(Oregonian (Portland, OR) Via Acquire Media NewsEdge) Feb. 07--Carolyn Lawson, the former Oregon Health Authority official at the center of the storm of Oregon's non-functional health insurance exchange, was investigated by the state of California for inappropriate contracting in 2008, The Oregonian has learned.
Upon being hired by the California Public Utility Commission in 2008, Lawson funneled five contracts worth nearly $500,000 in a four-month period to the small consulting company run by her former boss in the private sector. The former boss was Steven Powell, who Lawson later hired as her senior deputy in Oregon.
When Lawson was asked to resign in December, the state promoted Powell to replace her. In three years, Powell rose from running a tiny consulting company to being interim chief information officer for the Oregon Health Authority and the Department of Human Services, one of the highest-ranking technology jobs in the state.
The California incident raises more questions about Lawson's judgment and decision-making, issues that have already come up in the still-unfolding controversy over Oregon's health exchange, Cover Oregon.
State officials were tight-lipped about the matter Friday, other than to say they didn't know about California's contracting probe when they hired Lawson. "This was not disclosed by Lawson or any of her references," OHA spokeswoman Patty Wentz said.
Lawson could not be reached. Powell declined to comment.
Despite spending more than $160 million on the project, the botched exchange forced the state to devise a massive stopgap apparatus to manually process Oregonians' health insurance applications.
Bruce Goldberg, the former OHA director who directly supervised Lawson, said Lawson and other state managers misled him when they claimed the exchange site would work. Gov. John Kitzhaber says he, too, never received accurate information about the project. Kitzhaber has launched an internal review and has taken plenty of heat for being insufficiently attentive to the massive IT project. The state in September stopped paying Oracle Corp., the largest technology contractor on the job, and has insisted that the software giant will bear the cost of completing the exchange.
At the California PUC
Lawson joined the California Public Utility Commission as its chief information officer in February 2008.
That spring, the PUC awarded five IT contracts to Powell Consulting Group collectively worth $727,320. They were relatively small contracts as IT jobs go, ranging in size from $4,785 for the "repair of Intellesync server," to $449,935 for work on an "IT tactical plan."
Powell didn't collect all of the $727,320. The PUC paid his firm $498,046, PUC spokeswoman Terrie Prosper said.
At least one employee from the PUC complained about the contracts, which prompted the investigation by the California State Controller's Office. The probe determined that three of Lawson's contracts, two of which went to Powell, violated state contracting rules because the PUC failed to get at least two competing bids.
According to California state records obtained by The Oregonian, Lawson pushed back, pointing out that her office did ask other companies to bid for the contracts. But these firms chose not to submit bids. The controller's office ruled that under the state's small business contracting rules, that wasn't good enough. Agencies are required to obtain at least two bids before awarding a contract.
The controller's investigation also questioned how Lawson and her employer managed its contracting process. The PUC's "internal control over contract procurement is weak, as one individual exerts significant influence over the entire contract and contract-related payments processes," the report said.
In other words, Lawson identified the PUC's IT-related projects and contracts, she played an instrumental role in selecting prospective vendors, evaluating their bids and qualifications, and approving payment. "The fact that one individual is exerting control and influence over the entire contract-awarding process represents a serious internal control weakness that could lead to abuse in the contracting process and/or improper payments," the report said.
Lawson and Powell had known one another for years.
She worked for a firm under Powell's supervision from November 1998 to February 2000, according to the California investigation. The PUC employee who had raised questions complained the multiple contracts amounted to rank favoritism.
The controller's investigator did not go that far, saying, "the scope of our review does not include investigative procedures to support or refute allegations of favoritism."
The PUC did not dispute the report's findings. Paul Clanon, California PUC executive director, said in an Aug. 1, 2008 letter to the controller's office that his agency would "begin implementing revised operating procedures for our IT contracting processes..."
Lawson moves on
In March 2010, Lawson left the California PUC and joined the California Office of the State Chief Information Officer. "She was moved from the PUC to OCIO," said Joe Camicia, former chief of staff at the office. "If I remember right, it was not Carolyn's idea."
Camicia counts himself a fan of Lawson's. He acknowledges that he heard multiple complaints about Lawson and her management style. She had strong ideas and didn't always worry about ruffling feathers to implement her plans, he said.
"I've been an elected or appointed official or government relations employee for more than 30 years now," Camicia said. "Many of the people in government that end-up being described as "hard to get along with" or "abrasive" are often the people pushing hard to get things accomplished. I don't know any of the details about what happened in Oregon, but people in any government willing to make hard decisions are rarely embraced and rewarded."
A new opportunity came Lawson's way when the Oregon Health Authority launched a search for a new CIO. The agency conducted a national search and received about 100 applications, said OHA spokesman Patty Wentz. The state culled the list to three and after two rounds of interviews hired Lawson. She began with the state in July 2011.
The move was a goldmine for Lawson. Oregon agreed to pay her more than $171,264 a year and had bumped up her compensation to more than $178,000 by 2013. In California, her salary hovered between $95,000-$99,000.
It was also a boon for Powell. He and his wife, co-owner of their IT consulting firm, struggled financially 2009 and 2010. They filed for Chapter 7 personal bankruptcy in July 2010.
Their IT consulting business generated annual income of $67,200 in 2008, $5,200 in 2009 and $13,347 in 2010, according to bankruptcy documents.
Oregon is paying Powell $181,368 as OHA's interim chief information officer.
-- Jeff Manning
-- Nick Budnick
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