• California Medi-Cal Fraud Analytics Bid and Procurement Reform – Case Study II

    November 23rd, 2016 by admin Categories: Blogs Tags: , , , , , , ,

    California Medi-Cal Fraud Analytics Bid and Procurement Reform – Case Study I

    The issue of State of California IT procurement reform has been a steadily recurring theme, since, well…in all probability since there have been IT procurements, in particular where large, complex IT project procurements lasting over a year or more are commonplace.

    However, in addition to the intolerable delays, perhaps one of the thorniest issues involves the state bid evaluation team’s consideration of prior performance of vendors who are bidding on state work. This issue has taken on the rubric of the controversial “vendor scorecard” recently and has aroused certain vendor passions that haven’t been encountered since I introduced new project approval guidelines for new investments in information technology, the so-called  Flynn’s Fundamentals, back when I was State CIO.

    While the state plans for the new vendor scorecard to proceed with a pilot this year, TLTV has not heard much more about it since last summer when at a forum, TLTV asked whether the state would be considering vendor performance on work in other states in its scorecard criteria. The answer from the Department of Technology representative was, “not at this time”.

    We believe that is unfortunate, and that brings us back around to the issue of bidder references articulated in our previous post. TLTV and many project management experts have long felt that prior performance is the single best clue as to the ability of a vendor to successfully complete a project.

    However, the basic reference requirements in standard California RFP documents ask bidders to supply specific examples of similar prior work. It doesn’t take a rocket scientist to realize that bidders are unlikely to offer up failed projects for consideration in such an exercise.

    Thus it allows bidders to cherry pick their prior work, submitting their successful projects for bidder evaluation, not disclosing the unsuccessful ones. And this is why it should be mandatory for bidders to fully inform the state as to the full range of performance on similar projects including those performed in other government jurisdictions. At a minimum, they should be required to detail cancelled projects, fines and penalties, all project related legal issues, and original bid value versus final contract costs.

    As has been disclosed in investigations after many California IT project failures, there was no formal process in place to identify instances in other states of a questionable past performance history, of blatant vendor failure, and incompetence which led to state audits, legislative hearings and even FBI investigations and criminal prosecutions.

    What if it were known that a vendor in another state, on a similar project (H-T to J. David McSwane at the Austin American-Statesman):

    • Had never done similar work prior to its award;
    • Its software did not work properly and was not fully developed;
    • Was awarded a contract in a highly questionable sole source procurement;
    • After award used state employees to market their company to other states;
    • For these reasons had their nearly $100 million dollar contract cancelled, and
    • Triggered state and federal investigations prompting the resignation of several IT managers, plus the Director of the Health Agency’s Office of the Inspection General, and the Health Agency Commissioner.

    And the debacle set back the state’s Medicaid fraud detection project a decade…

    The ultimate question is, should this vendor or any vendor with a similar history be considered for a similar project in the State of California?


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