House Democratic leader’s letter to Parson on McKinsey’s consulting contract

  

June 19, 2018

The Honorable Mike Parson
Governor of the State of Missouri
Missouri Capitol, Room 216
Jefferson City, MO  65101

Dear Governor Parson:

On June 18, 2018, the St. Louis Post-Dispatch reported on a $2.7 million consulting contract the state awarded to a company with close ties to a high-ranking staffer in the governor’s office following a highly questionable bidding process initiated under the administration of your predecessor. To protect the interests of Missouri taxpayers, I respectfully request that you immediately place this contract on hold pending a full and open review into whether standard bidding rules were followed.

The winning bidder on the contract to perform an assessment of the MO HealthNet program is McKinsey & Co., which formerly employed Drew Erdman, who then-Gov. Eric Greitens hired last year for his staff in the newly created position of “chief operating officer.” Under the contract, McKinsey & Co. will be paid $2.7 million – more than the three lowest bids combined and more than three and a half times the lowest bid of $750,000. Although the lowest bid isn’t always the best bid, given that the three companies with lower bids all have national reputations and offered to do the job for significantly less than McKinsey, it raises red flags as to whether Missouri taxpayers are getting the best deal.

In addition, the process that led to McKinsey receiving the contract raises other suspicions. When Greitens’ Office of Administration issued the original request for proposal, the grading system for evaluating proposals was to be 40 percent based on cost, 40 percent on methodology and 20 percent on experience. According to the Post-Dispatch, the RFP was withdrawn within days, and when it was reissued cost was downgraded to just 15 percent of grading system. This change seems designed to ensure that McKinsey’s high-dollar bid wouldn’t prove to be a large disadvantage.

In other cases, it appears the process was skewed in McKinsey’s favor, as this excerpt from the Post-Dispatch story explains:

“One of the most unusual elements of the bid is its scoring on methodology. McKinsey received perfect scores in every category, with identical comments that were copied and pasted in each section. Every other company was graded down – in some cases significantly – in each category, with specific criticisms outlined in each comment section. The perfect grading allowed McKinsey to easily overcome its significantly higher cost.”

Also troubling is the fact that when McKinsey’s bid documents were posted on the state’s bidding website, they were heavily redacted, with several dozen pages entirely blacked out. Of the companies bidding on this contract, only McKinsey’s documents are redacted, according to the Post-Dispatch.

At the paper’s request, Missouri Attorney General Josh Hawley’s office reviewed the bid documents and expressed concern. “The attorney general’s office does not discern any basis for redaction in the bid proposal provided by the Office of Administration,” Hawley spokeswoman Mary Compton told the paper.

Yet despite the evidence uncovered by the Post-Dispatch and Attorney General Hawley’s concerns, in a statement to The Associated Press a spokesperson for your office defended the contract and said it was awarded following “a fully transparent process that this Office supports.” With all respect, based on the available facts it appears this process was anything but transparent.

Put simply, $2.7 million is a large amount of money to be spending on consultant fees, especially when Missouri is struggling to fund basic needs throughout the state budget. With compelling evidence that this process may have been tilted in favor of particular firm, you have an obligation to Missouri taxpayers to investigate this matter to ensure that their money is spent efficiently and appropriately following an open and transparent process.

Confidence in state government has been shaken by the many misdeeds and missteps of your predecessor, and you are charged with the unenviable yet vital task of restoring Missourians’ trust in their government. That task will be significantly more difficult if they believe the current administration is turning a blind eye to potential malfeasance.

Sincerely,

Gail McCann Beatty
Minority Floor Leader
District 26