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New Mexico’s State Ethics Commission notched a win last week, negotiating a settlement with Gov. Michelle Lujan Grisham and the Human Services Department (HSD) to honor the outcome of its open bidding process under the New Mexico Procurement Code for companies to administer the state’s multi-billion dollar Medicaid program.
In January of this year, just as the Human Services Department readied letters to notify four managed care providers they had been selected to help run the program, the governor’s office stepped in to pull the plug. Administration officials said none of the companies that had bid for the contract had scored high enough. This despite HSD employees evaluating the proposals based on the criteria set forth in the state’s request for proposals.
Of the five that made bids under the official procurement process, Western Sky Community Care, a subsidiary of Centene that runs the Medicaid program now, was not selected.
In the midst of the legislative session, lawmakers expressed alarm at the casual tossing of the state procurement process, one that in this case is worth billions of dollars. State ethics officials took notice too, launching an investigation and then a lawsuit in April.
Here’s why it matters.
Procurement code. Insurance adjuster. Financial investment. Purchasing agent. Invoice acquisition. These terms are a snooze fest, right?
But in truth, they’re at the center of the biggest corruption cases in New Mexico’s modern era.
State treasurers – two of them – took hundreds of thousands in kickbacks to direct state business to investment advisers. A powerful state senator took kickbacks to award contracts for a new courthouse, including allocating some of his own state capital outlay money for some of the work. An insurance regulator threatened hefty fines unless insurance companies made contributions to a nonprofit in the business of purchasing books he himself had authored. A state senator ushered legislative approval of the sale of a public building, then pocketed a hefty real estate fee for the sale of that building. And coming up in January – a former House Majority Leader goes on trial for allegedly manipulating the purchasing process at Albuquerque Public Schools, where she worked, to funnel money into bank accounts under her control.
These were powerful people who were able to persuade, hoodwink, arm wrestle, or simply direct the use of public funds for their own financial gain.
The procurement process is notorious for corruption – here, nationally, and globally. Reams have been written about the danger of fraud, about actual cases of fraud, about codes of conduct for procurement, about the duties and responsibilities of procurement officers.
New Mexico lawmakers have incrementally taken steps to increase safeguards. In fact, the idea for New Mexico’s State Ethics Commission, which embodies an idea at the core of democracy — the public’s oversight of government, came out of an ethics task force created in the wake of the scandal involving the state treasurers.
No one is suggesting corruption by the governor in this case and in the settlement with the Ethics Commission the governor’s office admits no wrongdoing and in fact continues to express concern that the four quite large and prominent managed care organizations aren’t good enough for the job.
But there are other reasons besides corruption for adhering to the procurement process.
Number one, it’s meant to ensure the public its dollars are well spent, by laying out criteria that selected teams then use to score applicants and award contracts to the highest scoring candidates. Number two, it’s meant to inspire confidence in the private sector that the work that goes into bidding on projects will be assessed in a transparent and fair process – so that qualified companies actually choose to do these jobs in the first place.
Lujan Grisham flouted the state’s procurement code, an important process that legislative analysts have for years been warning needs more guardrails, not less. And the State Ethics Commission more than earned its annual budget by investigating, suing, and in the end, forcing the most powerful elected state official to honor the process.