Another coop contract flies the coop

State to investigate contracts to Austin company

The Travis County District Attorney’s office [yes, THAT Travis County District Attorney's Office] and the Texas State Auditor will investigate how a company here won $110 million in state contracts without any competition, officials announced Thursday as the deals drew increasing condemnation and calls for reform.

Gregg Cox, director of the district attorney’s Public Integrity Unit, said he expects to open a criminal inquiry following two formal complaints into the now-canceled Medicaid fraud detection contracts given to Austin technology firm 21CT by Jack Stick, who last week resigned as general counsel at the state Health and Human Services Commission amid allegations of favoritism.

Perry: Top official resigning over no-bid contract

The widening fallout over $110 million in no-bid state contracts awarded to an Austin tech company forced the resignation of a second top state official Friday, this time at the request of Republican Gov. Rick Perry, as criminal prosecutors prepare for a likely investigation into the taxpayer-funded deal.

Texas Health and Human Services Commission Inspector General Doug Wilson submitted his resignation after the governor expressed a loss of confidence, Perry spokeswoman Lucy Nashed said. Wilson's office is in charge of preventing waste and abuse within Texas' massive health agency.

Travis DA to open criminal probe of $110 million contract award

Minutes after Cox's confirmation, Executive Commissioner Kyle Janek released a statement saying he had asked the state auditor to look into the actions of the commission, as well as the state Department of Information Resources, whose pre-approval of 21CT's product allowed Stick to use the no-bid process. "I am confident that (State Auditor John Keel)and his office will follow this investigation wherever it may lead, and I will act immediately on any findings," Janek said.

A spokesman for Gov. Rick Perry, meanwhile, indicated the governor thinks the matter should be reviewed internally.

In response to the certainty of further scrutiny, 21CT CEO Irene Williams issued a statement saying the company "welcomes any review into our good work for the State of Texas [see tag "No harm no foul?"] to validate our patented analytics technology." "We are saddened by the false innuendo and unsubstantiated claims made by self-interested competitors who attacked a procurement process that (the state) asked us to follow...."

Janek canceled the contracts last Friday, saying he had discovered that 21CT had won the massive project despite four other companies submitting more detailed information about their ability to do the job. He also scrapped a second 21CT agreement, a $452,000 pact with the health commission's Child Protective Services agency for software to track child abuse investigations.

Both projects were awarded through a no-bid process that typically is used for small technology purchases, such as school printer cartridges. Over the past five years, the average purchase through the process, called the Cooperative Contract program, has been just $3,493, according to a Houston Chronicle analysis.

Related recent post re cooperative purchasing: Procurement controversy -- District of Columbia streetcar deal