Audit: Covered California Broke Rules for Big Contracts

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A state auditor is accusing Covered California, the agency charged with enrolling Californians in Obamacare, of awarding sole-source contracts without hearing competitive bids.

The accusation against Covered California was made by state Auditor Elaine Howle, who reported that roughly 25% of the justifications the agency cited for awarding its contracts to one bidder did not meet the agency’s own guidelines, according to the Sacramento Bee. KCRA 3 reported, “Auditors reviewed 40 no-bid contracts and questioned the need for three, including one for advertising and another for a data analytics project manager. The auditors found nine other contracts for which Covered California did not supply sufficient justification for avoiding competitive bids.”

The agency’s standards allowed sole-source contracts only when timeliness or unique expertise superseded normal requirements.

Howle stated, “In some instances the justifications asserted reasons that the board had not approved for using a noncompetitive procurement process. In other instances the justifications failed to explain why Covered California was using a sole-source contract at all.”

One example auditors cited: Covered California’s third-largest overall contract, a marketing and outreach deal with public relations firm Weber Shandwick for roughly $134 million, was offered but the reasons for the offer did not meet agency standards.

Covered California spokesman Roy Kennedy said the agency has changed its standards so that written justification is required for all noncompetitive bid contracts that exceed $25,000. The San Diego Union-Tribune reported, “The Covered California board adopted the tougher standards on Jan. 21, the first day of the agency’s official review of the audit prior to its public release.”


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