LINCOLN — With the benefit of hindsight, neither state officials nor the embattled nonprofit that is managing child welfare cases in the Omaha area would sign the contract that binds them together.
That's what leaders of both the Department of Health and Human Services and St. Francis Ministries of Salina, Kansas, said Friday under intense questioning from a special legislative committee.
The committee is investigating how HHS and St. Francis ended up signing a $197 million contract in July 2019, as well as how St. Francis has carried out the contract.
HHS CEO Dannette Smith said there was extensive discussion within HHS about the feasibility of the St. Francis bid before recommending that the state sign the contract.
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But she said she had no reason to question the reasonableness of the bid, even though the nonprofit offered to do the job for 60% of the bid from PromiseShip, the Omaha-based contractor that had managed child welfare cases for almost a decade.
"We were so driven on following the process," she said, noting that a previous attempt to bid out the job of overseeing the care of abused and neglected children in Douglas and Sarpy Counties had to be scrapped because of flaws in the procurement process.
William Clark, the interim president and CEO of St. Francis, said there were staff within St. Francis who raised concerns about the bid, especially those working in programs and finance, and believed that it would lead to financial losses. But he attributed the problems to sloppy work, not bad intentions.
"Simply put, the bid was bad. The work to prepare the bid was not accurate," he said. "However, the contract was not maliciously underbid by St. Francis."
Clark said the bid was put together hastily and without using a consultant. When they submitted the bid, St. Francis officials did not know about the Nebraska law setting case load standards or the law requiring that the private contractor managing cases in the metro area provide only 35% of services in-house.
Both requirements increased costs, he said. HHS officials required the nonprofit to bring its proposal in line with both laws but said any change in the price would invalidate the bid. The contract was signed at the original bid price.
But Nebraska ended up signing a new emergency contract with St. Francis in late January that erased the cost difference with PromiseShip. HHS officials signed the contract after Clark told lawmakers that the nonprofit would run out of money to operate unless Nebraska agreed to pay more.
The 25-month, $147.3 million emergency contract ends Feb. 28, 2023, a month after Gov. Pete Ricketts is term-limited out of office. State officials have not said what they plan to do after that. Under state law, the contract could be extended for another year.
But on Friday, Clark acknowledged that St. Francis would have lost money on the contract even if it had been accepted as originally written.
In fact, he said, St. Francis staff were surprised to learn that Nebraska had announced its intent to award the contract to them. He said the top leaders were surprised and excited, while others were surprised and concerned. Those leaders were terminated last fall after a whistleblower brought financial mismanagement to light.
Several questions Friday focused on who was ultimately responsible for deciding to sign the contract. Smith pointed to the Department of Administrative Services, which handles procurement for the state. She said that HHS made the recommendation to contract with St. Francis but that the other agency ultimately made the decision.
But Administrative Services Director Jason Jackson said the responsibility is shared. He said his department ensures that the state's procurement process is followed but would not overrule the recommendation made by the agency with expertise in an area.
Smith said HHS wrote the request for proposals and put together the team of evaluators that scored the responses for everything but cost. PromiseShip outscored St. Francis on all areas reviewed by that team but was outscored by St. Francis once cost was factored in.
Although St. Francis altered its staffing plan from the original bid, it has yet to comply with key requirements of its contract, including the caseload limits for workers set by state law. Clark said the pandemic has exacerbated problems with recruiting and retaining child welfare workers.
A report issued last month by Jennifer Carter, inspector general of Nebraska child welfare, called for the state to terminate its contract with St. Francis and end its 12-year experiment with having private entities manage child welfare cases.