Raleigh, N.C. — The Joint Legislative Program Evaluation Oversight Committee voted Monday to ask State Auditor Beth Wood to investigate whether the Department of Health and Human Services is complying with state laws governing non-competitive contracts.
That's after a preliminary study by the legislature's Program Evaluation Division found that only 10 of 143 of single-source contracts at DHHS since 2010 appear to have gone through the review process required by state law.
State law requires that all large single-source consulting contracts undergo review by the Office of State Budget and Management.
But PED Director John Turcotte said 21 of the 143 contracts were for "personal professional services," which state law exempts from that requirement.
"You’ve got a very severe problem with that particular exception," Turcotte said. "It isn’t always clear what is consulting and what is personal service contracting."
Turcotte recommended that lawmakers refer the probe into DHHS to the auditor as a "compliance" issue. Meantime, PED will undertake a thorough study of contracting in other state agencies and the university system.
DHHS Secretary Aldona Wos has come under fire for a number of generous "personal professional services" contracts, including a 2013 deal for $312,000 to former Republican state auditor Les Merritt and a $310,000 contract with Joe Hauck, a vice president at New Breed Logistics, which is owned by Wos' husband.
In February 2014, the agency announced it had awarded a $3.25 million contract to management consulting firm Alvarez & Marshall for organizational restructuring help in the state's troubled Medicaid program. That deal included as much as $800,000 for one project manager.
DHHS also inked a $487,500 contract with Navigant Healthcare this year to assess the Medicaid program's auditing processes.
Lawmakers on the state's Health and Human Services Oversight Committee have said the contracts were excessive and unnecessary.