Consulting firm landed big state contract with losing bid

Herald/Times Tallahassee BureauFebruary 24, 2014 

TALLAHASSEE -- The vendor blamed for the website that locked thousands of Floridians out of their unemployment benefits was awarded a $31.6 million contract by another state agency -- after a rival firm pitched a lower bid.

Suzanne Vitale, the Department of Children and Family's deputy secretary at the time, awarded Deloitte Consulting a contract to modernize the state's system for tracking Medicaid eligibility, even though it sought about $6 million more than did a rival firm, Accenture.

A negotiating team of DCF employees with computer and software expertise voted 7-0 to award the contract to Accenture on Jan. 31, 2013. Af

ter negotiations with Accenture stalled, the panel voted to reconsider Deloitte. Yet on March 5, 2013, the panel still voted for Accenture, this time by a vote of 4-3.

Three days later, Vitale chose Deloitte instead.

It was the latest coup for one of the world's largest government contracting firms, which since 2007 has won $283.4 million in state contracts. It wields one of the most powerful lobbying corps in Tallahassee.

Just last month, Brian Ballard, who co-chaired Gov. Rick Scott's inaugural finance committee, met to discuss the troubled unemployment site project with Adam Hollingsworth, Scott's chief of staff. Around the same time -- just after the state publicly blamed the firm for the problems -- Deloitte enlisted additional lobbying help from Slater Bayliss and Al Cardenas, the former chairman of the Florida Republican Party of Florida.

Vitale cited good management, not political pressure, for her decision to go with Deloitte.

"(The committee) was evaluating the bids on specific criteria related to the project," Vitale said Friday. "As the executive, I have to think about other things that may or may not have been considered."

Originally, Vitale cited only the committee's second vote in her decision, records show.

She made the call "due to close vote, and other thoughtful consideration of all factors," Vitale wrote March 8, 2013. More than two weeks later, she wrote an internal memo explaining she checked with DCF's general counsel, who advised state law allows recommendations to be overruled.

Deloitte, which had already worked with DCF, was more familiar with the agency's IBM mainframe system, she wrote in the two-page memo. Deloitte promised it would provide 87 workers for the job compared with Accenture's 36. Further, she wrote, Deloitte's track record proved it was an "established player in this field nationwide."

But by then, concerns about Deloitte's work had been raised elsewhere, including government agencies in Pennsylvania, California and Miami-Dade, where the company was fired in 2009 after the school district decided it could complete the work on its own.

Deloitte also was having trouble with CONNECT, the unemployment benefits website it was getting paid more than $40 million to design and build for another agency under Gov. Rick Scott -- the Department of Economic Opportunity.

As far back as 2011, DEO officials were warning Deloitte the CONNECT project was shoddy and behind schedule. In December 2011, DEO officials put Deloitte on notice it intended to fine it $15,000 a day until it revised its final design, which project manager Tom McCullion called "poor" in a letter to the vendor.

When Doug Darling left his job as DEO executive director Jan. 31, 2012, the design of CONNECT was still "insufficient," Darling said this week.

In June 2012, the DEO threatened to fire Deloitte.

When asked this week if anyone at DCF knew of the CONNECT issues, an agency spokeswoman replied the website hadn't launched at the time the new contract was considered.

"I didn't know about those issues," said Vitale, who left DCF in January to work as a consultant with Cambria Solutions, a technology firm.

When CONNECT launched Oct. 15, 2013, thousands of unemployed workers were locked out of the system because of glitches and waited weeks and sometimes months to get paid weekly claims of up to $275. It got so bad federal officials had to intervene.

On Dec. 20, the DEO started fining Deloitte $15,000 a day until the defects are repaired -- or $570,000 through the end of this week. While DEO officials say the problems are under control, it is still squabbling with Deloitte over costs. On Friday, Sen. Bill Nelson, R-Orlando, for the third time asked federal officials to investigate complaints that problems persist.

Over at DCF, a December 2013 Ernst & Young report showed Deloitte had fallen behind schedule and was over budget on the Medicaid project. But DCF spokeswoman Alexis Lambert said the system, which complies with the Affordable Care Act by adjusting for changes in the state's Medicaid eligibility system, launched successfully Dec. 16.

"The project is not overbudget," Lambert said.

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