Raleigh, N.C. — A state contract terminated last month after a vendor left thousands of state employees with "inactive" health insurance received no review from outside technology experts, despite a state law designed to require oversight for IT projects.
North Carolina lawmakers in 2004 began requiring agencies to seek review from the state's chief information officer on large taxpayer-funded information technology projects, which are often plagued by technical problems and cost overruns. But when the North Carolina Treasurer's Office inked a deal with Aon Hewitt in late 2014 to run sign-ups for the State Health Plan, state officials classified the agreement as a "service contract," essentially exempting it from external oversight.
It's a case State Chief Information Officer Chris Estes calls a possible "gray area" in a law meant to ensure the state protects itself before beginning complex technology projects.
The Treasurer's Office apologized last month after North Carolina employees were turned away from doctor's offices or had their prescriptions delayed when the health insurance of an estimated 2,000 to 4,000 workers was listed as "inactive."
Although Aon Hewitt initially called the problem "an isolated issue impacting a small number of individuals," the Treasurer's Office and the vendor mutually terminated the contract, according to Treasurer's Office spokesman Schorr Johnson.
The state is working on returning the contract to a vendor it has worked with before. Officials expect to finalize a settlement with Aon Hewitt in the coming weeks.
Years before the deal with Aon Hewitt, though, officials with the State Health Plan did seek help from the Office of Information Technology Services. In 2011, plan officials asked OITS for state project managers to oversee contracts for the health plan's eligibility and enrollment services, which would be handled by an outside vendor.
But no one was qualified, according to the Treasurer's Office, and in late 2011, OITS told State Health Plan officials the project proposal wasn't technology-related enough to warrant the office's help.
That determination applied to the initial eligibility and enrollment services contract with Benefitfocus, which took the job in July 2013. After customer service problems with Benefitfocus prompted the state to switch to Aon Hewitt a little more than a year later, the Treasurer's Office used the same rationale.
"It is the view of the State Health Plan that the contract with Aon Hewitt for Eligibility and Enrollment Services was a contract for services and not primarily an information technology contract and did not require state Office of Information Technology Services approval or oversight," Johnson said in an email.
Estes, who took the helm of OITS in January 2014, said there's no real "bright line" separating a services contract from an IT contract.
"Every law has some gray area, and you may have found one," Estes said.
He said better defining the differences between types of contracts that need oversight is one area his office is working on. But because OITS played no role in the Aon contract, Estes said justifying the decision not to seek oversight would be up to officials with the State Health Plan.
"From their perspective, they probably thought they were following the process they were supposed to follow," Estes said. "I'm sure they had the best intentions."
Johnson said the Treasurer's Office couldn't speculate about whether additional oversight would have affected the outcome of the Aon Hewitt contract.
"The State Health Plan is committed to providing members the best customer service and will continue to hold vendors to the highest standards," he said in an email.