Privatization in Practice: Case Studies of Contracting for TANF Case Management. Evaluating Proposals and Selecting Contractors Fairly


The process of choosing TANF case management providers often generates substantial scrutiny from advocates, losing bidders, and auditors, owing to both the sensitivities associated with welfare privatization and the value of contracts at stake. Agencies in some study sites have been targets of criticism  even lawsuits  due to perceived unfairness in the procurement process:

  • Lower Rio Grande Valley. Lockheed Martin IMS sued the workforce investment board over the loss of its contract in January 2001. Lockheeds proposal received a slightly higher score than a competitors, but with a budget of $2 million more. Although the board felt its award decision was justified, it eventually settled the case by conducting another procurement.
  • San Diego County. Because county staff did not have sufficient information or time to compare complex budgets from multiple contractors, the selection committee elected to remove cost entirely from the scoring process. Although this decision conformed with the countys procurement guidelines, a civil grand jury speculated that award decisions may have been affected as a result (San Diego County Grand Jury 1999).
  • Delaware. After a 1999 procurement, a state auditor found errors in six of the 80 scores verified (State of Delaware, Office of Auditor of Accounts 2001). The committee used multiple methods to calculate scores, and one committee member arrived late and was unable to score all the contractors. Although these errors affected the contractors total scores, correcting the errors would not have led to different selection decisions. The state agency made improvements to its process in response to this critique.

This external attention makes it especially important that agencies conduct procurement in an evenhanded fashion and document the rationale for selection. Identifying the evaluators and the criteria they will use are two key considerations.

Proposal Evaluators. In every study site, a committee has responsibility for assessing proposals and making awards. The membership of these committees varies, however, and may include public agency staff, independent citizens, and/or consultants. Some agencies recruit members of the local community to serve as evaluators, while others deliberately tap outsiders for this role. Table III.2 summarizes the membership of selection committees in the six sites.

Table III.2.
Composition of Selection Committees
Site Evaluation/Selection Committee Membership
Delaware Five representatives of private sector organizations and employees of four state agencies
Hennepin County Employees of county agencies and a representative of the local workforce board
Lower Rio Grande Valley Independent consultants evaluate proposals and make recommendations. Entire workforce board votes on final award.
Palm Beach County Subcommittee of the workforce development board
San Diego County County employees and citizens, employees of state and outside local agencies, and representatives of nonprofit research/advocacy organizations
Wisconsin State TANF agency employees

Each type of evaluator has associated advantages and drawbacks. Agency staff contribute detailed knowledge of a programs policies and operation, which can help in assessing whether a potential contractor has the necessary capacity to carry out case management well. However, their relationship with current or previous providers may be too close, and their expertise too focused, to permit impartial and wide-ranging consideration of proposals. Involving people from outside the agency brings a fresh perspective, and relevant business or cultural expertise to the selection process. Outside evaluators can also protect the integrity of the process by reducing the potential that contractors or others will exert improper influence over award decisions. However, these evaluators require training by agency staff and, if they are volunteers, may be reluctant to commit the time and effort required for a thorough reading and appraisal of each proposal.

Agencies in some study sites have attempted to capture the strengths of various evaluators by including a mix in their selection processes. San Diego County and Delaware placed public agency employees and private citizens on their selection committees, drawing representatives from the community and employers from the local workforce investment board. Selection committees consisted exclusively of workforce board members in Palm Beach County and the Lower Rio Grande Valley. In its most recent procurement round, however, Lower Rio Grande Valley hired a team of three outside evaluators to score proposals and offer recommendations to board members, who made the final award. (The lead evaluator also served as an intermediary during contract negotiations.) This approach helped insulate board members and agency staff from possible lobbying by contractors, which had been an issue during past procurements.

Evaluation Criteria. Selection committees in the study sites employed a number of similar criteria to assess proposals. Four key factors appeared in nearly all of the sites: (1) program design, (2) organizational capacity and management capability, (3) past performance, and (4) budget (meaning either the cost of services or the allocation of resources to different activities, or both). Some agencies used additional factors in response to local priorities. San Diego County included partnerships and collaboration among the main factors used to judge applicants, mainly to ensure the cultural competence and local integration of providers. Agencies also varied in the priority they placed on each of these factors.

Schemes for scoring proposals in the study sites suggest that a proposals budget generally received less weight than other formal evaluation criteria. In none of the sites did budget account for the largest share of possible points, and in several it was the least important factor. The greatest number of points generally went to program design, organizational capacity, or past performance. Nevertheless, contractors were often subject to other pressures to keep costs down. Hennepin County offered contractors a fixed price per client slot, for instance, capping the amount it would reimburse providers for services. In San Diego County, although the procurement did not prioritize contractors proposed budgets, the county charter requires that private providers demonstrate at the initial procurement and contract renewal that their services cost less than the employment case management provided by county staff.

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