Auditors question validity of billions in health services contracts


The awarding of $3.4 billion in grants has been thrown into question after the Texas State Auditor’s office found that the state’s Health and Human Services Commission didn’t establish proper controls to ensure its processes for reviewing vendor proposals for major contracts used reliable and complete information.

Without better controls, the auditors said, HHSC can’t ensure its award decisions are sufficiently supported.

The audit came at the request of Gov. Greg Abbott, following an explosive April report that showed how HHSC and the Texas Department of State Health Services had bungled the handling of a major contract with Genesis Systems, Inc. to maintain the state’s record system of births and deaths. Delays in launching the program cost Texas taxpayers more than $10 million.

Abbott wrote then that “mistakes like this are unacceptable.”

Auditors examined 28 procurements that HHSC awarded between Jan. 1, 2015, and March 31, 2018, totaling about $4.6 billion. That represented nearly 70 percent of the total $6.7 billion in contracts awarded during that period

In five of the largest procurements, worth a combined $3.4 billion, auditors found significant evaluation scoring errors and missing documentation. Because of that, the examiners couldn’t determine whether the scores that supported the awarding of those contracts were adequate.

Overall, auditors found a litany of errors in HHSC’s evaluations. These include:

  • Not using all evaluation scores in the evaluation tool to calculate the final evaluation score in four cases
  • Not using the required 1-to-10 rating scale in 14 cases
  • Not scoring all applicable criteria in 11 cases
  • Not listing evaluator comments in 16 cases

The issues listed in the report were deemed as “priority level” by the auditor’s office, the highest possible level on the office’s scale. This means the problems identified present risks that, if not addressed, could critically affect the audited entity’s ability to effectively administer the programs in question. The issues require immediate action by HHSC.

An unsigned letter from HHSC included in the audit report said the commission is currently examining its contracts to ensure compliance with Texas statute.

“[HHSC’s Procurement and Contracting Services Division] management recognizes both the inconsistent application of policies and procedures and the absence of certain governance tools that ensure best practices,” the letter says. “All PCS policies, procedures and checklists have been reviewed and are being updated, rewritten and/or created to ensure compliance with state law and the State of Texas Procurement and Contract Management Guide.”

Lisa R. Collier, first assistant state auditor, wrote in the report that “auditors communicated other, less significant issues to Commission management separately in writing.”

She also said the auditor’s office will be taking a deeper dive into some of the contracts that were determined to be high-risk based on the results of this audit and will issue a future report on those contracts.

The recent audit is just the latest in a torrent of turmoil for HHSC. Then-director Charles Smith retired in May after being scrutinized for weeks following the April audit. Prior to Smith’s retirement, two HHSC procurement officials resigned and three commission employees were fired over errors committed in the contracting process that led to the cancellation of some of the contracts.

Some members of the Texas Legislature criticized HHSC in 2017 for failing to report the status of dozens of contracts to the Legislative Budget Board in a timely fashion, Texas Tribune reported.

Johnny Kampis can be reached at [email protected]


    • Absolutely. Way back when I was still working Lockeed Martin got the contract to handle welfare- to-work programs. What did they know about social services or job search? But they figured out how to make a profit on poor people.


Please enter your comment!
Please enter your name here