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Reports: Former Munger firm gets $12.5 million no-bid contract after a $12 million payment was frozen by Mendoza

Friday, Nov 17, 2017

* Mark Maxwell

Mere days after the state paid down roughly forty percent of its backlog of overdue bills, the Rauner administration finalized the largest vendor contract in state history.

The six-year, $5.26 billion deal is split between seven healthcare companies who met the state’s criteria for a massive Medicaid overhaul. BlueCross BlueShield ($1.03B), County Care ($1.05B), Harmony Health Plan of Illinois ($685M), Illini Care Health Plan ($915M), Meridian Health Plan ($960M), Molina Healthcare of Illinois ($440M) and Next Level Health Partners ($180M) enlisted as Managed Care Organizations and, as agreed to under the terms of the deal, will combine to provide at least five coverage options for Medicaid patients in all 102 Illinois counties. […]

On Wednesday, as required by a part of the new procurement code, the Rauner administration quietly published the first details of a new one-year consulting contract with McKinsey and Company worth up to $12.5 million. The sizable bid was awarded without any competition. HFS says the ‘consent decree compliance’ contract is exempt from competitive bidding rules. […]

A source close to the governor’s inner circle says McKinsey has been nurturing this deal from the beginning, often serving as a mediator between potential providers and the governor’s office. The source, who asked not to be named in this report, says a partner at McKinsey maintains a direct line of communication with Deputy Governor Trey Childress. Calls placed to McKinsey were not immediately returned. Childress, who operates largely behind the scenes and coordinates business with state agency supervisors, is one of a select few top advisors who not only survived the governor’s summer staffing purge of 2017, but also saw his responsibility and influence swell to new heights.

This first glimpse at the cost and scope of the McKinsey contract may provide insight into how this deal was crafted from the start. Any previous contract work with the state was not publicly disclosed as it was technically exempt from publishing requirements under the old procurement code. New orders filed under the Freedom of Information Act may soon yield further details about McKinsey’s role in this process.

“Now we’re seeing disclosure of contracts we didn’t know about. I wonder who was involved in designing the criteria and deciding the selection and exclusion of winners and losers,” Representative Harris wondered. “I think we have an interest in knowing these things.”

* The Rock River Times connects some more dots

The more than $12 million handed to the firm [for the no-bid Medicaid contract] tied to Rauner’s administration has raised eyebrows. Leslie Munger, one of Rauner’s deputy governors who previously served as comptroller under the first-term Republican before losing the office in last November’s election, was a former recruitment chief at McKinsey, from 1978-82, according to the governor’s office.

Munger’s appointment following her loss to Democrat Susana Mendoza in the comptroller’s race came under scrutiny earlier this year. Rauner announced that she would be paid $135,000 per year, the same as when she was appointed comptroller following Judy Bar Topinka’s death in Dec. 2014.

In March, as the state’s two-year budget impasse was ongoing, Mendoza suspended $27 million in payments that were part of a $250 million computer modernization plan launched by Rauner. Among the $21.6 million promised to outside consultants in that move was a $12 million sum for McKinsey. […]

Earlier this year, the state’s Department of Innovation and Technology (DoIT), which Rauner created in 2015, had its expenses called into question by the comptroller and lawmakers on both sides of the aisle. After Munger’s loss in the Nov. 2016 election, she moved more than $70 million from the state’s general fund into administration-controlled agencies that largely benefitted DoIT.

But Mendoza held up payments for the DoIT’s secretary to multiple professional organizations, saying, “This type of waste of tax dollars is why I will always demand accountability and transparency from every state agency.” McKinsey had more than $38 million earmarked for its services as part of Rauner’s tech-overhaul.

All emphasis added because… hmm.

* As an aside, Munger’s salary is reported in the above story and others to be $135,000 a year, but a check of the comptroller’s database shows she’s been paid $169,000 this year so far out of a CMS contractual line.

