The decision to end negotiations with Truven Health Analytics of Ann Arbor, Mich., is another setback for the Legislature's decade-old plan to increase data-based decision-making at the Health and Human Services Commission, a mega-agency that runs the state's Medicaid program, foster-care system and many other services.
The "enterprise data warehouse" project is expected to be tweaked and put out to bid again, a process that would take months and cost the state tens of thousands of dollars in staff time.
More damaging, potentially, is a perception among some contractors that the state is rebidding the project to give another chance to a company favored by a new top commission official.
Tom Suehs, a former head of the commission who is advising Truven, said the rare nature of the decision and lack of a public explanation has raised suspicions. Other contractors declined to comment, citing business pending before the state.
HHSC Executive Commissioner Kyle Janek bristled at the suggestion of favoritism, instead bringing up a very different ethical issue - that Truven had received information about a closed-door meeting in which the state discussed how to get the contractor to lower its asking price.
"Nobody in that room should have taken that conversation out of there and called the vendor," Janek said. "Somebody in the agency was way too cozy with a vendor, and I cannot sit still for that."
A Truven spokesman could not be reached for comment.
Not enough money
Ultimately, Janek said, the company demanded a higher rate than lawmakers authorized."Here's the simple truth," Janek said. "The Legislature has not given me enough money to cover that potential contract."
Suehs and other former officials questioned that, noting Truven tentatively won the contract in June and the commission included a specific $78.03 million request for the project in a biennial budget proposal it submitted in August, less than a month before pulling the plug Sept. 5.
"We were entirely unaware of any issues," CEO Mike Boswood wrote in a letter to the commission. "We have no information whatsoever as to the reasons for HHSC's dramatic and sudden change in its procurement decision."
He added that Truven will ask the commission to reconsider or reimburse the company for an estimated $2 million in costs associated with relocating staff to prepare for the project.
The two sides are scheduled to meet Wednesday.
Janek played down Truven's concerns, saying the company was stirring drama to help its bargaining position. A tentative award only allows negotiations to begin, he said.
"I'm not sure how he can lead a huge company like Truven and be shocked that somebody would walk away from a bad deal," Janek said.
The enterprise data warehouse was envisioned as a massive database housing a wide variety of information that would allow officials to draw connections between different data sets, leading to savings and improved services.
The Legislature first discussed the idea in 2005, and funded it in 2007, calling for the warehouse to be operational by February 2009.
Goodman said the commission missed that deadline, in part, because it struggled to get federal matching funds.
Lawmakers said the latest delay was a concern because of the project's importance.
"When you can actually compile millions of pieces of data and have the ability to do sophisticated queries of that warehouse, it's a very, very valuable thing," said state Rep. John Zerwas, R-Richmond. "It helps you do your job better. It can help us provide better services and save money."
2 companies made bids
The commission issued a 273-page request for proposals in February 2013. Thirty-three companies expressed interest, but two pursued it most: Truven and Optum.The state did not re-engaged with Optum or any other bidder before ending the process.
The commission has not addressed the cancellation aside from posting a paragraph about it on its website. Lawmakers were not notified.
In the absence of information, rumors have been bouncing around the Capitol for days with much suspicion centering on the leaked comment by Jack Stick, the commission's new top lawyer.
Stick, who previously served as the commission's deputy inspector general, said his former division had a data project with another contractor charging much less than Truven was requesting.
The comment got back to Truven, which viewed it as an attempt by Stick to convince other officials to revoke the tentative award and give to the contract to the other company, according to one of its lobbyists.
Goodman said the commission is investigating the leak.
©2014 the Houston Chronicle
