Brown's No-Bid Health Plan Consultant Deal Looks Illegal

Northampton County Controller Steve Barron is one of two elected officials who were banned from an Executive John Brown news conference last week. Like Council member Bob Werner, he said he was just there to listen. But he had some paperwork with him, and shared it with me after the news conference. It related to a Scranton-area based firm called the C3 Group, Cost Control Consultants. "We guarantee to boost your bottom line," boasts their webpage. This is the outfit that recommended that Brown reduce the health benefits being paid for County workers. Colin D. Healey, associated with that firm, is the helpful fellow who told employees, "Nobody subpoenaed you to work here." Barron is concerned that Brown has ignored the requirements of the Administrative Code in his selection of yet another sole source contract. I'm not suggesting another lawsuit because this horse has already left the barn, but Barron appears to be right.

Who the Hell is C3?

Their webpage boasts of "decades of combined experience in helping businesses improve profitability and control costs." That must be in dog years or maybe gerbil years. According to the state corporation bureau, its parent company has only existed for five years. Its three partners are Christopher Rothwell, Thomas Boles and Jeffrey Raider. It only has one other County Client, Lackawanna, where the Deputy HR Director was once a C3 employee.

Colin D Healey, the Employee Benefits Consultant who claims to have come up with the benefits reduction plan for Brown, appears to have nothing more than a bachelor's degree from the Indiana University of Pa. in '86. He's been with C3 since 2010, but claims to have 25 years of "management" experience. Prior to hooking up with C3, he bounced around for 12 years as an analyst with the Global Business Exchange, which provides corporate training.

He appears to have no real experience actually working in any of the companies where he has given advice or training on cost control.

Brown's Arrangement With C3.

When John Callahan ran for office, he said he would look to the people who work here to find ways to keep expenses down. But Callahan was defeated by John Brown, and his approach to cost containment has been government by consultant. He attempted unsuccessfully to bring in a business consultant for an exorbitant sum. He rammed a controversial PR consultant down the County's throats, though he had to do it twice to get it right. He's hired Donna Taggart, who seems to get consultant contracts everywhere. He's also hired Integrity Personnel. These all started out as no-bid contracts, meaning he never sought out proposals from anyone else. He did finally go through a Requests For Proposals on his second try for his PR consultant.

His specific arrangement with C3 appears to consist of three mini-contracts.

The first, dated 5/23/14, is a $24,000 consultant agreement for "cost containment measures for the County's group health plans". It's for three months beginning in June. C3 is to provide an "eligibility audit" and is to make recommendations concerning different benefit plans. Brown authorized payment on June 4.

The second, dated 7/24.14, is a $10,000 consultant agreement to control workers compensation claims costs.It's for three months, beginning August 1, and is for $65 per hour, not to exceed $10,000. It includes accident investigations. All claims are supposed to be investigated. Though the contract is a per hour contract starting August 1, Brown authorized payment of the full $10,000 on August 5.

The final mini-contract, dated 8/31/14, is basically a continuation of the first contract, related to the group health plans. Though no term is set forth in the agreement,a bill to Brown indicates it's for another three months, beginning in September, for another $24,000. Brown authorized payment of this bill on September 9.

That's three mini-contracts totaling $58,000. All but $10,000 relates to the health plans.

The Administrative Code

The purchase of services from outfits like C3 is governed under The Administrative Code. All services in excess of $25,000 require a written contract approved in advance by the Solicitor (Section 13.16a), as well as an Executive Order. The reason an Executive Order is required is because that serves to notify both Council and the Controller.

In this case, each of these mini-contracts is under $25,000. But this is "piece-mealing", defined in The Administrative Code as making a series of contracts for less than the actual purchase price, when there should have been one contract for one price. (Section 13.02(i). In this case, the benefits contracts totaling $48,000 were piece-mealed in violation of the Administrative Code

Brown's own invoices refers to C3's services as "professional services". Because they exceed $25,000 and they are "professional services", he was required to seek proposals from different vendors (Sec. 13.09(a)) unless he determined that it would be impractical and had permission from County Council to go ahead without seeking proposals. Sec. 13.07(b).

The Administrative Code also requires that the report or study made pursuant to a professional services contract must be supplied to Council. Sec. 13.16(f). Obviously, some kind of report had to be furnished to Brown before deciding on fairly drastic reductions in health benefits, but that has not been provided and Brown has claimed there is no written report.

Should Brown Be Sued?

I think it's pretty clear that Brown violated The Administrative Code. ... Again.  But is it knowing and intentional? "These contracts pieced together have the sole intention of avoiding disclosing the agreement with the consultant and keeping my office and council in the dark about the goings on in the county," Barron told The Express Times. Though I'm growing suspicious, I doubt Brown was playing games. I think the more likely explanation is that he has been in office less than a year and failed to consult with his Solicitor.

There's no point in suing. The horse has already left the barn. C3 has been paid.

But I would demand that the Executive provide all written communications between himself and C3. I'd ask for the "eligibility audit" supposedly performed by C3 as well as any documentation reflecting its review of different plans.