*Editor's note: This story has been updated throughout.
Jack Stick, the top lawyer for the Texas Health and Human Services Commission, is resigning his post amid a crumbling state contract with data analytics from 21CT.
The commission’s Office of Inspector General, or OIG, has been under scrutiny for the way it decided to award a highly sought-after contract to the company to detect fraud and waste and later a potential vendor to sub in for another disintegrating project contract to store and sort the sprawling health agency’s data into searchable, cataloged material. The state tentatively awarded the contract to 21CT outside the formal bidding process, Janek has said. The contract, originally set at $20 million, is about to expire, and the OIG had proposed a $90 million, three-year extension.
"Contractors have raised issues about the procurement for this project,” Kyle Janek, the agency's executive commissioner, said in a statement Friday. “I've looked into those concerns, and I'm not comfortable with the process used so I've withdrawn the request for state approval to extend the project and notified the OIG.”
Stick worked with 21CT throughout his term at OIG and as the agency considered which company to hire for the storage project, Stick suggested there might be overlap in the new data project and services the company provided, Janek has said. In September, Janek, Stick’s boss and a Gov. Rick Perry appointee, defended Stick’s work ethic and professionalism.
But agency spokeswoman Stephanie Goodman said Friday that Stick offered his resignation to Janek and Janek accepted.
“Regardless of the merits of this project, we cannot have doubts about the fairness of the procurement process,” Janek said Friday. “Our business should be conducted in the light of day in a transparent bid process open to all qualified companies."
Janek's announcement follows an Austin American-Statesman investigation into the contract.
In a statement Saturday, Irene Williams, the CEO of 21CT, said the claim that its contract with the Health and Human Services Commission is not competitive is "patently false."
"I am proud of 21CT’s professionalism during the Texas HHSC procurement process and that our work identified over $200 million in potential Medicaid fraud in Texas over the past two years," Williams said in the statement. "In each and every state and within the federal government where we work, we readily adhere to the requirements for contracting. We aggressively bid on and competitively win the work, fair and square.
21CT spokesman Kyle Flaherty said the company plans to continue its relationship with the commission and will be vying for future contracts.
"For two years, 21CT has used the normal state contracting process to win good work and earn the trust of our customer at HHSC," Flaherty said. "21CT stands ready to compete with big guys and to prove that our patented technology can efficiently fight health care fraud while protecting good health care providers and consumers."
Separately, Stick has been in hot water for fighting a 2012 charge of driving while intoxicated in Austin’s entertainment district. Stick is set to face a jury trial Feb. 19 on that charge.
Before he arrived at the commission's Office of Inspector General in 2011, Stick was a state representative for House District 50, a municipal court judge in Bee Cave and a longtime friend of Perry.