Stop holdup of DHS pact, Arkansas governor says

Deadline looms, panel told; legislators question bid, cost

Gov. Asa Hutchinson on Tuesday called on the Legislative Council to complete its review of a proposed technology contract for the state Department of Human Services, saying a delay could jeopardize services.

In a letter, the Republican governor asked for a favorable review today of the proposed contract with Deloitte Consulting of Hermitage, Tenn. The contract would cost the state $75.2 million over three years. On Friday, the council adjourned midway through its agenda after senators and representatives clashed over the proposal.

Under the proposal, Deloitte Consulting would provide support for about 200 software applications used by the department. Some lawmakers Friday questioned why the state awarded the contract to Deloitte despite the company submitting a bid that was about $20 million higher than the bid of the current contract holder, Northrup Grumman of Falls Church, Va. No other companies submitted bids.

Hutchinson said in his letter that he's seeking "immediate and final review of all pending contracts on the agenda," including the Deloitte contract, "so that the business of the state can continue."

"While I maintain that the contract review requirement is unconstitutional as an infringement on the executive branch of government, I have great respect for the General Assembly and its oversight responsibility," the governor wrote in his letter, noting there was no law requiring such review before 2003.

"Therefore, I have supported reasonable legislative review," Hutchinson said. "My view is that each branch of government should strive to avoid constitutional challenges when possible and to work in a spirit of comity with the other branches."

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Legislative review of proposed state contracts "should be limited to traditional oversight work to aid in determining whether changes need to be made by future legislation. The review should not be aimed at rewriting the terms or second guessing the executive branch of its decision-making," he wrote in his letter.

The contract was discussed Tuesday by a council panel, the Review Subcommittee. After an hour-and-a-half hearing, a subcommittee co-chairman, Sen. Scott Flippo, R-Mountain Home, said he's releasing his hold on the proposal.

"This will be voted up or down on its own merits" by the council, he said. The subcommittee couldn't act on the proposal because the panel lacked a quorum, he said.

If the contract were extended to its maximum length of seven years, it would total about $163 million, compared with $122.7 million if Northrup Grumman had the contract, said Jeffrey Dean, the Department of Human Services' chief information officer.

Deloitte was awarded the contract after scoring higher in a technical evaluation by a committee of state employees. The technical evaluation made up 80 percent of the overall score, while a score based on cost made up 20 percent of the overall score. If 35 percent of the score were based on cost, that would have changed the outcome of the contract award, Dean said. It's standard for states to base 20 percent to 25 percent of the score on cost for such contracts, he said.

Deloitte's bid is about $5 million per year less than the cost of the current contract, Dean noted.

During the Review Subcommittee's meeting, Sen. Jimmy Hickey, R-Texarkana, referred to Hutchinson's letter and said he respects the governor.

"Now, there is this thought that we don't have the right ... to look over this stuff. I don't know anybody within this Legislature who has ever said that the governor cannot go ahead and override us with this [proposed contract]," he said.

"But I think the public sent us as legislators up here to have oversight and to look at this stuff. When this stuff is so egregious this way, I think it is our right to do this ... and, if the governor wants to defend it out in the public, that's his right."

Hutchinson said in his letter that the proposed contract with Deloitte Consulting "was won by a competitive bidding process." Northrup Grumman is continuing to provide information technology services based upon a special procurement until Dec. 31 since the previous competitive procurement has expired, he said.

"The special procurement with Northrup Grumman is approximately $5 million more annually than the new Deloitte contract will be when it is put in place," he said.

Hutchinson said the transition to Deloitte will take four months and "we are in jeopardy of not being able to complete the transition by Dec. 31" if the state doesn't start the contract until after lawmakers complete their review and that review is delayed.

"Under federal guidelines, we must have the new contractor in place by the end of the year or we jeopardize the ability of DHS to process services for program beneficiaries," he said. "For example, the U.S. Food and Nutrition Service has notified us that they will not provide federal funding after Dec. 31, 2017, because we have not competitively procured this contract in the last two years."

Hickey said during the Review Subcommittee meeting that he doesn't know "how in the world that I could go out there to the public and say that your confidence has been increased with us because of the way we are doing a RFP [request for proposals].

"When you have a company that has been doing it for years, all their evaluations are great [and] whenever we put out another RFP, we structure [it] to the point that some other company comes in and now we are going to pay them this huge amount more. How would you answer that question to the public?" Hickey asked Department of Human Services chief legislative affairs officer Kelley Linck, a former Republican state representative from Flippin.

Linck said that the department is required to issue a request for proposals every seven years whether it is satisfied with the current vendor or not.

"When we put it out for bid, we are not allowed to look at the past," he said. "We simply have to compare straight up, this company versus that company.

"The current company, Northrup Grumman, simply did not do as good of a job filling out the applications, giving us the technical expertise and what they are going to do," Linck said. "It was like looking at two different cars and one car was a lot shinier and had better features than the other car."

"We are following the law. We're doing what's required," he said.

Metro on 08/23/2017

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