October 22, 2009

Minority business issues scuttle $71-million health care contract

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By Andy Rosen
Andy@MarylandReporter.com

The Board of Public Works threw out a massive health care spending proposal Wednesday, asking the Department of Human Resources for more information about minority business participation in a proposal to spend $71.3 million on in-home health care over five years.

The complex proposal, which would authorize 10 different contractors to provide services across the state, came under fire from a P-B Health Care Agency Inc., a Baltimore City contractor that performed similar services under a contract that is set to expire at the end of October. The state was still talking to 16 additional vendors that it planned to make eligible later.

The BPW voted to extend the existing contract by six months and rebid the contracts, over protests from a DHR attorney who said it would take longer. The discussion of the issue hit on often-controversial issues related to the state’s minority contracting laws, such as whether minority firms should be treated differently when they are prime contractors instead of subcontractors.

P-B Health, which is minority owned, argued that it had been improperly rejected from the new contract. Without the contract, the company would be out of business, said Robert Dashiell, a lawyer for the firm. Luwanda Jenkins, who heads the Governor’s Office of Minority Affairs, said the company did not meet its goals for minority subcontracting, even though the firm is minority-owned itself.

“When a firm is able to bid directly as a contractor, the race and ethnicity is not a primary factor,” Jenkins said.

For Comptroller Peter Franchot, one of three members of the state spending panel, the questions brought up additional issues related to minority business in the contract. He said he was concerned about the 10 percent participation rate, which is lower than the state’s 25 percent overall goal.

Jenkins said minority participation goals are generally tailored based on the nature of the contract, given the amount of firms that are in that line of business and would be eligible to participate.

Franchot said he hoped the minority participation could be increased under the contract when it gets rebid.

“On its face, that does not make any sense,” he said of the participation goal on the home health care contract. “It’s not something that you have to have a law degree to do.”

Gov. Martin O’Malley, who also sits on the BPW along with State Treasurer Nancy K. Kopp, said the confusion with P-B Health, as well as questions over the overall minority participation goal could probably be resolved through a six-month delay and rebid. He called the move, the path “of least resistance.”

Kopp said she had some concerns about the delay. She said state officials generally do a good job with procurements.

“I respect the department and the office having looked at the 10 percent, and personally I would not throw everything out in the effort to solve this particular problem,” she said.

BPW members and staff expressed concern throughout the course of the meeting at the pace at which they were being asked to act on contracts. The home health contract, for instance, would have expired before the board’s next meeting. A DHR spokeswoman said Wednesday that she could not immediately provide information about the total cost of the existing contract.