“Pinch me, this can’t be true! If so, this is one for the history books, a must read for Texas public purchasing officers.” – Anonymous
By Molly Mulebriar
A Texas county recently received proposals during a Request for Proposal process. Under Texas bidding laws a political subdivision is authorized to negotiate terms and conditions during an RFP process before an award is made. So, they did.
In this instance the county’s insurance committee reviewed proposals followed by the negotiation phase of the RFP process for best and final offers. The negotiation process produced positive results.
Here’s what happened:
Care Navigator Vendor A agreed to reduce their fee to $20. TPA Vendor B agreed to a fee of $30. Both vendors are important to the management of the county’s self-funded health plan.
The contract for both vendors was awarded based on these fees.
Now the fun begins…………..
Billing is received showing Care Navigator Vendor A fee of $20 increased to $30 while the TPA Vendor B’s fee reduced from $30 to $20.
“Why did you increase your fee to $30?” asked a county official.
“We wanted to make up for the lost revenue we agreed to give up during negotiations, so we convinced Vendor B, who we have a preferred relationship with, to reduce their fee and we took that reduction and added it to our fee. You shouldn’t be concerned because your total cost of $50 between the two of us remains the same! We’ll send you an amended contract!” replied the Care Navigator Vendor A.
“Houston, we have a problem” said the insurance consultant who managed the RFP process. “A Texas county cannot lawfully pay for goods or services that were not authorized by a contract. Doing so would violate procurement laws, budget controls, and county auditor constraint and could expose county officials to legal and administrative risk. Under Local Government Code ยง 113 the county auditor is prohibited from approving a demand for payment without legal authorization (e.g. by contract or statute).“
In the meantime, less than a week into the contract year the county receives an unsolicited amended contract to change fees that starts with “WHEREAS, the Parties desire to amend Exhibit B to the Agreement….for an additional one year period (the awarded contract was for 1 year only) ….WHEREAS, the Parties intend for this Amendment to modify only the specific provisions of the Agreement as set forth herein, with all other terms and conditions of the Agreement remaining in full force and effect………..NOW, THEREFORE, in consideration of the mutual promises, covenants, and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows…..”
“Nope, don’t do it” advised the county’s consultant.
“It looks like I moved a little too quick in drafting an amendment to the contract to change the fees. Please disregard that amendment” responded Care Navigator Vendor A’s CFO in an email. He continued “No problem, we will work with TPA Vendor B to get the October Invoice corrected and have the correct amounts billed between us.”
“My BLT is stale” said the customer. “Excuse me?” says the waiter. “I’m having trouble Believing you, Trusting you, and Liking you” responded the customer…… and out he went.
They must have shit for brains. They have no idea what they are doing and the jeopardy in which they’ve placed themselves. In fact, file this under “You Can’t Make This Shit Up.” This is a classic case of vendor collusion. They should be worried.
