, retirees and dependents through the state’s retirement system.

The Alabama Public Education Employees’ Health Insurance Plan (PEEHIP) board members, lacking pharmacy specialty training, retained Buck Consultants in late 2009 and early 2010 to handle the entire process, including writing the request for proposals (RFP), receiving and scoring the RFPs and making a recommendation for a contract.

Buck handled the entire process and gave the board the choice of contracting with MedImpact which was named by Buck primary contact person Michael Jacobs as having the best of several proposals submitted. The entire recommendation to the board took up a single paragraph in the board minutes.

The employee for the Retirement System of Alabama (RSA) who negotiated and signed the contract between the state and MedImpact later admitted in deposition that he had been involved in a relationship with a female representative of MedImpact.

But it was the relationship between Buck, Jacobs and MedImpact that warrants a closer look.

Even as he was contracted by RSA to issue, receive and evaluate the RFPs, it turns out that Buck, unbeknownst to Alabama officials, was simultaneously under a $50,000 contract to MedImpact. BUCK DEAL WITH MEDIMPACT

Jacobs, in a Dec. 23, 2009, letter to MedImpact Vice President of Business Development Bryan Boda, noted that the term of the contract was from Dec. 24, 2009, through Feb. 28, 2010, but upon written notice, “will be extended for an additional term, as mutually agreed to by both parties.”

Attached to that letter was a description of the scope of services to be provided by Buck which, among other things called for Buck to:

  • Provide MedImpact with marketplace information without disclosing anything to identify MedImpact’s proposal;
  • Collect competitor information, utilizing the internal proprietary Buck database of vendor information and drawing upon Buck’s “extensive data base” on PBM industry practices as well as outside public sources;
  • Develop a competitive employer marketplace analysis;
  • Present its final report during a final meeting with MedImpact at its (MedImpact’s) corporate headquarters.

It should pointed out that attorneys for three Alabama pharmacies excluded from participation in the prescription drug program for the teachers found it necessary to obtain the letter of agreement between Buck and MedImpact from Buck after MedImpact refused to provide the information.

The discovery of the contract between Buck and MedImpact during the time Alabama was in the process of selecting a prescription drug administrator for PEEHIP immediately raises the question of whether a similar arrangement existed between the two during the time Louisiana was selecting an administrator for OGB’s prescription drug benefits program.

An email to Buck Consultants posing that question was not answered.

MedImpact also refused to divulge what it was paying for prescription drugs, revealing only what it was charging Alabama. In one case, attorneys for the three pharmaceutical companies did obtain a document showing that MedImpact paid about $26 for an amoxicillin prescription but charged the state $96.

That, of course, also raises the question of how the billing is done by MedImpact for OGB. Does MedImpact pass along a 300 percent mark-up to OGB at a time when the state is, for all practical purposes, broke? MedImpact calls itself a transparent company but like our “transparent” governor, it has not been forthcoming thus far with details about what it pays for prescription drugs or about its contract with Buck Consultants.

And at the other end of the spectrum, it appears that not nearly enough hard questions have been asked by officials—either in Alabama or Louisiana.

After all, how can it be considered an acceptable practice for Buck Consultants to contract with a state to issue an RFP, evaluate the proposals and make a recommendation to award the state contract to a firm already contracted with Buck Consultants for Buck to collect competitor information?

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ORM contract sold a third time since privatization amid rumors of attempts to rig bids in favor of FARA renewal

Posted in Contract, Contracts, Corruption, DOA, Ethics, Fraud, Governor's Office, Jobs, Layoffs, ORM, Office of Risk Management, Privatization, Public Records, RFP, Request for Proposals on November 24, 2014| 16 Comments »

Some things never change when it comes to doing business with the State of Louisiana.

Several business owners have, over the past couple of years, told LouisianaVoice they would never bid on a state contract because, they said, the bid process and contracts are rigged, or at least weighted, heavily in favor of pre-selected vendors.

Now, three separate sources have come forward to offer specifics that support that claim as it regards a request for proposals (RFP) for renewal of an existing $75 million contract.

One of our very first stories under the LouisianaVoice banner was the manner in which Gov. Bobby Jindal went about privatizing his very first state agency, the Office of Risk Management (ORM), throwing nearly 100 employees out of work in the process.

Now we learn the story of F.A. Richard & Associates (FARA), the Mandeville company the state initially paid $68 million to take over as third party administrator (TPA) of ORM has taken yet another interesting twist.

Well, make that two interesting twists—including a third violation of the original contract between the Division of Administration (DOA) and FARA and now it seems there may be a strong case made for bid manipulation on the part of the state.

The reason we said the state initially paid $68 million is because eight months after that 2011 takeover, FARA was back asking—and getting—an amendment to its contract which boosted the contract amount by exactly 10 percent, or $6.8 million, bringing the total cost to just a tad under $75 million. An obscure state regulation allowed a one-time amendment to contracts for up to (drum roll, please)…10 percent.

Then, less than a month after the contract was amended by that $6.8 million, FARA sold its state contract to Avizent, an Ohio company, which kept the contract for about four months before it sold out to York Risk Services Group of Parsippany, New Jersey.

Last month, it was announced that Onex Corp., a Toronto-based private equity firm, had finalized a deal to acquire York for $1.325 billion.

In each case, the name FARA was retained “for branding purposes,” according to one former FARA employee, but there was no getting around the fact that the state’s contract was—and is—being shifted from one company to another until the latest deal that placed in the possession of a foreign corporation.

The original contract with FARA stipulates that the contract may not be sold, transferred or re-assigned without “prior written authority” from DOA.

LouisianaVoice, of course, made the appropriate public records request for that “prior written authority” right after it was sold the first time—to Avizent. After the usual delays in responding, DOA finally sent us an email which said no such document existed.

So, now we a contract the very specific terms of which have openly violated not once, not twice, but three times and the state has remained silent on this point.

Jindal, in case you need a reminder, is the same Louisiana governor who only last Friday criticized President Obama of “flaunting the law” in his executive action granting amnesty to illegal immigrants.

But as bad as the contract shuffling might be, ongoing efforts to rig the bidding process for a renewal of the five-year contract in FARA’s favor would appear to be far more serious.

Three separate sources—one employed by DOA and the other two former employees of first ORM and, after ORM was privatized, FARA, said that FARA had been requested to assist in drafting a new RFP in such a way as to guarantee that FARA would retain the contract.

Both former FARA employees, interviewed separately, said a staff meeting of FARA employees was held in Lafayette last April and again in May. On both occasions, they said, FARA management assured them that the company had been asked to assist ORM in drafting the RFP and that FARA was certain to win renewal of the contract, which expires next July 1.

“We were all told to update our resumés so they could be used in beefing up FARA’s proposal,” said one of the former employees.

If true, that would constitute bid rigging in almost any law book and should prompt an immediate investigation. This would be an ideal opportunity for someone to awaken East Baton Rouge District Attorney Hillar Moore to see if he is up to performing his duties.

Wasn’t that, after all, the basis for the investigation of Bruce Greenstein and the $189 million contract to his former employer, CNSI? That was the investigation that led to his nine-count indictment for perjury.

Having said that, if there are any other business owners who have had unpleasant experiences in bidding on state contracts, or who feel they have been shut out of the process through favoritism we would love to hear from you. Our email address is: louisianavoice@yahoo.com or louisianavoice@cox.net

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