The Connector paid Mansha Consulting at least $14.7 million before cutting off payments and launching an investigation into the performance of the information technology vendor, said Jeff Kissel, the Connector's executive director.
Mansha's main role was project manager, supervising the work of the Connector's IT developer CGI Group Inc., which won $74.2 million in contracts but delivered a problem-plagued system that opened two weeks late in October 2013. It also was assigned to resolve data transfer problems between the Connector and Medicaid health insurance program for low-income residents.
Virginia-based Mansha, which rents space in a shared office in Honolulu's Waterfront Plaza, is listed in a state audit of the Connector as the second-highest-paid vendor with roughly $22 million in contracts.
The state audit, released in January, said Mansha failed to successfully integrate the Connector system with the state Department of Human Services, which runs the Medicaid health insurance program. The two systems need to talk to each other to determine whether applicants are eligible for insurance through Obamacare or Medicaid. The audit said the information sharing Mansha was supposed to oversee still does not work and would be difficult to fix.
Michelle Stawinski, a Maryland-based attorney for Mansha, told the Honolulu Star-Advertiser that Mansha is owed $4.2 million for work it completed from July to December. Mansha laid off more than a dozen workers because it was not getting paid by the Connector, she said.
The Connector has never informed Mansha why it is withholding payments, Stawinski said. She defended Mansha's work, saying the firm provided monthly reports of its work to the Connector, some as long as 75 pages.
"The Connector has ignored us," Stawinski said. "If they are doing an investigation, they're doing it without us knowing. I don't know how they can do an investigation without talking to anyone. Nobody's even asked us for a copy of the contract."
Stawinski said everything was fine between Mansha and the Connector and that "everybody was happy with all of their work" before Kissel became executive director in October.
"The new executive director comes in, and that's when it all falls apart," she said. Initially, Kissel had told the firm he was working on drawing down the federal funds to pay Mansha, according to Stawinski.
"What Mansha had been told in October was, ‘There's no problem. You're going to be paid.' Then in November before the rollout, he said, ‘Don't worry about it. You're going to get paid.' The Friday before Thanksgiving Mr. Kissel finally says, ‘Look, you're never going to get paid,'" Stawinski said. "There's never been anything specific that says, ‘You haven't done this. You haven't done that.' We have not yet gotten anything from them that says, ‘This is what you're not doing right.'"
The Connector, which signed up 9,800 individuals on the exchange at the close of the enrollment period in 2014, acknowledged last year that its low numbers were due in part to a backlog of 11,000 applicants whose applications couldn't be processed because DHS' and the Connector's IT systems weren't integrated.
Jan Yamane, the acting state auditor, said she is conducting a separate audit on Mansha. Yamane said she was unable to determine whether fees paid to Mansha were reasonable because the Connector didn't provide her with information requested.
"We are concerned about the Mansha contract because the Connector entered into a sole source (or no-bid) $12.4 million contract with Mansha to serve as systems integrator for the Connector system and the DHS system … despite serious concerns raised by the board," Yamane said in her recent audit.
In the audit, Yamane said the Connector's former executive director, Coral Andrews, originally hired Mansha for $56,000 to help the organization prepare for a design review of its IT system. It later amended the contract and increased the amount to $168,000. Another contract, for $12.4 million, was amended three times until reaching $21.9 million.
Kissel said he does not know how much money the Connector owes Mansha.
"The trouble is we are not exactly certain. That is why we have an independent investigation underway," Kissel said.
The Connector — which received $204.3 million in federal grants to enroll people in health insurance under the Affordable Care Act — spent more than $119 million on IT and consultant contracts, according to the state audit.
The audit said Mansha was supposed to have a team of 17 people composed of 11 employees and six subcontractors.
"Supporting documents indicate that Mansha did not provide anywhere near the number of personnel it committed to, and the subcontractor was retained for only 3.5 months of the 12-month period," the audit said.
Kissel told lawmakers at a Capitol briefing this month that the Connector has severed ties with Mansha.
"There is no relationship whatsoever," Kissel said. "They have indicated we owe them money, and we have declined to pay it without further investigation. We don't have sufficient evidence to pay them."
He added, "We are very careful of any payments we make because it's taxpayer money."
Kissel told lawmakers the Connector has hired former Attorney General Mark Bennett, who now works for the law firm of Starn O'Toole Marcus & Fisher, to investigate the Mansha contracts.
The state Office of Information Management and Technology recognized Mansha as Contractor of the Year in 2013, and several OIMT staff members were hired by Mansha after the company started its work with the Connector.
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