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Joint | June 9, 2014 | Committee Room | Program Evaluation

Full MP3 Audio File

[0:00:00.0] …And if members will please take their seats I briefly have amendment, Senator Gladys Robinson is gonna filling the vacated seat from the Late. Martin Nesbitt. Senator will welcome you and we apologize that we don’t have ___[00:20] ready today, and that objection we are gonna call the meeting to order, amendments should be, I need motion for the approval of our May 5 amendment. So, those amendments approved as appeared, Mr. Tucker you have the flow to discuss the amendment to the work plan. Oh, I’m sorry, I’m really sorry all in favor will say aye. [SPEAKER CHANGES] Aye. [SPEAKER CHANGES] All oppose will say no. Mr. Tucker. [SPEAKER CHANGES] Thank you Madam, I’m sure the members this is a proposal that stand from a preliminary review that we did that the request of the Chairs that preliminary review looked at the department of Health and Human Services hailing a personal service in consulting contracts. We are going to go over a project for PD and another one that we would like to recommend that the committee refer to the state auditor. You should have in front of you in addition to the slides, this list of statues that council has prepared that reference consultants and personal services also in Blue paper these are what we called ‘Project Profiles’ for work plan projects is front & back. The first is to authorize PD to conduct in the evaluation use of personal service contracts by state agencies and universities. We are going to scope this project if you approve it, looking at the issues such as contracting the former employees that’s always an issue somebody works one day and then they hangout the shingle and become a consultant and come back as a consultant or they come back as a personal service contractor, it’s not necessarily inherently wrong, it’s just a circumstances and the questions that might come up, another is multiple contracts with the same individual, there are dollars of minimums where below that amount there are great deal of exemptions and flexibility to given agencies but sometimes that amount is repeated three or four times during the one year and in the aggregate it is something substantial that should be of concern. And getting around review requirements that are in the state law the law is fairly clear the Governor has to have a significant role in consulting contracts and that’s an imperative and prior to that the offices state budget and management has to conduct a review if an agency wants to enter into a contract and there are some questions about it made in the statutory exemptions always BM’s gotta review it and in some instances the Governor has to review it. So, in the preliminary review that we did, we found that there are number of contracts that DHSS did not meet these review requirements. If you approve or direct us to do this we will start this project this month, release the report December of this year, it does not require us to hire a consultant outside expertise, not a great deal of travel we don’t expect that to be a problem here as most of the agencies are located here and Chapel is not too far away and the universities and there is date available from OSBM and from the Department of Administration and from ITS, the state ___[04:33] office. There is some potential for cost savings in terms of avoiding cost if a contract is properly, legally review and the contract is disapproved. Since we have did this preliminary review and looked at DHSS’s contracts we found that there were… [0:05:00.3] [End of file…]

Contracts over there that did not meet statutory requirements and since we were limited to a great deal in time and the amount of detail that we could examine in the course of that review, this of course is still inconclusive and tentative, but still a number of contracts are not being reviewed. It appears to be that way at least at DHSS, 143 of these noncompetitive contracts during the period from fiscal ’10 through March 2014, 21 of these contracts were consulting services did not appear to receive the correct review required by law. Since this would be a compliance oriented review that is the reason why we recommend the state auditory do this review instead of us but it’s up to the committee to decide if you want to refer to the state auditor or if you direct us to do so. If you direct us to do so we would simply carve out a compliance project within the one that you might approve relative to the other project. In any event, we can do it but we felt that since it was compliance in nature that’s appropriate for the state auditor to conduct, and the state auditor’s shown a great deal of interest in contracts as has this committee. Madam Chair, members, that’s all I have. The action would be to approve the first project for PED and it’s your option. Either refer it to the state auditor or direct PED to also do that compliance review at the HSS. [SPEAKER CHANGE] Members of the committee you’ve heard the recommendations. Is there discussion? Yes mam. [SPEAKER CHANGE] Just one question. Thank you madam chair. In terms of, and this is it’s my first time on my committee, but this sounds like a preliminary or beginning so once the process is concluded then would that give DABA to look at other areas or here you’re saying universities and state agencies, we collect that data so we then can have that to look at other relevant kinds of constituents? [SPEAKER CHANGE] Mr. ??? [SPEAKER CHANGE] The preliminary review that we did leading up to this proposal was strictly preliminary. This review will be determinative, and final, and in depth. Of course there may be areas of inquiry, other areas that might need further review, but we intend to scope this project to address the problem that we found in the preliminary review. This will not be a preliminary review, this will be a full PED evaluation. [SPEAKER CHANGE] Senator Hise. [SPEAKER CHANGE] Thank you madam chairman. If approved for both these motions, what do you expect to be the impact on the work plan? [SPEAKER CHANGE] As of the moment we don’t know what the legislature is going to do statutorily or through budget provisions and how these deadlines that would be set would affect the work plan, but the way that the special provisions are all worded they give this committee discretion to determine which of those projects are what priority and also when the reports would be reported. Until that is finalized this project would have no effect on the current work plan, we can do this project with the current staff without it affecting the current work plan. [SPEAKER CHANGE] Senator Hise would you like to be recognized for a motion? [SPEAKER CHANGE] I would. Madam Chairman I would move to authorize PED to conduct the study for us and to recommend referral to the state auditor for the DHHS contracts. [SPEAKER CHANGE] Thank you sir I’ll take that motion. Senator Hunt, yes sir. [SPEAKER CHANGE] Thank you Madam Chairman. I just had one quick question. You mentioned that DHSS was not conforming to statutory requirements and then what we’re evaluating is noncompetitive projects, which I guess means a no bid type project, you’re not saying that no bid projects don’t meet statutory requirements are you or are you? [SPEAKER CHANGE] ??? [SPEAKER CHANGE] Senator Hunt in the preliminary review we looked at existing reporting and other requirements when a noncompetitive project is proposed. In the cases that we reviewed at the DHHS there were how many..

