Wednesday, July 24, 2024

Louisiana audit shows mental health agency didn’t use proper procurement procedures for $1.2M buy

by BIZ Magazine

By Victor Skinner | The Center Square contributor

The Florida Parishes Human Services Authority did not use proper procedures when it contracted with a software vendor for a new electronic health record system last year, according to the Louisiana Legislative Auditor.

Louisiana Legislative Auditor Mike Waguespack issued an audit report for the Florida Parishes Human Services Authority on Monday that examined certain controls the agency uses to ensure accurate financial reports, compliance with laws and regulations, and accountability over public funds. 

The agency provides mental health services for Livingston, St. Helena, St. Tammany, Tangipahoa and Washington Parishes in eastern Louisiana. 

The most significant finding involved FPHSA’s failure to follow public bid law requirements for a $1.2 million contract for a new electronic health record system last year.

“FPHSA personnel researched several possible vendors and obtained the assistance of a contracted consultant to evaluate the vendors. FPHSA selected the vendor whose software was most compatible with its day-to-day behavioral health and clinical processes,” auditors wrote.

“The vendor selected resulted in a contract being signed with a system cost of more than $1.2 million during the initial contract term of 60 months. As part of this process, FPHSA failed to advertise for the software purchase in accordance with state law and agency procedure.”

Louisiana law requires all purchases of materials or supplies using public funds of more than $30,000 to be advertised and awarded to the lowest bidder. FPHSA procedure also requires advertisement of bids in The Advocate and parish journal where the goods and services will be delivered.

Auditors recommended FPHSA establish procedures to ensure the mistake did not happen again.

Other aspects of the audit regarding cash transfers, accounts receivable, payroll and personnel, federal grant revenues and expenditures, and revenue billings and collections all included adequate controls to ensure FPHSA operations complied with relevant laws and regulations, according to the report.

FPHSA Executive Director Richard Kramer sent a letter to Waguespack on Aug. 2 that acknowledged the agency’s failure to follow the public bid law, along with an explanation of what happened.

“Although we did solicit presentations and walkthroughs from several different vendors and evaluated them with the assistance of a third party outside consultant familiar with these types of implementations to identify the system most suitable to our needs to best serve the citizens of Louisiana, we did not publicly solicit bids as is outlined in the audit finding,” Kramer wrote.

“The reason for this error was that we applied the incorrect regulations to this endeavor and, therefore, were under the mistaken impression that it was not required in this situation,” he wrote. “This is the first time that we have made such a purchase and were not as familiar with the applicable regulations as we are with the types of transactions we usually process.”

Kramer promised to update the agency’s internal procedures “to ensure that a similar error will not happen in the future should we ever require another similar purchase.”

The letter did not describe what the planned update entails.

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