On the Lege: A $156 Million Disaster

It took more than a year of blunders before Health and Human Services Commission officials last week halted an ill-fated privatization experiment teeming with red flags from beginning to end.

Why it took the agency so long to cancel a nearly $1 billion contract with consulting firm Accenture is but one of many curiosities surrounding a disastrous attempt to revamp a delicate function of human services by replacing 2,900 state workers with privately operated call centers. The call centers were supposed to make social-services enrollment a breeze for needy Texans seeking food stamps, Medicaid, and children's health insurance.

Austin Rep. Elliott Naishtat was an early and vocal opponent of privatizing social-services enrollment.

The hastily launched project was fraught with computer quirks, poorly trained call-center workers, lost applications, and a dramatic, unintended drop in the number of children enrolled in the Children's Health Insurance Program. Meanwhile, client complaints piled up while lawmakers and stakeholders stepped up demands for the state to fire Accenture. In response, HHSC and Accenture officials insisted they were merely working out a few kinks and that things would be running smoothly in no time.

"I think they were just wedded to this plan," said Will Rogers, spokesman for the Texas State Employees Union. "They were bound and determined to make this happen, despite disastrous results. Finally it got to the point where they had to face reality and pull the plug."

Accenture, the Bermuda-based outsourcing giant, was the lead contractor of Texas Access Alliance, a group hired by the state in June 2005 to operate a portion of social services. The massive undertaking was billed as the magic bullet for improving delivery of human services with a new computer system, a reduced workforce, and fewer bureaucratic hurdles. The project grew out of a controversial component of 2003's House Bill 2292, which the Legislature passed at a time when the Republican majority was desperate to resolve a $10 billion budget shortfall without raising taxes. The bill led to the consolidation of a number of social-services and public-health programs under one agency – the Health and Human Services Commission. The bill's sponsor, former Rep. Arlene Wohlgemuth, had sold the legislation as a more efficient and cost-effective way of providing public assistance to those Texans "truly in need" – a thinly veiled directive to move toward trimming state welfare rolls and cutting social-services jobs.

If Health and Human Services Commissioner Albert Hawkins thought his long-running headache with the privatization experiment would disappear with the March 13 cancellation of the Accenture contract, he was wrong. Sen. Bob Deuell, R-Greenberg, and 29 other senators have since followed up with a letter to the state inspector general, requesting an in-depth probe into the procurement process that led to the Accenture deal, as well as a review of how HHSC's new computer system was developed and of the redesigned enrollment and eligibility system.

In seeking the investigation, the senators aren't necessarily looking for anything specific, said Deuell spokesman Todd Gallaher. "If the state canceled something this large," he said of the Accenture contract, "we want to know what happened."

Deuell, a physician and vice chair of the Senate Health and Human Services Committee, lends credibility to the campaign to get to the bottom of the privatization catastrophe. Rogers said, "Senator Deuell, for the last couple of years, has been one of the biggest critics of the concept of replacing skilled and knowledgeable state workers with privatized call centers." Rogers hopes that the investigation will also include a review of the HHSC procurement process. "The way the contract ended up going to Accenture really stinks," he said, referring to past news reports suggesting conflicts of interest between Accenture and HHSC higher-ups. "Somebody needs to look into the whole idea of cronyism and insider deal-making," he said.

Hawkins, nonetheless, is hard-pressed to acknowledge his mistake, even as members of the House Human Services Committee tried to squeeze an admission out of him last week.

Committee Chair Patrick Rose, D-Dripping Springs, summed up the whole Accenture deal as a "$156 million disaster" – referring to the amount the state has already shelled out for the contract work.

Similarly, committee member Elliott Naishtat, an Austin Democrat and a House expert on social-services policy, says someone at the top needs to accept responsibility for the failure. "I would have appreciated an acknowledgement from our leadership – whether through Commissioner Hawkins or the governor – that the contract with Accenture and the Texas Access Alliance was a mistake," he said this week. The commission's initial business case analysis of the project provided an early indication of impending doom, Naishtat observed. "It was based on the assumption that a private contractor would be able to hire workers with only a rudimentary knowledge of human-services policies," he said. "An assembly-line business model does not work when dealing with human situations and human services."

All in all, the Legislature and HHSC are both to blame for the bungled project. The Lege passed HB 2292 over the objections of Naishtat and other Democrats who warned that it was "too much too fast." "I blame the Legislature for directing [HHSC] to move forward with such significant changes so quickly," Naishtat said. "But the commission is responsible for not doing a better job of planning and for not doing a better job of examining the Texas Access Alliance proposal and suggesting that it might not work." – Amy Smith

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Capitol Briefs•

Legislation designed to remove roadblocks in the Children's Health Insurance Program was temporarily benched this week by an opponent who spotted a technicality in the bill's language. House Bill 109, sponsored by Rep. Sylvester Turner, D-Houston, would loosen some of the screws that lawmakers added in 2003, which left some 200,000 children without insurance. The proposal is opposed by a small but vocal minority, including Pasadena Rep. Robert Talton, who called out the technical error – a missing word in the text of the bill – when the measure came up for discussion on Monday. The legislation was pulled down for a quick fix and is expected to return to the House floor for a vote next week. It enjoys a fair amount of bipartisan support. – A.S.