- Posted by Rich Miller        

57 Comments
  1. - 360 Degree TurnAround - Friday, Nov 17, 17 @ 12:08 pm:

    That sounds like Rauner is adding water to the swamp.


  2. - Flynn's mom - Friday, Nov 17, 17 @ 12:11 pm:

    I love Rauner’s idea of transparency/s


  3. - 360 Degree TurnAround - Friday, Nov 17, 17 @ 12:13 pm:

    Sounds like maybe Rauner is lining up a job for himself in January of 2019.


  4. - Sonny - Friday, Nov 17, 17 @ 12:15 pm:

    If the work can be done in house, then do it in house. Lord knows Munger isn’t doing anything so start with her but if the administration is going to outsource work, then they need to demonstrate there are savings and then make the tough decisions to downsize staff and eliminate or combine agencies. With Rauner, we get the worst of both worlds, and no leadership or accountability to boot.

    Also, I thought this was a $30 billion to $40 billion procurement. Maxwell may need to look at that number again.


  5. - DuPage - Friday, Nov 17, 17 @ 12:15 pm:

    Exactly what did that company do to get that 12.5 million?


  6. - anon2 - Friday, Nov 17, 17 @ 12:17 pm:

    No-bid contracts? Is that the GOP method to hold down costs and promote efficiency?


  7. - former southerner - Friday, Nov 17, 17 @ 12:17 pm:

    But I am sure Mr. Bowtie, aka George Will approves.

    Rauner is behaving in a rational fashion since those with their eyes open don’t expect anything better from this administration and those in the LP camp will continue to fawn over him no matter what.


  8. - Perrid - Friday, Nov 17, 17 @ 12:21 pm:

    Sonny, I believe that the amounts he quoted are for each year, or rather for the first year. The MCOs and the state can and almost certainly will negotiate the rates the MCOs will get paid (I think its common practice with managed care in general to underbid to get the contract then demand more money when you show a loss), but just extrapolating from the $5.26 billion the full 6 year contract, if it lasts that long, will be over $30 billion.


  9. - Mark Maxwell - Friday, Nov 17, 17 @ 12:23 pm:

    Sonny, the individual contracts can be extended beyond the initial 6-year term. But those are the final numbers according to HFS records. The estimates tossed around at a committee hearing were $9Bn+. I haven’t yet heard your $40Bn number.


  10. - Oswego Willy - Friday, Nov 17, 17 @ 12:24 pm:

    Munger didn’t need a job.

    She told us so.


  11. - Curl of the Burl - Friday, Nov 17, 17 @ 12:27 pm:

    This is what it’s impossible to “defend” Governor Rauner on his Mendoza remarks re: being Madigan’s buddy. Rauner goes after everyone he doesn’t like or disagrees with him - so that’s not a shock regardless of gender or anything else - but when he handpicked Munger, bankrolled her campaign and then gave her a nice gig after she lost it’s political theater of the absurd.


  12. - Anonymous - Friday, Nov 17, 17 @ 12:29 pm:

    I wonder if a purged former superstar helped connect these dots.


  13. - wordslinger - Friday, Nov 17, 17 @ 12:33 pm:

    Munger can smell the meat-a-cookin’.

    She did great work in her final days as lame-duck comptroller, too, with her midnight GRF raid for the IT pinstripe patronage army, even when their dedicated account was already flush with cash.

    Add this to The Return of the Cellini Gang fat lease deals on Rauner’s watch.

    What’s next for shakin’ up Springfield? Is Rauner going to put Stu Levine back on his payroll? He’s done his time and has demonstrated useful skills in this area. Rehabilitation of the felon is good government.


  14. - Thinking - Friday, Nov 17, 17 @ 12:34 pm:

    Thanks Mark Maxwell, good reporting.


  15. - Ducky LaMoore - Friday, Nov 17, 17 @ 12:35 pm:

    Am I the only one who thinks that this isn’t a big deal? RNUG? You out there with some perspective?


