Taxpayers already know many foul details about the Hawaii Health Connector’s bumbling dealings with its contractors, but nonetheless there’s plainly more to discover.
The latest ration of appalling information comes in the form of a report from the state auditor, Jan Yamane, the second audit on the troubled health-plan exchange agency to be issued this year. The Connector is a private nonprofit established under state law to implement the online system of selling health plans under the federal Affordable Care Act (ACA).
The previous report found, among other failings, that the Connector’s governing board and executives did not procure and manage contracts competently.
In particular, concerns over fees paid to one contractor, Mansha Consulting LLC, led to the second audit. The specific findings — and Yamane’s characterizations of the “multitude of missteps” and the “abuse of public funds” — should prompt state officials to conduct further investigations into potential wrongdoing by the parties involved.
This means that the state’s Office of the Attorney General should use the audit as a starting point for a full inquiry into how contracts were awarded and whether the contractors for the Connector were held fully to account for what they delivered — and what they did not.
Mansha, founded four years ago as an IT consultant to states establishing exchanges under the ACA, had more than $21.6 million in contracts with the Connector, comprising a quarter of grant funds the agency had spent or obligated by the end of June last year.
The Connector did not pay Mansha invoices between July 2014 and Dec. 5, when the company withdrew from the project. But before that point, according to the audit, the agency had signed two separate contracts with Mansha, each of which were amended “to provide for additional services that significantly increased Mansha’s fees.”
“Connector payments to Mansha were based on a contractual payment schedule rather than successful completion of agreed milestones and deliverables,” Yamane wrote in the report. “Furthermore, the Connector also overlooked its responsibility to review the Mansha contracts for propriety and to amend or remove flawed provisions.”
Agency officials relied on the state Office of Information Management Technology (OIMT) to review the contract costs, and even to oversee Mansha’s performance and set the contractor’s staffing levels, according to the audit. But Yamane said the Connector still has the duty to perform its own cost analyses.
The federal cache for this project topped $200 million, and although not all the money was spent, it seemingly was treated as a bottomless well of money over which there was little accountability.
The trouble is, the bill ultimately could end up in the public’s lap. Paying Mansha for “questionable costs” could draw down a federal demand to repay grant funds with money the state doesn’t have, Yamane added.
The conduct seems so far out of line with accepted procurement practices that the state can’t expect the taxpayer to simply swallow hard and cover the cost overruns without consequences being considered for those at fault.
The state auditor called the practices “inept,” which is shocking enough, given the amounts of money at stake. However, officials owe the public further scrutiny — of the contractors and all officials of the Connector and OIMT involved in this mess.
That’s essential to ensuring that a cloud described as ineptitude doesn’t obscure actual wrong-doing, committed at the public’s expense.
