Saturday, May 13, 2006

Is Roob About To Award $1 Billion Contract To Ex-Employer?

The Family and Social Services Agency, which is administered by Mitch Roob, is about to award a contract to manage the state's Medicaid, food stamps, welfare and other benefit programs. And it's a big contract--as much as $1 billion over 10 years. There are just two finalists, and one of the finalists is Roob's former employer, Affiliate Computer Systems, Inc., which is partnering with IBM according to a report today by the AP's Ken Kusmer. He writes:

Controversy likely will flare again around FSSA once it picks the winner of the largest contract in state history. Two teams of vendors _ each vulnerable to criticism _ are vying for a deal estimated at $1 billion over 10 years to take over applications for Medicaid, food stamps, welfare and other benefits received by one in six Indiana residents. Critics went to work months ago gathering information on the out-of-state companies leading each team.

FSSA changed the timeline for awarding the contract after The Associated Press reported the agency would not hold a public hearing until after the contract was awarded. The agency now plans a hearing June 30, five days before the deal is due to be awarded.

The flaps illustrate the politically charged atmosphere Roob and other Daniels lieutenants face in trying to reshape a state run by Democrats for 16 years.

"Republicans and Democrats alike have been critical of the way FSSA is organized and run, and we're trying to make relatively quick changes to the agency," Roob said. "We're going to move at a pace that we think is aggressive but not destructive" . . .

Roob, in awarding the state's largest contract ever, will choose between two teams of vendors, one led by Bahamas-based Accenture LLP and the other by IBM and Affiliated Computer Systems Inc., or ACS. The two teams submitted their final offers last week.

Accenture leads a similar team of vendors in Texas currently coming under harsh criticism for problems rolling out that state's privatized benefits system. ACS, based in Texas, has had its own problems: It lost part of a Georgia contract two years ago when it ran into problems processing claims for Medicaid and the state's health insurance program for low-income children.

Nowhere in the article does it mention the obvious conflict of interest Roob faces in making a decision on whom to award the biggest contract in the state's history. Shortly after Roob left the employ of the City of Indianapolis at the end of Steve Goldsmith's tenure, he and Goldsmith formed a new company, NetGov that promoted Internet web portal services to local governments across the country based upon the website they had helped create under the Goldsmith administration. An Indianapolis Star column by John Strauss in December 2000 described NetGov: "Every day's a reunion at Netgov, the company founded by former Mayor Stephen Goldsmith that helps develop government Web sites. At least seven former Goldsmith associates have joined the company, including former Deputy Mayor Skip Stitt and City Controller Ann Lathrop."

Roob and Goldsmith lured investors' money with the anticipation of getting contracts with the cities of New York, Chicago and Los Angeles based upon the "close relationships" the two had developed with the mayors of each of these cities. The company lost out on all three bids and, a short time later, the company filed bankruptcy after spending more than $20 million of the investors' money. Before going under, a 2001 article in the IBJ reported that "NetGov appears to have hit the skids as its handful of customers mull backup plans after receiving spotty service in recent weeks . . . The town of Fisher . . . saw parts of its [web] service go down for more than a week . . . NetGov's executive chairman, Steve Goldsmith, the former Indianapolis mayor, did not return IBJ telephone calls for comment. Roob . . . also could not be reached."

While the investors lost their money, Goldsmith and Roob jumped to another company, with the business' intellectual property in hand, and eventually wound up at ACS after it acquired that company. At ACS, Roob served as Vice President responsible for client relations in the Midwest and developing an integrated response to the Medicare Modernization Act (MMA).

Governor Daniels, hope you're surfing the Internet this weekend and read this. Stop Roob before he causes another major scandal in your administration.


Anonymous said...

Great job on finding and sharing this disturbing info. This is the first Ive heard of it. I hope the star and other media sources take a hard look too and watch closely at what happens with this issue.

Anonymous said...

You might want to check out the Lucas Group Partners, LLP. Incorporated in Indiana on 12/01/05, this is the group that designed the request for proposal that FSSA used to solicite proposals for the privatization effort. The principal is a long-time friend of Steve Goldsmith.