At the risk of sounding a bit smug, regular readers may remember that we had serious misgivings about that $194 million CNSI contract with the Department of Health and Hospitals (DHH) from the outset.
And so, it turns out, does the FBI.
And Gov. Bobby Jindal, much like another governor of some 2,000 years ago, thinks by washing his hands, he can absolve himself of any blame in the entire matter.
Let’s review.
In early June of 2011, DHH Secretary-designate Bruce Greenstein appeared before the Senate Governmental Affairs Committee for his confirmation hearing and things quickly went south as Greenstein and Undersecretary Jerry Phillips became involved in the old irresistible force-immovable object standoff over the identity of the winning contractor to replace a 23-year-old computer system that adjudicated health care claims and case providers.
The contract is scheduled to go into effect in 2014 but that could change now.
Greenstein and Phillips contended that because of a state statute which required the official awarding of the contract by the House and Senate Health and Welfare Committees, they were prohibited from divulging the name of the winning contractor.
Then-Sen. Rob Marionneaux (D-Livonia), who has since retired from the legislature because of term limits, told Greenstein, “One of the questions is about the company you used to work for (CNSI). Who is the company who is going to receive the contract?”
Greenstein and Phillips contended that because of a state statute which required the official awarding of the contract by the House and Senate Health and Welfare Committees, they were prohibited from divulging the name of the winning contractor.
Marionneaux argued that the statute “does not say you shall not divulge, just that shall not award the contract. We’re not here to award the contract; we just want to know who the contractor is. So, who is going to receive the contract?”
Greenstein again attempted to invoke the statute but Marionneaux interrupted him. “Are you telling me right now, today, that you’re refusing to tell this committee who’s going to receive that contract?”
“We believe that the law states that we should call on the (joint) committee and then make the announcement to that committee,” Greenstein said.
“I read the statute,” Marionneaux said. “Are you refusing to tell this committee who is going to be recommended by DHH to receive the award? Yes or no.”
“I’m not going to be able to say today,” Greenstein said.
“We’re sitting here trying to decide if you, the leader of DHH, are going to be confirmed and we have a headline in Monday’s paper that you want to keep a secret and a direct question is being asked and you refuse to answer.”
“I just don’t understand why this administration does this,” said Sen. Ed Murray (D-New Orleans). “You are, I suppose, just following directions.”
Sen. Jody Amedee (R-Gonzales) then laid the issue at the feet of Jindal when he asked Greenstein who made the decision “not to tell us this information under oath?”
“This was from my department…”
“You are the department,” Amedee interrupted. “Who is the person above you? Who is your boss?”
“The governor,” said Greenstein.
Committee Vice-Chair Karen Carter Peterson said, “You don’t want me to know, but you know. Is this what we call transparency?”
Phillips tried to intervene, saying that once the contractor’s name is made public, “it’s the equivalent of an announcement.”
“Do you make the law?” Peterson asked.
“I interpret the law,” said Phillips, who is an attorney.
“Then you’re not doing a good job. Mr. Secretary (Greenstein), I hope you’re paying attention. How many lawyers do we have on this committee? We make law and yet you choose to follow this gentleman (Phillips).”
Greenstein eventual acquiesced and admitted that his former employer, CNSI, was the winner but he insisted that he had built a “firewall” between himself and the selection process and that he had no contact with anyone from CNSI during the selection.
As the committee wound down its questioning, Peterson said, “I hope the governor is listening because what has been happening is not in the best interest of the people nor is it consistent with his purported policy of transparency.
“This gives the appearance of your wanting to hide something, particularly since we now know the contractor is your former employer and you wanted to keep that from us.”
The subsequently learned, despite Greenstein’s assurances to the contrary, that Greenstein indeed did have some contact with his old employer and in fact, implemented changes in the request for bids that allowed CNSI to submit a proposal—a proposal that actually ranked third among four bidders on the technical merits of its proposal but which won the contract based on the lowest price.
The low bid prompted howls of protests from CNSI competitors who accused the Maryland firm of low-balling its bid in order to win the contract. There was no way the company could perform terms of the contract for the amount it bid, they said.
CNSI bid $184.9 million on the 10-year contract. ACS was second with a $238 million bid and Hewlett Packard ES came in at $394 million. A fourth bidder, Molina Medicaid Solutions did not score high enough on the technical front to warrant consideration.
It turns out that the claims that CNSI low-balled its bid may have had merit. Earlier this month, state officials held up a proposed $40 million change to the contract, which had already increased to $194 million. And now we learn that the FBI has launched an investigation into the manner in which the contract was awarded
But on Thursday, only hours after word that the FBI had served a four-page subpoena on DOA was made public, word came down from the fourth floor of the State Capitol that the CNSI contract was being cancelled.
Actually, the administration has known of this probe into the proposal and the CNSI contract for some time now. The subpoena was served on DOA and signed for by DOA counsel Lesia Batiste Warren on Jan. 7.
That means that our open, transparent and accountable administration has known of this probe for nearly three months and chose to say nothing until March 21 and then only after word leaked out about the investigation.
The subpoena called upon DOA to produce:
• All documents submitted by ACS State Healthcare, Client Network Services, HP Enterprise Services, and Molina Medicaid Solutions;
• All financial information (including but not limited to financial statements, income statements, balance sheets, and statements of profit and loss) submitted by ACS, Client Network Services, HP Enterprise Services and Molina, and
• Documents sufficient to show the date and time at which each response to the proposal was received by the state.
Perhaps Jindal, remembering stories about Earl Long shouting to Leander Perez at the height of legislative debate over desegregation, “Whatcha gonna do now, Leander? The feds have the A-bomb,” realized that he would not be able to invoke his beloved deliberative process exception with the FBI and so decided on Plan B: cancel the contract.
“Based on consultation with the Attorney General’s office, today I am terminating the state’s contract with CNSI, effective immediately, announced Commissioner of Administration Kristy Nichols. “The state will work with the current contractor, Molina Medicaid Solutions, to provide services during this transition and until a new RFP (request for proposal), overseen by the Division of Administration, is completed,” she said.
“We have zero tolerance for wrongdoing, and we will continue to cooperate fully with any investigation,” she added.
Yeah, that ought to do it. Cancel the contract and everything will be okay.
The only course of action to decide on now is who to throw under the bus—Greenstein or Phillips
But it might be wise to heed the advice of one sage political observer who says to ignore what the administration says and play closer attention to what was not said.
The fact that the contract was cancelled so quickly tells us two things:
• The administration knew this was coming because you can’t simply cancel a contract of this magnitude on the spur of the moment;
• The administration is scared.
“I don’t think this is over,” our unpaid consultant said.
