After months on life support, the ill-fated contract between the Texas Health and Human Services Commission and the outsourcing firm Accenture has finally been put out of its misery.
The contract, signed in 2005 and designed to provide $640 million in savings to the state, was awash in complaints of mismanagement.
Accenture's task was to modernize services for low-income Texans who use the Children's Health Insurance Program, food stamps and Medicaid. A year after the contract went into effect, Accenture managed to end up with 200,000 fewer children enrolled in CHIP. State Sen. Eliot Shapleigh, D-El Paso, blamed the loss on incompetence and mismanagement. Shapleigh claimed that, due to the privatization of Accenture, "HHSC is the functional equivalent of FEMA."
The most acute illustration of Accenture's shoddy work occurred last June, when at least 144 Texans' applications accidentally ended up in a warehouse in Seattle. In November, then-Comptroller Carole Keeton Strayhorn released a report critical of the contract, at the request of a group of 60 Texas legislators who called for its termination.
Last December, these complaints led HHSC to scale back the contract to less than half of its original $899 million price tag and to move its completion date up two years. The half-hearted trial separation wasn't enough, and the divorce was finally granted last week. By Nov. 1, state employees will be back to processing applications.
Thus the privatization effort, which was ordered by state legislators in HB 2922 and signed in June 2003, was officially a failure. The lesson that many will take from this escapade is that privatization is bad. State Rep. Dan Gattis, R-Georgetown, warned: "My fear is that because of Accenture's failure and just incompetent execution, that it puts all privatization issues back five, 10, 20 years."
Give Dan Gattis a gold star. One thing he failed to mention, though, is that Accenture's failure was due in large part to privatization's supporters, who in their ideologically driven attempt to outsource as much government work as possible neglected to worry about quality control.
The lesson should have been learned already. Texans have had ample opportunity to see how political zealotry can muddle the execution of a good idea.
Take the case of Texas's experiment with charter schools. These schools, operating with public funds but outside of public school districts, promised to improve education by giving more freedom to school leaders.
The idea has met with some great success, including the KIPP chain of charter schools, which started in Houston and now has 52 schools nationwide (including one in Austin). However, the enthusiasm with which the Texas Education Agency initially embraced charters eventually hurt them.
During the "third generation" of charter approval, from 1998-1999, all completed applications for charter schools were approved. If you showed up, you got state funds to run a charter school. That year, 109 charters were awarded, compared to 41 the previous year and 20 the year before that.
Because of those lax standards, the "third generation" class of Texas charters has been performing miserably. They consistently score lower on standardized tests, and their rate of charter removal is 41 percent, more than five times the rate of charter removal for all other generations of charters.
These unsuccessful charter schools make it even more difficult for successful charters to open, since they cast such a bad image on the institution. If the TEA had done a better job vetting these applicants 10 years ago, there would have been fewer failures and less opposition to charters. Instead, the single-mindedness with which policymakers believed that these schools would solve all problems trumped any reasonable evaluation of the applicants' merits.
The dreadful Texas Academy of Excellence (though not a third-generation charter) is the poster child for those who think charters are a bad idea. Last week, its former superintendent, Dolores Hillyer, was indicted for misusing $550,000 in state money.
The Accenture contract is emblematic of the same paradox: The Legislature's love affair with privatization of government services ended up giving even more ammunition to those opposed to such privatization.
It only took two years and 200,000 children losing health care for Texas to acknowledge its mistake and remedy it. Though the lesson about privatization wasn't learned after subjecting children to mismanaged schools, perhaps it will be learned after subjecting kids to mismanaged health care.
Heutel is an economics graduate student.
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