  16. - RNUG - Friday, Nov 17, 17 @ 12:39 pm:

    -Ducky-

    I just sighed when I read it. More insider dealing / pinstripe patronage.


  17. - Perrid - Friday, Nov 17, 17 @ 12:40 pm:

    @ Ducky, I’m not RNUG bu I’m gonna respond anyway :). This isn’t proof of shenanigans by any means, but if someone in the Governor’s office is steering no-bid contracts for millions of dollars towards a former employer, that is a big deal. Now that is obviously a huge ‘if’, but it’s something to be cognizant of.


  18. - jim - Friday, Nov 17, 17 @ 12:42 pm:

    Munger was a former recruitment chief at McKinsey.

    when? that would appear to be relevant since the reporter is clearly suggesting impropriety on her part.


  19. - Sonny - Friday, Nov 17, 17 @ 12:43 pm:

    http://www.sj-r.com/opinion/20170516/susana-mendoza-accountability-transparency-needed-if-state-changes-health-care-landscape

    It could be wrong I suppose, but this column put the cost at $35 billion to $40 billion over four years.


  20. - Frequently Blocked By Rich - Friday, Nov 17, 17 @ 12:44 pm:

    =Am I the only one who thinks that this isn’t a big deal? RNUG? You out there with some perspective?=

    As offensive as these schemes are to IL citizens, taxpayers, and those who have ever been involved with actual public service, it’s just business-as-usual to the IL GOP and IL Dems.

    Anyone outside of the two-party cabal would likely be prosecuted for this apparent theft.


  21. - Sigh - Friday, Nov 17, 17 @ 12:45 pm:

    Wow. So thankful he ran on the campaign platform of ending business as usual in Springfield. {sigh}


  22. - Shane Nicholson - Friday, Nov 17, 17 @ 12:47 pm:

    “I wonder if a purged former superstar helped connect these dots.”

    I can say that this came up as part of another investigation we’ve been working on for a few months now.


  23. - Ginhouse Tommy - Friday, Nov 17, 17 @ 12:47 pm:

    I want to see Rauner,s babbling response to this when Mary Ann Ahern asks him about it. Since he said he was going to shake up Springfield he has no excuse for this. Looks like more of a shake down rather that shake up. Sheesh.


  24. - Jocko - Friday, Nov 17, 17 @ 12:47 pm:

    When Leslie described herself as Rauner’s wingman, she actually meant bagman.


  25. - Baloneymous - Friday, Nov 17, 17 @ 12:48 pm:

    Not very transparent from the guy who said he would be the most transparent governor in history


  26. - 47th Ward - Friday, Nov 17, 17 @ 12:50 pm:

    No bid contracts almost always look hinky, but in fairness, McKinsey is a global powerhouse in consulting. No chance Munger will see any personal benefit from this deal and it is unlikely that McKinsey was part of any under-handed scheme to steer business its way. They aren’t going to toss a stellar reputation into the toilet for $12.5 million.


  27. - Curl of the Burl - Friday, Nov 17, 17 @ 12:50 pm:

    12:29 - and that’s why the way the Rauners treated and then disposed of their staff was not only awful but stupid. If you let people go for legit reasons or with the understanding that it’s not personal then these things shouldn’t happen. But when you treat people that way it’s an invitation for spite and retribution.


  28. - Ducky LaMoore - Friday, Nov 17, 17 @ 12:50 pm:

    Hmm… okay. Maybe I am just too accustomed to this sort of dealing. With a no-bid contract it is hard to know but, does this type of money seem out of the realm of normalcy for what the company is doing for the state?


  29. - Anonymous - Friday, Nov 17, 17 @ 12:53 pm:

    - we’ve been working on for a few months now. -

    A few months as in since July?


