A bill introduced in the closing months of the 2014 session would have imposed a six-month waiting period on state employees before they could work for businesses that contract with the state — and companies violating the moratorium would have lost their state contracts as a result.
The “No Revolving Door Employment Act” (House Bill 1036) would have prohibited executive branch agencies, and other groups operating under the authority of state government, from contracting for goods or services with a private company that hires a former state employee and then uses that person in the administration of a contract with the state within six months of that employee leaving.
As part of the bidding process for a state contract, private vendors would have to certify in writing that they are not using a former state employee to help negotiate or administer a contract with state government. This “cooling-off” period is currently the same length of time applied to legislators (and some state employees) before they can become registered lobbyists.
“The reason this bill has come before you,” explained Representative Julia Howard during the floor debate, “is that in the last few months — and maybe even in the last year — we look back and we see people who have been hired by state agencies, and at certain times there are contracts for computer services and programs, in most cases these are very lucrative, and we spend a lot of time on these contracts. And the next thing we see that happens, the state employee who has been charged to help negotiate those contracts, leave the state agency and go to work for the vendor.”
Representative Howard, who is also the Senior Chair of the powerful Finance Committee, was likely referring to the high-profile case involving Paul Guthery, an IT manager with the Department of Health and Human Services (DHHS) under then-Governor Beverly Perdue.
Guthery was hired in January 2010 as senior program director and was earning a $126,500 salary as the state’s expert in charge of the testing of the Medicaid billing system called NCTracks — a project that’s been the subject of some controversy.
Guthery, who was closely involved in negotiating the $484 million technology project, quit his job in August 2013 and secured a top-level job days later with Computer Sciences Corporation (CSC), the contractor for the NCTracks system. (Incidentally, CSC is currently facing a federal civil health-care fraud lawsuit in New York state involving hundreds of millions of dollars of Medicaid fraud.)
Jane Pinsky, with the North Carolina Coalition for Lobbying and Government Reform, says, “If I’m a skeptical, cynical citizen, the question is, did he (Guthery) give them a pass and then they gave him a job?”1
State Auditor Beth Wood criticized the action at the time as a conflict of interest, and calls arose for the General Assembly to pass legislation, which eventually took the form of House Bill 1036.
The General Assembly’s Program Evaluation Division (PED) determined that DHHS appears to have improperly procured 143 non-competitive contracts from 2009 through March 2014, including 21 contracts for consultant services.2 “We looked at a sub-sample of non-competitively bid projects within DHHS,” said Pam Taylor of PED, “and we only identified 10 that appeared to have gone through the process, so there were 133 that we didn’t feel, from our preliminary review, had gone through the proper procedures according to state law and rules.”3
House Bill 1036 would have also made it a felony offense to falsify bid documents shielding disclosure of a state employee found violating the six-month moratorium. In cases where this does happen, enabling contracts would be void under the law.
The legislation could await future action by the legislature when it reconvenes in January of 2015.
- Medicaid Law NC, “Former DHHS staffer takes jobs with Medicaid contractor”
- Program Evaluation Division, “Meeting Handouts, July 9, 2014”
- Program Evaluation Division, “Meeting Audio, July 9, 2014”