An Illinois purchasing monitor canceled a $12.5 million contract Tuesday that Gov. Bruce Rauner's administration signed, saying it should have been offered to the highest and best bidder.
Chief Procurement Officer Ellen Daley nullified the pact between the Illinois Department of Healthcare and Family Services and consultant McKinsey & Co.
The action, likely unprecedented, couldn't have happened before legislative approval of tighter procurement rules the Republican governor demanded last spring, a Democratic lawmaker said.
The deal is part of a $60 billion Healthcare and Family Services program, which itself is under legislative scrutiny, to expand managed care to Medicaid patients.
HFS argued the deal with McKinsey was exempt from the bidding process because the company's expertise could help the agency "prepare for anticipated litigation."
Daley, in a letter to HFS director Felicia Norwood, said, "I remain unconvinced."
"The services detailed are not a necessary part of the actual prosecution or defense of litigation," she said.
A McKinsey spokeswoman could not immediately respond to a request for comment Tuesday evening.
HFS spokesman John Hoffman said the agency is reviewing the impact of what he called "this preliminary decision, its potential cost to taxpayers and its impact on fulfilling our mission to provide quality services to our most vulnerable clients in the state."
No money has been paid on the contract, which began October 13. But that's not surprising, given the state budget crisis that has fed a multibillion-dollar pile of overdue bills and which forces service providers to wait months for payment.
According to state comptroller's records, McKinsey has four other contracts dating to 2015 with HFS and another state agency, worth a combined $54.6 million, on which there have been no payments.
Rep. Greg Harris, chairman of the House Appropriations-Human Services Committee which will continue its examination of the overall managed-care contract with a hearing Thursday , said the contract reversal was unprecedented.
The Chicago Democrat added that it would have been impossible had the Democrats who control the General Assembly not adopted the procurement reform measure Rauner has demanded as part of his agenda to clean up Illinois' reputation for corruption.
"Interestingly, because of the restrictions on procurement, and the fact the chief procurement officer was given additional authority to review contracts, and particularly no-bid contracts, to be sure they weren't granted without reason, that she found that this contract did not comply," Harris said.
Harris sponsored legislation last spring to force HFS to go through the typical bid-solicitation process for the massive managed-care contract, which was awarded to seven companies to help low-income Medicaid patients coordinate health care with an assigned physician and focus on prevention.