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Thursday, February 18, 2016

California no-bid health contracts not healthy for competition, either

Following on from the same theme in the immediately prior post is this item from California.

California’s health exchange bent own rules in awarding big contracts
A new audit slams Covered California, the agency tasked with enrolling state residents in Obamacare, for not following rules when awarding lucrative contracts without a competitive-bidding process.

Covered California officials did not dispute the audit but said they have adopted new contracting policies and have improved staff training on the subject.

Without competition between prospective firms, the health insurance exchange couldn’t be assured its contractors were the most qualified – or cost-effective – auditors said.

Read more at the link.
The State Auditor's cover letter summarizes:
Covered California’s contracting practices must be improved to ensure the integrity of the process it uses to award sole-source contracts.

We reviewed the justifications for 20 of Covered California’s sole-source contracts and another 20 applicable amendments to those contracts, for a total of 40 justifications. The policy adopted by Covered California’s board of directors (board) and in place during our review stated that sole-source contracts should be justified in writing. In our review, we found that nine of the 40 justifications were insufficient according to Covered California’s board‑adopted policy. For example, Covered California did not sufficiently justify the use of a noncompetitive procurement method to award a contract for marketing and outreach services totaling nearly $134 million.

In addition, we question the validity of an additional three justifications because, even though Covered California asserts either timeliness or unique expertise as a basis for using the noncompetitive procurement process, available documentation indicates that either Covered California had sufficient time to use a competitive procurement process or the vendor was not unique.

Finally, although the California Healthcare Eligibility, Enrollment, and Retention System (CalHEERS) is functional, its rapid design, development, and implementation have resulted in some risks to system maintainability.
Adequate planning and competition are essential principles for an effective procurement system.

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