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Idaho exchange drops no-bid contract with board member, sets new limits

BOISE – A controversial no-bid contract with a former board member of Idaho’s state health insurance exchange has been canceled, and the exchange board voted today to forbid issuance of any contract for more than $15,000 without board approval.

Last week, the exchange announced a $375,000 contract with Frank Chan, head of Applied Computing, who had been the chairman of its technology committee; he resigned from the board the same day.

“I made the decision to contract with Applied Computing because they have the background and experience needed for this challenge,” Amy Dowd, exchange executive director, told the board today. “The questions that have been raised indicate this decision should have been made in a different way. … I understand the scrutiny we are under. I appreciate the concerns that have been expressed this week. … I have learned from this process.”

Board Chairman Stephen Weeg announced at the opening of today’s board meeting that Chan has now “exercised his right to cancel the contract.” Said Weeg, “There’s a 30-day cancellation clause.”

Chan offered to work with the exchange during those 30 days, but the board declined.

“I think that from here, we can’t contract with him,” said Sen. Jim Rice, R-Caldwell, an exchange board member and an attorney. “We have to deal with reality, and reality is that I don’t think we can do further business with Frank, in spite of the fact that he did volunteer a lot of his personal time while he was on the board and went above and beyond. It was something that was very commendable. … I don’t think it is something where we can just say we’re going to ignore that going forward. We can’t. There’s a lot of realities that come with this particular entity that don’t exist with other entities.”

Board member Tom Shores said the process was flawed. “There should have been some alarms going off,” he said. “All those things should have occurred and didn’t occur.”

The exchange had been operating under an interim procurement policy that left blanks for amounts of contracts that would trigger board review, empowering Dowd to make those decisions. That changed today with the new $15,000 limit.

“If an expenditure is to exceed that, that will be brought before the board to make a decision,” said board member Hyatt Erstad, who made the motion for the new limit. “It’s not designed to hamstring. It’s designed to allow us additional accountability.”

Exchange board member Kevin Settles lauded former board member Chan, who didn’t attend the meeting, for the time, effort and expertise he offered to the board before his resignation last week. “I thought that he was a tremendous benefit for the board and really appreciate him,” Settles said. He expressed hope in “the possibility of extending a contract with him in a better fashion,” and added, “I just feel bad for Frank, and for all of us. But we shouldn’t dogpile on it.”

Rice, however, countered, “Negotiation of the contract prior to the resignation – Idahoans don’t see that as appropriate, we just don’t. … It’s part of being a fiduciary.”

Weeg said, “My hindsight says that in some ways our desire for expediency overcame … our desire for good governance. … So we made a decision, a decision was made regarding hiring one of our board members … and it created a major mess for us, there’s no way to ignore that fact. So we need to look at that as a board.”

“We’re all in this together,” Weeg said. “We could spend time trying to figure out who did what wrong, and I’ll take some of the blame for that. The governor appointed me to chair this board and the governor can decide if I still have his full faith and confidence, and I’ll need to talk to him about that. But I think the goal today is to say we have a huge challenge, we have a significant issue that we need to address and do better together. … We’ve been pressed by time from the get-go. We’ve probably taken some shortcuts that have caused us to stumble.”

Board members noted that Dowd, before signing the contract with Chan, sought advice from Weeg and others.

“Amy operated in a way that was above and beyond what was required,” said board member John Livingston. “She sought consultation from board members, she sought consultation from the chairman of the board, she sought consultation from the governor’s office. … She was not a renegade going out and doing things that were above and beyond.”

The board went behind closed doors for an hour and a half executive session to discuss personnel matters, then returned to open session and voted unanimously to request an independent review of what happened. “We will be working to find an attorney to do that review for us,” Weeg said afterward, “to look at what happened, and how that might have happened, and what recommendations they would make for us as an organization.”

He said, “We’ve operated under a crisis mode for five months, and it’s time to stop and take a breath.”

The board meeting also included some discussion of steps Idaho’s exchange can take immediately to let Idahoans sign up for health insurance despite glitches and delays in the federal enrollment system. Plans in the works include online calculators to give consumers an idea of what they’ll qualify for in subsidies even without enrolling, and direct links to insurers’ sites with details of plans and costs.

During a break in the meeting, Rice said, “I think we’ve made some progress on getting to where we need to be.”

Said Weeg, “I think we’ve made a good start. We’ve still got a lot of work to do.”


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