  30. - Baloneymous - Friday, Nov 17, 17 @ 12:54 pm:

    Ducky— my take is this. The state can’t pay its bills. Universities and social services were damaged severely by Rauner. But Illinois has tens of millions to throw at McKinsey the most expensive consulting firm in the world? And do it all thru no bid contracts when he said he would be so transparent and ethical and change business as usual?


  31. - Shane Nicholson - Friday, Nov 17, 17 @ 12:55 pm:

    @Anon: August, actually. Unrelated to this though of a similar nature in terms of kickbacks.


  32. - Anonymous - Friday, Nov 17, 17 @ 1:05 pm:

    Six year contract? Who does six year contracts? It’ll run through the end of the next gubernatorial term.

    Oh, wait


  33. - Anon221 - Friday, Nov 17, 17 @ 1:06 pm:

    So the Transparent Man is now using the consent decrees he “detests” to line the pockets of supporters. A new low, and possibly illegal.

    From Mark’s report-”HFS says the ‘consent decree compliance’ contract is exempt from competitive bidding rules.”

    Keep the pressure on this administration, Mark:)


  34. - 100 miles west - Friday, Nov 17, 17 @ 1:18 pm:

    Having worked with McKinsey & Co on one of their state government projects, my views are skewed. The people I dealt with were not all stars, and their suggestions were sometimes laughable. They are pinstriped proteges of Professor Harold Hill.


  35. - allknowingmasterofracoondom - Friday, Nov 17, 17 @ 1:20 pm:

    This article’s headline is just Sensationalism plain and simple. What a joke.


  36. - Rabid - Friday, Nov 17, 17 @ 1:21 pm:

    rauner should be worried about the bank robber contacting the authoritys


  37. - Anonymous - Friday, Nov 17, 17 @ 1:27 pm:

    I’m amazed it’s taken so long for people to notice the stench around the MCO reorg. Between this and yesterday’s rate cut story, I hope people will start paying attention.


  38. - wordslinger - Friday, Nov 17, 17 @ 1:29 pm:

    You know, 47, you surprise me. If history has taught us anything, it’s that some corporations will risk their “stellar reputations” on all manner of devious schemes.

    Give it think, and I bet you come up with a bunch in matter of minutes.

    Ducky, as far as no-bid contracts to former employers go, see Barbara Byrd Bennett.


  39. - VanillaMan - Friday, Nov 17, 17 @ 1:32 pm:

    This happened because Bruce Rauner hasn’t been believed, even by his staffers. When the Boss spews it, then does it - the staff does it too. When the Boss just spews it, but doesn’t do it - the staff blows it off.

    We’re discovering that Rauner is more fake than his critics claim.


  40. - Louis G. Atsaves - Friday, Nov 17, 17 @ 1:35 pm:

    “HFS says the ‘consent decree compliance’ contract is exempt from competitive bidding rules.”

    There are all kinds of consent decrees dictating continuing State spending under terms imposed by courts. A good chunk of the current backlog of bills run up the past two years falls under “consent decrees.”

    Can someone fill in the blanks here?


  41. - Baloneymous - Friday, Nov 17, 17 @ 1:43 pm:

    47th Ward

    McKinsey and stellar reputation. Go use the google and look up Jeffrey skilling, Enron, Rajat Gupta and insider trading and get back to us.


  42. - Anon221 - Friday, Nov 17, 17 @ 1:43 pm:

    Louis G. Atsaves- In this case, I doubt the court instructed the Rauner Administration as to what no-bid vendor they HAD to use. That is more the issue here than the fact that, yes, the bill backlog has been damaged by the required spending dictated by consent decrees- which Rauner is more than happy to have happen. This reinforces his famous stance of the power of crisis and the usefulness of social services, et.al. to force political change.


  43. - Louis G. Atsaves - Friday, Nov 17, 17 @ 1:49 pm:

    @Anon221: “‘consent decree compliance’ contract is exempt from competitive bidding rules.”

    I am assuming some court weighed in here somewhere at sometime. All I’m asking for is for someone to fill in the blanks.


