Audit report: Errors found in 28 contract procurements at HHSC

The Texas Heath and Human Services Commission (HHSC) is in hot water again after a new audit report revealed a series of contract procurement errors within the Commission. HHSC has recently faced criticism related to contracting errors including the mishandling of Medicaid managed care contracts and the termination of five CHIP contracts.

The new audit report evaluated 28 awarded procurements that took place between January 2015 to March 2018. The selected procurements have an estimated value of $4.6 billion, accounting for approximately 69 percent of the total contract value awarded during that time period. Auditors found errors in all 28 procurements.

Auditors identified scoring errors, such as omitted scores or incorrect scores, and inconsistencies in the Commission’s management of contract procurements that resulted in diminished accuracy and objectivity of the evaluation process.

In five of the procurements, auditors found “significant evaluation scoring errors and missing documentation.” According to the report, the errors found in these procurements make it impossible to determine if that the scores used to award the contracts were accurate. These 5 contracts include the STAR Kids procurement (estimate value of $3 billion), the Business Process Redesign procurement ($17.5 million), the Protecting People in Regulated Facilities/Regulatory Services Systems Modernization Project procurement ($6.1 million), the Provider Management and Enrollment Services procurement ($45.7 million), and the CHIP Rural Service Area procurement that was cancelled ($350 million).

The auditors put together a series of recommendations to improve the accuracy of HHSC’s contract management. These include taking steps to ensure scoring is more accurate and consistent, a verification process for HHSC’s evaluation tool, retaining all documentation, and the development of a written policy outlining use of the evaluation tool.

In a letter to the State Auditor’s Office, HHSC agreed with the auditor’s recommendations and outlined the actions they will take, and have already taken, to address each one.

“The errors and recommendations in the report are in line with and encompassed by those identified through various forms of rigorous internal review, and current PCS [Procurement and Contracting Services] management has either taken steps to address the recommendations included in your report or set deadlines for remediating issues related to those recommendations.”

Based on the results of the audit, the State Auditor’s Office says it will conduct additional audits on high risk HHSC contracts.