Auditor questions no-bid contracts at Covered California

SACRAMENTO — California’s state auditor on Tuesday questioned the use of no-bid contracts at Covered California, which spent nearly $200 million without seeking competitive bids during a three-year period.

While the agency has significantly reduced its reliance on no-bid contracts, State Auditor Elaine Howle found Covered California waited until January to comply with a bill passed last summer requiring tighter contracting rules at the agency.

Howle’s office found California’s health insurance exchange issued 64 no-bid contracts worth nearly $200 million through June 30 — about a fifth of the nearly $1 billion in contracts issued during the three-year period.

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.

Covered California says it needed no-bid contracts to rapidly prepare for enrollment under the federal health overhaul and is relying less on them now. Less than 10 percent of the 166 contracts in the last fiscal year were no-bid, worth $10 million. In the 2012-2013 fiscal year, nearly 20 percent of contracts — worth $150 million — were no-bid.

“As the organization matures, the competitive bidding process across the organization has increased significantly,” said Roy Kennedy, a spokesman for Covered California.

Covered California’s contracting practices have come under scrutiny before. The Associated Press reported in 2014 about Covered California’s heavy use of no-bid contracts, some of which went to people with previous professional ties to Covered California’s executive director.

Last year, the Legislature ordered the agency to adopt tighter procurement standards in line with the strict policies used by most of the rest of state government. State agencies are generally required to shop around for large purchases to avoid ethical conflicts and ensure taxpayers get a good deal.CaliforniaCalifornia state auditorCovered CaliforniaElaine Howle

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