Jobless website vendor’s bid not held up by review
Florida’s health care agency forged ahead with a deal to give a consultant a nine-figure deal to revamp its Medicaid system despite warnings from another agency that the company had bungled the state’s unemployment website.
The Florida Agency for Health Care Administration announced last week it intends to hire Deloitte Consulting for a multiyear project worth at least $110 million.
That decision outraged laidoff workers who had spent weeks trying to get their benefits through the dysfunctional CONNECT website Deloitte designed.
And it raised a big question: How could the state dole out another multimillion-dollar contract to the same company that designed a website Gov. Ron DeSantis called a “clunker” and a “jalopy”? Deloitte beat four other companies bidding on the lucrative contract. Now bid protests are pouring in, demanding that the award be rescinded.
A review of public records by the South Florida Sun Sentinel provides a glimpse into the bureaucratic process that led to Deloitte’s selection.
■ The health care agency dismissed a bad reference from the Florida Department of Economic Opportunity, which reported it would not hire Deloitte again because of the problems with the unemployment website. The Agency for Health Care Administration’s nine-member negotiation team declined to seek further details about the bad review.
■ Mary Mayhew, who leads the Agency for Health Care Administration, delegated her decisionmaking authority on the contract to a subordinate.
■ Gov. Ron DeSantis says Deloitte’s lower pricing helped the company win the bid, but the agency won’t release the proposed budgets submitted by the bidders. The agency is withholding that information on pricing,
citing an exemption in Florida’s public records law for trade secrets.
■ The agency’s negotiators didn’t mind that Deloitte employees who worked on the unemployment website would be assigned to a new state system that affects medical records and sensitive data for thousands of residents.
Deloitte’s winning bid will likely face more scrutiny in the coming weeks. Two losing bidders — Accenture and IBM — filed notices this week that they intend to protest the bid.
Katie Strickland, a spokeswoman for the Agency for Health Care Administration, has declined to comment about the bid process, citing pending litigation.
Past woes didn’t ‘sway’ agency
Deloitte’s performance on the unemployment website concerned DeSantis enough that he ordered the chief inspector general to investigate the state’s contract. The website came online in 2013 and had problems from the start.
DeSantis said he doesn’t want Deloitte to get another contract — but even as governor he doesn’t have the power to intervene under Florida law.
One thing is clear to him, he said. The nearly $78 million price tag for the unemployment system was too high for what taxpayers got.
Yet, the Agency for Health Care Administration’s negotiation team wasn’t as concerned with Deloitte’s issues, according to a transcript of a July 10 strategy session.
The team sympathized with Deloitte, discussing how the company couldn’t have anticipated an unprecedented surge in unemployment claims caused by the pandemic. Members also questioned how the Department of Economic Opportunity had managed the project.
“If I got a sense that, you know, nine out of 10 of their reviews were like that, then, yeah, that would sway things, but it just kind of felt like a messy breakup here,” Shaun French, a data processing manager for the Agency for Health Care Administration, is quoted as saying in the meeting transcript.
Deloitte’s position has been that it designed the unemployment website based on the state’s specifications, and the state signed off on the work.
The negotiation team received references from two agencies that had worked with Deloitte. The other review from the Department of Children and Families was positive. That agency reported it would hire Deloitte again and didn’t have problems with the company’s work on an update to the state’s Medicaid enrollment system.
At one point during the July 10 meeting, the negotiation team discussed that a few of Deloitte’s employees who worked on the unemployment system would be assigned to the health care agency’s new project, which involves creating a data warehouse to serve as a central repository of information for state agencies.
“There aren’t many people in this industry that haven’t been on a project that’s failed in some level or another,” Matt Kline, another agency staffer on the negotiation team, is quoted as saying. “You know, those can kind of be some of the best lessons, too.· That whatever came out of DEO may turn out to be valuable.”
Ultimately, the team voted to recommend awarding the contract to Deloitte, citing its lower pricing as a factor. But the team wasn’t limited to just considering price. Negotiators were also instructed to consider design, the company’s track record and its ability to collaborate, among other factors.
The team members concluded they didn’t need to do further investigation into Deloitte’s performance with the Department of Economic Opportunity.
Mayhew, the agency’s director, had delegated her decision-making authority on the contract to Beth Kidder, deputy secretary of Medicaid, according to a July 16 memo.
On Aug. 3, Kidder signed off on the negotiation team’s recommendation to award the contract to Deloitte.
The agency has said its officials would not comment on the process due to pending litigation.
Unemployment website is a political blame game
The flawed unemployment website created a political firestorm filled with finger-pointing as out-of-work Floridians fumed about its performance. DeSantis placed blame on Scott, who was governor when the CONNECT system came online. Scott blamed his predecessor, U.S. Rep. Charlie Crist, who was governor when the selection process for the contract started. The contract was signed in early 2011 just after Scott was sworn in as governor.
So it came as a surprise that the company behind the political hot potato would make headlines for getting a new lucrative state contract — more than double the amount of the first contract — to work on an extensive multiyear project.
DeSantis said Deloitte overcame the bad review by lowering their price so much the agency couldn’t justify giving the contract to a different company.
“They dropped their price so dramatically that it’s not clear to me that at that point they could have been denied it on neutral grounds,” he said.
But getting a sense of how the bids stack up on price isn’t possible. The Agency for Health Care Administration is not releasing the bid amounts, citing an exemption in the public records law for trade secrets.
Florida law doesn’t lock state agencies into awarding contracts strictly on price. Agencies are charged with picking the “best value,” which includes consideration of “price, quality, design and workmanship.”
In its negative review, the Florida Department of Economic Opportunity noted that it had terminated its contract with Deloitte and assessed financial penalties, although the amount the company paid — if any — is unclear. The contract had been amended and modified 17 times from when it was signed in 2011 to when it ended in 2015.
The state paid Deloitte just under $47 million for its work on the CONNECT website, according to a review by the Agency for Health Care Administration.
When the site launched in 2013, it was plagued with technical glitches, similar to the ones laid-off workers experienced this year during the pandemic. Audits in 2015, 2016 and 2019 continued to flag problems with the system.
At one point in 2013, the Department of Economic Opportunity threatened to withhold payments and issue $15,000-a-day fines, citing Deloitte’s “failure to deliver a fully functioning online computer system” for filing unemployment in the state.
Deloitte has not responded to requests for comment about its latest bid. In a previous company statement, Deloitte defended its work on the Florida CONNECT website, saying it “built the CONNECT system to comply with Florida’s specific requirements and the state accepted the system.”
DeSantis said the Agency for Health Care Administration followed the process as outlined by the law, which is designed to keep politics out of purchasing.
“I can’t put my thumb on the scale,” he said.