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Idaho health insurance exchange no-bid contract called ‘indefensible’

BOISE – Idaho House Speaker Scott Bedke said Friday that it was “indefensible” for the state’s health insurance marketplace to award a no-bid contract worth up to $375,000 to one of its own board members.

Bedke, R-Oakley, joined Sen. Jim Rice in criticizing exchange Executive Director Amy Dowd’s decision to award board member Frank Chan the $180 per hour contract. Rice is a Canyon County Republican who sits on Your Health Idaho’s 19-member board.

Chan resigned from the board Wednesday, when the deal to oversee a large technology project was announced. He couldn’t be reached for comment.

Rice said he knew nothing of the deal before Wednesday and called it “totally unacceptable.” He’s now pushing for policies to prevent contracts with exchange insiders, especially if such deals aren’t publicly advertised or don’t require competitive bidding.

Bedke said he’s eager for that process to be completed to bolster public confidence in how the exchange doles out taxpayer-funded contracts.

“It was wrong,” Bedke said. “I’m very troubled by what has happened. I understand the board is going to revisit this issue, and I’m willing at this point to let the board do its job. The public has a right to have confidence in all governmental processes, including this one.”

Rice said the exchange board’s procurement policy never aimed to give Dowd a free hand to award large contracts without approval from the board. He intends to take up that issue soon, to eliminate any confusion.

The Your Health Idaho exchange created under President Barack Obama’s health care overhaul allows people to shop for insurance and learn if they qualify for federal subsidies.

According to his contract, Chan will oversee the exchange’s technology vendors as it works to replace the glitch-plagued federal enrollment system with state-based software by next year. The exchange is seeking a $50 million, taxpayer-funded grant from the federal government to pay for the new system.

Dowd, who didn’t immediately respond to Rice’s concerns Friday, said a day earlier that the exchange’s draft procurement policy gives her broad authority to award contracts without seeking competing proposals. The draft policy was created in May and still needs to be finalized by the board.

Dowd said Thursday that the exchange is under tight deadlines to replace the federal software system with a more reliable state-based system by next October. It was imperative that Chan begin work quickly, she said. Dowd also said she’d vetted the deal with exchange board Chairman Stephen Weeg and Gov. Butch Otter’s administration.

Otter spokesman Jon Hanian said the governor’s office didn’t sign off on the contract.

“Our role was to accept Mr. Chan’s resignation before a contract was offered,” Hanian said. “We understand there are questions concerning this contract. We have confidence in the board and staff to address these issues next week and ensure we continue to have a transparent and accountable process.”

Chan has done work for other state agencies. The $180 per hour contract has nearly doubled Chan’s hourly rate for recent work, state records show.

For instance, Chan was paid $95 per hour by the Idaho Department of Insurance in 2012 for information technology work for Otter’s Exchange Work Group. The governor tasked that group with investigating the merits of adopting a state-run exchange.

Department of Insurance records indicate Chan received more than $7,000.

Additionally, the Department of Health and Welfare in fiscal 2013 paid Chan $185,250 for IT work, with an hourly rate of $95.