LOS ANGELES (AP) — A consumer group Monday called on the state attorney general to investigate whether taxpayer dollars were misused when California’s health insurance exchange awarded $184 million in contracts without competitive bidding or oversight that is standard practice across state government.
The group Consumer Watchdog said Monday a probe should determine if Covered California consultants hired under the no-bid deals used their positions to advance insurance industry interests.
An Associated Press report Sunday revealed that dozens of contracts were awarded without competitive bidding from late 2010 through July, including deals that sent millions of dollars to a firm whose employees have long-standing ties to the agency’s executive director.
Awarding no-bid contracts is unusual in state government, where rules promote “open and fair competition” to give taxpayers the best deal and avoid ethical conflicts. The practice is generally reserved for emergencies or when no known competition exists.
The Legislature gave Covered California broad authority to award no-bid contracts to meet federal deadlines to get the agency running.
The agency emphasized Covered California was under pressure to move fast and needed specialized skills, and the deals were executed under guidelines it modeled after state contracting rules.
State Sen. Ted Gaines - a Republican running for state insurance commissioner - said the rules permitting broad use of no-bid contracting at the health insurance exchange must change and called the contracts “outrageous.”
“I don’t think the taxpayers’ interest is being served,” said Gaines, who has been critical of the agency’s marketing spending.
Consumer Watchdog is behind a ballot proposition to increase the state insurance commissioner’s power.
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