Covered California has handed out hundreds of millions in contracts without oversight and a competitive bidding process. In addition, some of the deals were awarded to a consulting firm called The Tori Group – which has ties with the Peter Lee, director of the agency.
The Covered-California’s no-bid contracts were for a range of different services, from ergonomic changes to work stations to public relations.
The practice of awarding contracts without a bidding process is very rare and usually only carried out in the event of an emergency or when there is no competition.
In 2010 Covered California was formed and given the ability to award no-bid contracts to meet federal deadlines, exempting it from certain state laws.
The agency stressed that it was under pressure to act quickly.
Peter Lee said that the exchange “needed experienced individuals who could go toe-to-toe with health plans and bring to our consumers the best possible insurance value. Contractors like The Tori Group possess unique and deep health care experience to help make that happen and get the job done on a tight deadline.”
He added: “As this organization matures we will rely less on private contractors.”
A government watchdog group has said that with the large amount of taxpayer money used there needs to be more oversight.
Executive director of California Common Cause, Kathy Feng, said that she understands that Covered California needs to be subject to less strict contracting rules that affect’s the agency’s means of meeting Affordable Care Act deadlines.
However, with millions of taxpayer dollars in play, she pointed out that “some accountability and transparency is needed, whether through audits or an alternative oversight body,”
“To spend $4.2 million on anything, let alone a contract to a friend and former colleague, raises serious questions.”
According to the Associated Press, the no-bid contracts account for roughly $2 of every $10 given to outside companies by the agency and were part of nearly $1 billion in agreements that it executed from late 2010 through July. Contracts with state and government agencies, such as the California Department of Health Care Services, were valued at around $370 million – not requiring competitive bids.
In its first year the federal government funded almost all of the money for Covered California’s operations.
