Labels and Tags

Accountability (66) Adequate documentation (5) ADR in procurement (3) Allocation of risks (5) Best interest of government (11) Best practices (19) Best value (14) Bidder prejudice (11) Blanket purchase agreement (1) Bridge contract (2) Bundling (6) Cancellation and rejection (2) Centralized procurement structure (12) Changes during bid process (13) Clarifications vs Discussions (1) Competence (9) Competition vs Efficiency (28) Competitive position (2) Compliance (32) Conflict of interest (28) Contract administration (24) Contract disputes (1) Contract extension or modification (8) Contract terms (2) Contract types (6) Contract vs solicitation dispute (1) Contractor responsibility (18) Conviction (3) Cooperative purchasing (3) Cost and pricing (13) Debarment (4) Determinations (8) Determining responsibility (32) Disclosure requirements (7) Discussions during solicitation (9) Disposal of surplus property (3) Effective enforcement requirement (34) Effective procurement management (3) Effective specifications (35) Emergency procurement (14) eProcurement (5) Equitable tolling (2) Evaluation of submissions (22) Fair and equitable treatment (14) Fair and reasonable value (23) Fiscal effect of procurement (13) Good governance (8) Governmental functions (26) Guam (14) Guam procurement law (12) Improper influence (11) Incumbency (12) Integrity of system (29) Interested party (7) Jurisdiction (1) Justification (1) Life-cycle cost (1) Limits of government contracting (5) Lore vs Law (4) market research (6) Materiality (3) Methods of source selection (28) Mistakes (3) Models of Procurement (1) Needs assessment (11) No harm no foul? (8) Other procurement links (14) Outsourcing (31) Past performance (12) Planning policy (33) Politics of procurement (46) PPPs (6) Prequalification (1) Principle of competition (88) Principles of procurement (21) Private vs public contract (15) Procurement authority (5) Procurement controversies series (75) Procurement ethics (17) Procurement fraud (27) Procurement lifecycle (9) Procurement philosophy (15) Procurement procedures (29) Procurement reform (57) Procurement theory (11) Procurement workforce (2) Procurment philosophy (6) Professionalism (17) Protest - formality (1) Protest - timing (10) Protests - general (35) Purposes and policies of procurement (9) Recusal (1) Remedies (16) Requirement for new procurement (4) Resolution of protests (3) Responsiveness (11) Restrictive specifications (4) Review procedures (12) Scope of contract (16) Settlement (2) Social preference provisions (59) Sole source (46) Sovereign immunity (2) Staffing (7) Standard commercial products (1) Standards of review (2) Standing (5) Stays and injunctions (6) Structure of procurement (1) Substantiation (9) Surety (1) Suspension (6) The procurement record (1) The role of price (9) The subject matter of procurement (22) Trade agreements vs procurement (1) Training (32) Transparency (59) Uniformity (5) Unsolicited proposals (2)

Wednesday, February 10, 2016

Florida no-bid health contract unhealthy for competition

Watchdogs denounce no-bid prison contract
The company hired to provide health care to most of the state’s prison inmates stands to make millions of dollars in administrative fees and profits under a no-bid contract that ultimately could be worth more than a billion dollars.

The Florida Department of Corrections last month contracted with Centurion of Florida to provide prison health care in the north and central regions of the state, following a decision last November by Corizon Healthcare, the previous provider in those areas, to bow out early from its contract. And while the department negotiated with several different vendors to fill the gap left by Corizon’s departure, it did not go through a formal competitive process before contracting with Centurion.

Centurion, though its parent company Centene, has a team of lobbyists that includes former House speakers Dean Cannon and Larry Cretul. Since 2014, Centene has given nearly $315,000 to Florida lawmakers and political committees. “It’s just a concern when you have a contract that big not competitively bid and then you see the amount of campaign contributions that the parent company has been making,” said Ben Wilcox, research director for Integrity Florida. “Did the campaign contributions buy influence? Did the 17 registered lobbyists help them win this contract?”

DOC officials said the agency didn’t have time to go through a competitive process and that it didn’t have to, under a statutory exemption involving the procurement of health care services.

Under its contract with DOC, Centurion will be reimbursed for its actual costs, including salaries and benefits of doctors, nurses and other staff, off-site care and insurance premiums. — to cover human resources, payroll, information technology and, the contract specifically states, profit.

Dominic Calabro, president and CEO of the fiscal watchdog Florida TaxWatch, said the public can’t be assured it got the best deal on prison health care without a competitive process.

“The best way to make sure you get value is through a procurement that is competitive, accountable and transparent,” he said. “And you want to have a system that rewards healthy outcomes and controls costs. The incentive of paying them $268 million (including) 13 percent of their costs encourages them to have higher, not lower, costs.”
There is a great deal more to this, as reported in the story at the link above, which you ought to read in the original at the link above.

Failure to provide effective competition is a glaring hole in the integrity of the procurement process here. But there is another issue mentioned, as quoted above:
"Centurion will be reimbursed for its actual costs.... On top of that, the company will get an additional payment — 13.5 percent of its actual costs...."
Alarm bells would normally ring off the walls with such a deal. Cost plus a percentage of cost contracts are generally considered to be illegal, plain and simple.

The ABA Model Procurement Code § 3-501 says
Subject to the limitations of this Section, any type of contract which will promote the best interests of the [State] may be used; provided that the use of a cost-plus-apercentage-of-cost contract is prohibited.
Guam's procurement law, based on the Model Code, follows suit.

At the national level, the Federal Acquisition Regulations, § 16.102(c), says:
The cost-plus-a-percentage-of-cost system of contracting shall not be used (see 10 U.S.C. 2306(a) and 41 U.S.C. 3905(a)). Prime contracts (including letter contracts) other than firm-fixed-price contracts shall, by an appropriate clause, prohibit cost-plus-a-percentage-of-cost subcontracts (see clauses prescribed in Subpart 44.2 for cost-reimbursement contracts and Subparts 16.2 and 16.4 for fixed-price contracts).

No comments: