A Reminder of Why Those Pesky Bureaucratic Rules Matter in Procurement

This post, written by David Wyld, originally appeared on Public Spend Forum

Rules. Handbooks. Procedures. Policies. Statutes. Guidelines. Codes of ethics. Waiting periods. Timeframes. Sometimes, public sector executives can feel like they have to manage in a box, constrained by what are often endless and burdensome constraints on their actions and decision-making. And yes, in government, it’s a rare thing to have regulations and policies taken “off the books,” as more often, new pages and new clauses are added to existing guidelines. Yet sometimes, there’s a story that comes across our desks that reminds us just why there is merit in having constraints on public sector officials and employees and why maybe, just maybe, those ethics training sessions that seem to go on too long may have some value.

Such was the case with a scandal that emerged out of Idaho in recent days. While the national media has had endless stories over the past two months with the problems enveloping the Obama Administration with the botched launch of the HealthCare.Govwebsite, at the state level, there have also been massive expenditures and serious technical issues in the fifteen states that opted to develop their own health insurance coverage websites under the Affordable Care Act. Idaho is one of these states, and the state legislature there set up a Health Insurance Exchange Board. Frank Chan was one of 19 appointees to this board, which included representatives of insurance companies, medical service providers, legislators, small businesses and consumers. The board had a tight timeline to build-out Idaho’s state-run health insurance exchange, as its members were appointed on April 10th of this year by Idaho Governor C.L. “Butch” Otter, and the body had to have the state marketplace up and running by January 1, 2014 to comply with the provisions of Obamacare.

In Idaho, the state procurement regulations require almost all contracts over $25,000 to be subjected to a competitive bidding process. However, with the tight timeline to get the exchange up and running to meet the federal mandate, the state legislature exempted the Idaho Health Insurance Exchange Board from the state’s acquisition rules, authorizing the exchange to establish its own procurement guidelines. And for the major contract to be issued by the board to accomplish that task—setting up the website for the exchange—Your Health Idaho Executive Director Amy Dowd took what at best could be characterized as an unusual step. In October, she awarded Robert Chan’s company a $375,000 contract—without the opportunity being put out for competition—to help the state develop and operate the exchange’s website. Chan stepped down from the board later that same day.

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