Politicizing Privatization in Indiana, Part 2

Almost exactly a year ago, I posted on the politicization of the Indiana Family & Social Services Administration’s (FSSA) welfare eligibility modernization initiative—a large-scale privatization initiative that’s faced a number of implementation challenges in its early rollout—in the gubernatorial race. Looks like it’s happening again.

I reported last month that FSSA announced that it had ordered lead contractor IBM to fix problems with the state’s troubled welfare eligibility modernization initiative by October or potentially lose the eight years and $800 million remaining on the $1.2 billion privatization contract. As I wrote then:

When privatization initiatives don’t perform well, you do what [Gov. Mitch Daniels] is doing—put the contractor on notice and give them a chance to rectify the problems. A large-scale modernization project like this will be inherently tricky, and even more so when national economic conditions swell the rolls of system users at the very same time that you’re trying to restructure it.

That’s not good enough for two Indiana congressmen who are asking the feds to review its earlier approval of the project under the Bush adminstration. As AP writer Ken Kusmer reports:

Democratic Reps. Baron Hill and Andre Carson co-signed a letter to Vilsack dated July 30, about a month after the Agriculture Department’s food stamp program administrator informed Gov. Mitch Daniels that Indiana’s food stamp error rates exceeded U.S. averages last year.

Marcus Barlow, a spokesman for the Indiana Family and Social Services Administration, called the Hill-Carson letter political and said Friday that the agency was working with its private partners to fix problems.

A coalition of companies led by Armonk, N.Y.-based IBM Corp. and Dallas-based Affiliated Computer Services Inc. privatized Indiana’s processing of food stamps, Medicaid and other welfare benefits under a 10-year contract, now worth $1.34 billion, signed by Daniels in December 2006.

Indiana needed the Agriculture Department’s approval because the federal agency pays for food stamps. Carson and Hill asked Vilsack to review “the policy determination by the USDA Office of General Counsel that resulted in the approval” of the program, formally known as the Supplemental Nutrition Assistance Program. Hill represents southern Indiana and Carson, Indianapolis.

Indiana received the USDA approval under Republican President George W. Bush’s administration. With the agency now run by Democrats, the Carson-Hill letter raises the possibility approval could be revoked.

Carson and Hill also asked Vilsack to review the impact of privatization and “modernization” on food stamp clients, and possible errors by FSSA and the IBM-ACS team.

The USDA’s Food and Nutrition Service, which oversees food stamps, still was preparing its response to the letter Friday, FNS spokeswoman Jean Daniel said. She said the agency is committed to working with Indiana and ensuring eligible clients get food stamps.

The same thing I wrote here earlier this year applies—what are these pols trying to achieve by stirring the pot at a time when the folks on the implementation end (fed and state) are trying to right the ship?

Presumably these congressmen would be satisfied if they could score political points by derailing the contract. Great—then you go back to the same old dsyfunctional state dinosaur whose original failure is what prompted the privatization/modernization initiative in the first place. Great solution.

Is there anything Congress won’t put its nose into these days? Aren’t there other pressing issues in D.C. these days, like…I don’t know…trying to cut spending to address the newly projected $9 trillion deficit over the next ten years?

Reason Foundation’s Annual Privatization Report 2009
Reason Foundation’s Privatization Research and Commentary