Texas health agency chief to retire amid contracting scandal

Resignation comes as audits find errors riddling deals funded by taxpayer dollars

AUSTIN — Executive Commissioner Charles Smith is out as head of the embattled Texas Health and Human Services Commission after a slew of contracting errors have come to light at the mega state agency.

Smith, an appointee of Gov. Greg Abbott, announced Thursday he would retire at the end of the month after nearly 30 years of service.

“The agency has a big heart and strong leadership. We will be sure our employees and the people of Texas have what they need to continue to shine,” he said in a statement.

The move marks a major shake-up at the agency rocked by audits and findings that the contracts sought by HHSC were riddled with errors, miscalculated scores grading vendors and a failure to check references for a company trying to do more than $10 million in business with the state.

HHSC found itself under fire in recent months by state officials, most recently for problems with a contract for the Texas Electronic Vital Events Registrar, which included delays causing a $2 million increase in the award. The state also canceled five managed-care contracts for low-income children enrolled in the Children’s Health Insurance Program upon discovering mistakes in that procurement process.

In addition to canceled state contracts, the errors led several people to lose their jobs, including high-ranking Chief Operating Officer Heather Griffith Peterson, who resigned last month, and the firing of Associate Commissioner for Procurement Operations Michael Parks and two of his aides.

“HHSC needs a comprehensive, outside review in order to fully identify and address the problem this agency has with its management of taxpayer dollars,” House Speaker Joe Straus, a San Antonio Republican, said in a statement. “The problems at HHSC are severe and longstanding, and they continue to warrant serious attention.”

Smith’s retirement announcement comes amid mounting pressure for the agency to fix its contracting processes. Abbott sent top aide Tommy Williams to the agency help fix operations at the department three weeks ago. Williams will head up the agency on an interim basis, according to the governor’s office.

Although Abbott praised Smith for his service and “handson approach to solving tough issues” Thursday, Abbott has called the errors “unacceptable” but has not speculated that the mistakes were intentional to favor one contract over another. State lawmakers, frustrated by the mistakes, blasted Smith at a hearing last month about the contracting problems.

“I’ve been sounding the alarm over messy contracting practices at HHSC for over a year,” said Rep. Sarah Davis, a West University Place Republican critical of the agency. “I believe Charles is a good person, but I think he has been out of his league from the outset.”

Smith previously worked as deputy for child support at the attorney general’s office from 2013 to 2015. His career started as a volunteer in the attorney general’s Child Support Division in 1988, where he racked up 26 years of service. Abbott appointed Smith to lead the agency through February 1, 2019.

HHSC oversees some of the biggest state contracts that handle critical services for low-income families and severely disabled Texans. The agency itself is responsible for about 108,000 contracts and spends more money than any other agency, projecting more than $34 billion in spending for the 2018 fiscal year, according to a spokesperson — more money than around 45 entire state governments spend in a year.

Davis, who roasted the agency at a House Appropriations Committee meeting last month, said the departures of many senior agency aids with deep historical perspective is concerning. “I do hope Gov. Abbott will find someone to lead the agency with an extensive background in procurement and contracting practices. Billions of taxpayer dollars are at stake and so are millions of lives.”

“The agency has a big heart and strong leadership. We will be sure our employees and the people of Texas have what they need to continue to shine.” Charles Smith, Health and Human Services executive commissioner