[0:00:00.0] 140 [SPEAKER CHANGES] I’m ___[00:03] with the program evaluation division, we look that a sub-sample of non-comparatively bid projects within the HESS and we can only identify 10 that appeared to have gone through the process so there was 133 that we didn’t feel for my preliminary view had gone through the proper procedures according to state law and rules, follow up Senator ____[00:32]. [SPEAKER CHANGES] Could you give us a brief discussion or maybe some of the more important requirements for bids being accepted by the HESS? [SPEAKER CHANGES] The administer already code of North Carolina, he has many different exceptions that allow that exceptions but it allow non-comparative projects and there are numbers fairly reasonable such as artistic projects where it’s like the personal perform can do that, where time is all the essence and it’s an emergency situation in fact I think there is a general rigor for that in state law. But there is one exception that is the one instance where a non-competition is allowed is for personal professional service and consulting. So, you have got a very severe problem with that particular exception and that’s a problem Senator Hunt throughout the law and throughout the regulations, it isn’t always clear what is consulting and what is personal service contract. You can have a personal service contract but if it has a consulting element it’s supposed to fall within the reporting and justification requirements of consulting which is slightly different. All the more reason for us to do the ___[02:00] I’m not suggesting any of these contracts that we reviewed the HS didn’t have the character to them. Well, the state didn’t get away from money I’m not suggesting that at all, it just looks at, we just looked at the numbers and the frequency when they were approved properly or not and others will not. [SPEAKER CHANGES] And one last follow up. [SPEAKER CHANGES] Yes, Sir. [SPEAKER CHANGES] I’m sure where we are heading is possibly changed the statue to fix that. [SPEAKER CHANGES] I think it’s almost a certain day that we would come back listen the recommendations for a better statue and get instructed by the committee to do that. [SPEAKER CHANGES] ____[02:40] committee you have heard the motion made by Senator Hise. Is there further discussion? If not all in favor will say aye. All oppose no, okay. Okay, the motion holds. My next meeting if you will follow planning purposes will be next Monday…I’m sorry two weeks, Monday, June 23 at 3:00 o’clock and this… [Background Conversation] Mr. ____[03:22] would you like to address the meeting on 23rd for a little bit of information, please Sir? [SPEAKER CHANGES] Well, at that time we will have a work plan update what's happen to the PD work plan through the statutory and budgetary projects. Well, we have the child support enforcement project already, no I don’t think so and that will be July. So, it would be a very, very routine meeting venture and the minutes of this meeting…Oh, I’m sorry, excuse me, excuse me! Senator Harrison just reminded me, we are going to have a presentation from the NC Gear Project Team at the Governor’s office and that team consultants as you know that’s a very important strategic project they receive 2 million dollar appropriation for the current year and the project is under way and according to the preliminary report that they filed earlier this year you won’t hear anything about NC Gear the February 1st, 2015. So, the Chair suggested that an update or a briefing on what they intend to do with that project in a little more detail has been then that has been provided so far such things as what the consultants project plan is? What steps they plan to take? It will be a full update and we met… [0:04:59.9] [End of file…]

... with Joseph Coletti, who is hitting that up over at OSBM, and gave him a list of issues that we would hope he would address during that presentation. I apologize for not remembering that. I’m 66 this month. [SPEAKER CHANGES] No excuse. Are there any other comments or concerns from the committee? Again, I’d like to take a minute and welcome Senator Robinson, and we’re glad to have you as a part of the committee, and thank our Sergeant-At-Arms from both the House side and the Senate side. We appreciate you doing all the ?? work that you do for us. There’s no further business. We stand adjourned.