An investigation by a federal watchdog agency found that the Centers for Medicare & Medicaid Services violated federal contracting rules by allowing contractors to perform government functions.
An Office of Inspector General report released Thursday analyzed three contracts for strategic communications services worth a total of $6.4 million between June 2017 and April 2019. The investigation stemmed from a POLITICO report that questioned the legality of the contracts, which benefited GOP-aligned communication consultants.
Though CMS prepared the required documentation for awarding the contracts in accordance with federal regulations, it did not administer and manage the contracts properly, according to the OIG.
The report noted that during those years, CMS had between 221 to 234 full-time employees dedicated to Office of Communications functions, with eight to 15 vacant full-time positions. CMS stated that it requested contract support for strategic communications services based on the needs of the office and that the department could not manage everything with the number of staff it had, according to the report.
The investigation also found that CMS allowed contractors to make managerial decisions and direct agency employees, and that the agency managed the contracts as personal services contracts. By doing so, CMS created the appearance of an employer-employee relationship between the government and contractor personnel.
CMS has “deep concerns with [the] OIG’s findings and believes the report’s conclusions are based on unsubstantiated assumptions and incomplete analyses” in response to the report, the agency said. It added that the report relies on mischaracterizations of contractor tasks and duties as well as misinterpretations of the [Federal Acquisition Regulation] and its requirements.
Among its recommendations, the OIG called on the Department of Health and Human Services to review any active HHS contractors or subcontractors or CMS service contracts or task orders. It also called on CMS to review contractor invoices for questionable costs and take appropriate action to recoup any improper payments.
HHS agreed with and plans to implement the recommendations.