Rauner-linked firm gets $12M in new deal, months after being cut out of $12M deal
SPRINGFIELD — As part of an overhaul of Illinois’ Medicaid system, a consulting firm linked to Gov. Bruce Rauner’s administration has received a $12.8 million contract without undergoing a competitive bidding process.
McKinsey and Company, which has two Chicago offices, was a beneficiary of the deal announced by the Rauner administration. The six-year, $5.26 billion per annum Medicaid package is split across seven providers and will offer five coverage options to residents in the state’s 102 counties.
But the influence of McKinsey in negotiations has come under question. Prior to the awarding of the contract, state Rep. Greg Harris, D-Chicago, had sought more oversight for the General Assembly in awarding the contract, the largest vendor contract awarded in the history of Illinois.
“Since I introduced legislation to require more transparency and oversight into the largest procurement in Illinois history, I have known there would be problems,” Harris told Champaign’s WCIA.
That measure passed the Democratic-led assembly but was vetoed by Rauner last month, who said it would “needlessly cost taxpayers millions of dollars.”
The more than $12 million handed to the firm tied to Rauner’s administration has raised eyebrows. Leslie Munger, one of Rauner’s deputy governors who previously served as comptroller under the first-term Republican before losing the office in last November’s election, was a former recruitment chief at McKinsey, from 1978-82, according to the governor’s office.
Munger’s appointment following her loss to Democrat Susana Mendoza in the comptroller’s race came under scrutiny earlier this year. Rauner announced that she would be paid $135,000 per year, the same as when she was appointed comptroller following Judy Bar Topinka’s death in Dec. 2014. However, Munger has been paid $169,003.29 according to state documents.
In March, as the state’s two-year budget impasse was ongoing, Mendoza suspended $27 million in payments that were part of a $250 million computer modernization plan launched by Rauner. Among the $21.6 million promised to outside consultants in that move was a $12 million sum for McKinsey.
Since Rauner took office, McKinsey has been awarded more than $70 million in contracts from the state. Prior to 2015, the firm was last awarded a $1,232,121.55 contract in 2005 according to state records.
Following the award of the Medicaid contract this week, Mendoza called into question the machinations behind the $5.26 billion deal. “We are beginning to see the consequences of (Gov. Rauner) going outside the scrutiny of the state’s standard procurement process to award the biggest-ever contract in state history,” she said on Twitter.
Mendoza championed a budget transparency act that took a bi-partisan override of the governor’s veto to pass in Springfield. The bill requires state agencies to update the comptroller on a regular basis throughout the year on debts and contracts. Previously, agencies had to provide only an annual report to the Assembly.
Rauner and Mendoza have sparred repeatedly since the Democrat unseated Munger. Earlier this year, the state’s Department of Innovation and Technology (DoIT), which Rauner created in 2015, had its expenses called into question by the comptroller and lawmakers on both sides of the aisle. After Munger’s loss in the Nov. 2016 election, she moved more than $70 million from the state’s general fund into administration-controlled agencies that largely benefitted DoIT.
But Mendoza held up payments for the DoIT’s secretary to multiple professional organizations, saying, “This type of waste of tax dollars is why I will always demand accountability and transparency from every state agency.” McKinsey had more than $38 million earmarked for its services as part of Rauner’s tech-overhaul.
Felicia Norwood, who Rauner appointed to head the Department of Healthcare and Family Services (HFS) in 2015, defended the actions of the administration in the Medicaid deal. “In retaining (McKinsey) to achieve this goal, HFS has followed state procurement code,” she said in a statement. “By helping to ensure that the Department is in compliance with the law, this contract is intended to ultimately prevent costly future litigation.”
HFS further said that according to the federal consent decree regarding the Medicaid contract, bidding is exempt from a competitive process.
WCIA reports that associates close to the Rauner administration say McKinsey has been involved with discussions of the Medicaid contract from the beginning. Work McKinsey had previously done for the state, including the suspended computer modernization program, was not disclosed during the bidding process. R.