  44. - Anon221 - Friday, Nov 17, 17 @ 1:55 pm:

    Perhaps this will help:
    https://www.law360.com/articles/940695/illinois-must-pay-medicaid-debt-under-consent-decrees


  45. - Arthur Andersen - Friday, Nov 17, 17 @ 2:02 pm:

    Thanks to Mark and Shane for their reporting and for commenting here to help us understand this stinker.

    One observation, in no way meant to defend this deal-one didn’t see McKinsey around from 2005-2015 because Deloitte had a lock on a great deal of the State consulting “work” under BlagoQuinn for not entirely meritorious reasons.


  46. - Shane Nicholson - Friday, Nov 17, 17 @ 2:15 pm:

    @Arthur A: Thank you, sir. And yes, the Deloitte stronghold was just as big of a sham.


  47. - wordslinger - Friday, Nov 17, 17 @ 2:19 pm:

    – fill in the blanks–

    The fact that the contract is exempt from competive bidding does not require that it to be no-bid, or that it be awarded to the “deputy governor’s” former employer.

    Hope that helps.


  48. - RNUG - Friday, Nov 17, 17 @ 2:20 pm:

    == You out there with some perspective? ==

    Adding a bit more perspective, you don’t have to sole source to steer contracts. All you have to do is tailor the specifications to match your favorite vendor. Take a look at the recent warehouse deals for examples of that.

    And unless the rules have changed, last I knew someone at a high level (think Director) had to actually sign their name justifying any sole source contract as being in the “best interest of the State”.


  49. - Sigh - Friday, Nov 17, 17 @ 2:37 pm:

    Can anyone confirm what Munger’s Deputy Governor job description includes- what agencies/issues she works on? Does HFS and the other social service agencies report to her?


  50. - sharkette - Friday, Nov 17, 17 @ 3:15 pm:

    Unfortunately, the payments Menodza is holding up in this fund are also payments from funds 302 and 304 which merged into a single technology fund, and Susie is not paying ANY technology invoices under CMS/DoIT. Including small minority owned business such as mine.


  51. - this guy - Friday, Nov 17, 17 @ 3:16 pm:

    ==No chance Munger will see any personal benefit from this deal and it is unlikely that McKinsey was part of any under-handed scheme to steer business its way. They aren’t going to toss a stellar reputation into the toilet for $12.5 million.==

    Uh, you might want to check Open Books before you make such a statement. In the past two years alone, they’ve received more than $62 million dollars in no bid contracts.


  52. - sharkette - Friday, Nov 17, 17 @ 3:17 pm:

    And even though the fund takes in monies all the time. It also as cash and is approved to pay technology vendors.
    And this genius move is causing interest payments due for her failure to pay the tech vendors for her vendetta against Rauner.


  53. - sharkette - Friday, Nov 17, 17 @ 3:18 pm:

    True it is.
    Millions in intentional interest costs to all of those that live here. thanx susie


  54. - Honeybear - Friday, Nov 17, 17 @ 3:32 pm:

    Well Sharkette now you know how private social service agencies feel. But hey just like Rodogno said about the social services,maybe some of you small IT firms need to be “shaken out” a bit. Remember when she said that? Yeah…. Those were the days.


  55. - Arthur Andersen - Friday, Nov 17, 17 @ 3:42 pm:

    Sharkette. please help an old guy out-are Funds 302 and 304 the former Stat Services and Communications Revolving Funds?


  56. - Honeybear - Friday, Nov 17, 17 @ 3:44 pm:

    I don’t remember hearing a peep from you Sharkette when Munger was fast tracking IT invoices and stiffing all other contractors in the state.
    I think it’s adorbs that you’re all mad at Mendoza and don’t get the irony.


  57. - Jerry - Monday, Nov 20, 17 @ 8:58 am:

    Looks like corruption isn’t confined to the Dems…..


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