Leadership problems at the Texas Health and Human Services Commission in the wake of a contracting scandal that resulted in forced resignations leave the agency too vulnerable to consolidate at this time, according to a report released Monday by Gov. Greg Abbott's handpicked "strike force."
The report found that too often decisions at the committee are reactive and that when the strike force team came to the agency in January, the agency found it "in quiet turmoil."
The team's report cited a lack of leadership at the agency — both at the top of HHSC and at the commission's office of inspector general. That poor management created the perfect environment for a no-bid software contract with Austin firm 21CT, the report said, and bigger problems surfaced as a result.
"While the 21CT controversy was the product of a near-perfect storm of circumstances — a lax procurement process, aggressive pursuit of a single vendor, internal control weaknesses at HHSC and poor contracting — the real problem was leadership," the report stated.
The release of the report comes as the Legislature is debating whether to move forward with ambitious — and controversial — plan to restructure the state’s five health and human services agencies, including the massive HHSC, and combine them into one “mega-agency.” This month, Senate Finance Chairwoman Jane Nelson suggested slowing down that consolidation in light of concerns about contracting at HHSC.
"A strong case can be made that the public health and child and adult protective services functions, at minimum, should remain at separate agencies under HHSC oversight," the report said. "They will be more likely to attract and retain the sort of leadership they need at separate agencies rather than two divisions within a "mega-agency.'"
In recent months, several state lawmakers have called for Texas Health and Human Services Executive Commissioner Kyle Janek to resign in light of the contracting scandal. Abbott has said he wouldn't make a decision on Janek's future until after the release of the report. Janek has said he was misled in staff briefings on the 21CT deal.
The report describes Janek as a manager who while affable and knowledgeable, was “insulated from many issues by his immediate staff and not always well-served by them.”
In January, Abbott had dispatched the team — led by Billy Hamilton, executive vice chancellor and chief financial officer of the Texas A&M University System — to conduct a full outside review of HHSC's management operations and contracting methods after revelations that a $20 million fraud tracking software contract with Austin firm 21CT was not competitively awarded.
HHSC needs to make improvements in its procurement and contracting processes, the report says, noting that significant changes were already underway.
Abbott's team could not determine whether Deputy Inspector General Jack Stick wanted to channel the software to 21CT. However, the team found that at the very least, the commission's office of inspector general "skirted the limits of permissibility under state law and represented a case in which OIG executive personnel exercised judgment so poor that it put HHSC's credibility at risk."
Last December, the commission's inspector general Doug Wilson and Stick were forced to resign after it was revealed that 21CT's lobbyist James Frinzi, was a former business partner of Stick's.
Last year, the Texas Sunset Commission voted in support of consolidating the five social services agencies into one entity. HHSC oversees four other state agencies — the Department of Aging and Disability Services, Department of Family and Protective Services, Department of State Health Services and Assistive and Department of Rehabilitative Services. Together they are $34 billion entity, about a third of the state budget.
The team behind the report also included Heather Griffith Peterson, chief financial officer of the Texas Department of Agriculture; Scott McCown, clinical professor and director of the Children’s Rights Clinic at The University of Texas School of Law and former State Rep. Talmadge Heflin, director of the Center for Fiscal Policy at the Texas Public Policy Foundation.
Aman Batheja contributed to this report.
Disclosure: The Texas A&M University System, University of Texas at Austin and the Texas Public Policy Foundation are corporate sponsors of The Texas Tribune. A complete list of Tribune donors and sponsors can be viewed here.