The South Carolina Medicaid agency did not comply with state law when it gave a no-bid contract worth up to about $2.3 million to a financial consulting firm, according to a Legislative Audit Council report released Tuesday.
State agency directors are permitted to make no-bid procurements when facing “an immediate threat” to public health, the economy or safety. The S.C. Department of Health and Human Services “had an ample amount of time to secure this contract under normal procurement methods, and emergency procurement was not necessary,” the Legislative Audit Council said in its report.
The agency “may be limiting other providers who may wish to bid on providing these services to the agency, as well as possibly increasing the amount that the agency pays for these services. ... South Carolina may not be getting the best service for the best price.”
Medicaid Director Tony Keck said his department has not violated the law, pointing out that the state’s procurement office approved his emergency requests.
In a July 27 letter responding to the Legislative Audit Council’s report, Keck said the financial crisis in his agency “justified immediate action to overhaul our budget process, expenditure monitoring and cash management functions.”
After facing a midyear deficit in 2011, Keck hired Alvarez & Marsal, a national “turn-around” consulting firm.
“There was not the personnel here to produce a functioning budget and to monitor it,” Keck said in an interview Tuesday. The firm “was basically acting as our interim CFO and comptroller,” he said.
Since then the agency has hired a CFO, a comptroller and a manager for budget and policy.
Keck said he became familiar with Alvarez & Marsal in Louisiana, where he was deputy secretary of Louisiana’s Department of Health & Hospitals. The firm handled public finances and restructuring in New Orleans after Hurricane Katrina, he said.
South Carolina initially gave the firm a $770,000 contract. Since then, the value has increased “to an amount not to exceed” about $2.3 million, according to the Legislative Audit Council report. The firm probably will remain involved with the state until the end of October, Keck said.
Reach Renee Dudley at 937-5550 or on Twitter @renee_dudley.