Florida agency downplayed Deloitte’s history with unemployment before awarding it $135m contract

The process the agency created for companies to bid on a project to overhaul the state’s Medicaid data minimized each company’s past performance.
Florida Gov. Ron DeSantis enters the room as he prepares to hold a roundtable discussion at Winthrop College Prep Academy,  12802 U.S. Hwy. 301, on Aug. 10, 2020 in Riverview.
Florida Gov. Ron DeSantis enters the room as he prepares to hold a roundtable discussion at Winthrop College Prep Academy, 12802 U.S. Hwy. 301, on Aug. 10, 2020 in Riverview. [ DIRK SHADD | Times ]
Published Aug. 13, 2020|Updated Aug. 13, 2020

TALLAHASSEE — The company awarded a potential $135 million state contract doesn’t appear to have been penalized for its past work building Florida’s dysfunctional unemployment system.

Neither a negative recommendation by the state’s unemployment agency nor $8 million in penalties appears to have counted against Deloitte Consulting before it was selected for the new contract, according to a Tampa Bay Times/Miami Herald review of the Agency for Health Care Administration’s bid process and the company’s applications.

A critical factor that boosted Deloitte’s odds in scoring the new contract was that the bidding process the agency created for the job of overhauling the state’s Medicaid data intentionally downplayed each company’s past performance.

Any fines levied against the companies by a government agency since 2014 counted for just 10 out of a possible 1,000 points. Despite being penalized $8 million during the duration of its work on Florida’s unemployment system — which was partially covered in the 5-year time frame — Deloitte scored a perfect 10 out of 10. (Deloitte representatives assert the firm has not had any involvement in Florida’s unemployment system since 2015.)

The company’s top competitor, Accenture, scored just 1 out of 10.

And although the Department of Economic Opportunity responded “no” when asked whether it would hire Deloitte again, the scoring system the state created does not appear to include penalties for a negative recommendation.

Deloitte also netted a positive recommendation from a different state agency for recent work. Accenture got positive marks from two state agencies — and no negative reviews.

Two state lawmakers are now saying the state’s bidding laws should be rewritten because of Deloitte’s latest award. State Sen. Darryl Rouson, D-St. Petersburg, called it “egregious.”

“This is what I’m calling for, an overhaul of how we rank bids, the whole bid process,” Rouson said. “It seems to me that prior negative experience that causes an investigation should factor more heavily in future bidding.”

Agency for Health Care Administration spokeswoman Katie Strickland declined to comment. Since the state announced last week that it would award Deloitte the contract, two bid protests have been filed, preventing the state from answering questions, she said.

The agency has also refused to release selection committee notes that might help explain why Deloitte edged out Accenture, saying that whatever notes might exist were not a public record under Florida law.

They also did not release records indicating whether Deloitte was penalized for its work building the state unemployment system, or how much each company bid on the project, citing an exemption in Florida public records law that allows private companies to keep trade secrets from becoming public information.

In winning the Medicaid contract, Deloitte edged out Accenture by just 14 points, scoring 755 compared to 741. Although five companies bid on the project, including IBM, Deloitte and Accenture’s top scores allowed them to move on to negotiations with the state.

The agency’s team of negotiators settled on Deloitte this year even while CONNECT, the unemployment system the firm built, was melting down. More than a million Floridians waited months to receive unemployment checks, with many begging lawmakers, state officials and reporters for help. Some said desperation led them to contemplate suicide. Many are still waiting for help.

Deloitte successfully negotiated the contract even as Gov. Ron DeSantis criticized the firm’s work in news conferences. On May 4, DeSantis said he was opening an investigation into the company’s 2011 contract with the state. He said that while he’s not happy that Deloitte was selected for the Medicaid contract, he can’t legally intervene.

One of the only tools the state has to stop Deloitte from finalizing the deal is to cancel the procurement process outright and have firms reapply. That could delay the project for at least another year.

“Obviously, I don’t want Deloitte getting contracts, personally, because we’re investigating what happened with the unemployment system,”DeSantis said at a Tuesday news conference.

DeSantis said that during negotiations, Deloitte dramatically lowered its initial bid, which “tied” the hands of state officials.

However, the agency did not have to decide on the company based on price. Under state law, the agency had to decide which company provided the “best value,” a vague term that gives state officials wide discretion in awarding multi-million dollar contracts in a complicated process that can take years to play out.

During the state’s negotiations to overhaul the SunPass toll system, the Florida Department of Transportation discarded its own bidding rules in choosing Conduent, prompting competitors to file protests. In a highly unusual move, the department then in 2015 paid one of the protesting firms $3.6 million to go away.

The most recent contract won by Deloitte earlier this month would overhaul how Florida handles its Medicaid program. It’s a change the federal government has been pushing for nearly half a decade, and the upgrades will be funded 90 percent by the feds.

Sen. Gayle Harrell, R-Stuart, has long agreed the state is in need of such an overhaul, arguing Florida’s current system is not equipped to properly track patients through various state agencies.

Allowing government entities to communicate with each other more easily is essentially what Deloitte was asked to do when it won the bid to build Florida’s unemployment system, Harrell said. The company did not build such a system, she said.

Harrell said Deloitte winning the Medicaid contract calls into question the entire state bidding process.

“Because of the many problems we’ve had with the unemployment system, we’re going to be looking very carefully across the whole enterprise,” Harrell said.