DHHS Signs Contract with Saint Francis, Rejects Protest from PromiseShip

Scott Stewart
The Daily Record

Despite a protest from the current provider, the Nebraska Department of Health and Human Services has finalized a contract to migrate child welfare case management to a new provider for the Omaha metropolitan area.

Saint Francis Ministries will begin providing service Jan. 1 under the roughly $196 million contract, which the state department finalized July 3.

The Kansas-based nonprofit will handle child welfare cases in the Eastern Service Area, which covers Douglas and Sarpy counties. The transition is expected to be finished by the start of 2020.

“Finalizing the agreement marks the official beginning of our expanded partnership,” Matt Wallen, director of the DHHS Division of Children and Family Services, said in a news release.

The current case manager, Omaha-based PromiseShip, said Monday that it is “currently exploring all options at this time,” according to a spokeswoman.

Cutting Services?

An attorney for PromiseShip said, in a letter protesting the notice of intent to award the contract, that the change in case management providers would result in chronic understaffing, litigation, negative publicity and higher rates of de facto homelessness.

That’s been the experience seen in Kansas, where Saint Francis is one of two contractors providing child welfare case management, according to a summary of issues raised on behalf of PromiseShip in a written protest filed June 14.

Thomas J. Kenny, a partner at Kutak Rock LLP, wrote that testimony to the Kansas Child Welfare System Task Force alleged that many foster children have no idea where they will be sleeping that night, with 764 children facing one-night placements over a six-month period in 2018.

“This practice amounts to an inherent deprivation of shelter and is de facto homelessness,” Kenny wrote in the protest. “Saint Francis has drastically underbid the (state’s request for proposals) by failing to include the cost to obtain the necessary case managers and subcontractors over the life of the contract, virtually ensuring its services will be inadequate with – as in Kansas – tragic consequences for both the State and its residents.”

Beyond the issue of one-night placements, PromiseShip President and CEO Ron Zychow-ski said in a statement that the Saint Francis plan amounts to “slashing services to children and families” by spending $27 million less on direct services than PromiseShip.

PromiseShip also alleged Saint Francis established its target caseload at 25, which would exceed Nebraska’s statutory maximum. PromiseShip said that the submitted staffing plan would result in a caseload of 29. State law permits a range between 12 and 17 cases per manager.

As of June 30, the two-county area had 1,808 cases requiring management, PromiseShip said, which requires at least 106 case managers and 21 supervisors. 

A letter from the Nebraska Department of Administrative Services said that Saint Francis identified a total of 116 staff positions with case management responsibility. PromiseShip described that the state offering Saint Francis “a special opportunity to correct its unlawful proposal,” and it said the additional staff were not required, according to the bid, to hold bachelor’s degrees, which is the necessary minimum educational level for case managers.

An addendum to the signed contract that details “additional negotiated terms” notes that Saint Francis recognizes the statutory caseload limits and reiterates the allocation of 116 positions so that it will “meet the statute without additional cost to its proposal.” 

Saint Francis told The Daily Record in a statement that it would follow the law, seeking to meet or exceed the expectations of state human services officials.

“Saint Francis Ministries will meet all expectations outlined in the Nebraska contract and conform to all applicable state regulations and law,” the group said.

Systematic Challenges

The child welfare system in Kansas has faced serious pressures in recent years, Saint Francis told The Daily Record.

Since 2012, the number of children in foster care grew by 45% without a corresponding increase in foster care homes.

A similar lack of psychiatric residential treatment facility beds is also a challenge, with a wait list for the 272 beds often having 170 to 200 children listed.

Saint Francis also pointed to unintended consequences of juvenile justice reform that has placed harder-to-handle children into the child welfare system.

“Their behaviors make it more difficult to maintain placement stability and to find foster parents who will care for them,” communications director Morgan Rothenberger said. “In addition, a child can refuse to go to a home, and we cannot make them.”

Rothenberger said the nonprofit is adapting to these pressures and has decreased how many children end up spending the night in the office because of a lack of beds.

“We never want to see any child make multiple moves or spend even a single night in the office,” Rothenberger said. “We also have to put their safety and security at the forefront, and those steps sometimes are necessary as we seek to find a home that is best able to meet their needs, depending on the time of night we receive a call and on their behavior or health needs.”

Saint Francis also shared a fact sheet from KVC Kansas, the state’s other child welfare case manager. The fact sheet notes a national social worker shortage that has contributed to “severe, persistent workforce challenges.”

The difficulty in hiring workers creates high caseloads, which in turn makes it harder to hire workers and also creates high turnover.

That turnover is also felt with a reduction in licensed foster families, as “increased youth mental health/behavior challenges and substance use have led many caring foster families to let their provider licenses expire,” KVC said.

Statewide Privatization

PromiseShip was established a decade ago to provide service to the Omaha metro area as part of a statewide privatization of child welfare case management.

Initially known as Nebraska Families Collaborative, Promise-Ship was formed by Boys Town, Child Saving Institute, Heartland Family Service, Nebraska Family Support Network and Omni Inventive Care. The nonprofit is partnered with dozens of other organizations and providers.

The state also privatized service in several other service areas, but those providers didn’t last and the case management responsibility reverted back to the Department of Health and Human Services. The Eastern Service Area, served by PromiseShip, is the only area in the state that remains privatized.

DHHS attempted to put the ESA contract out to bid in 2016, and it initially accepted a proposal for PromiseShip over Magellan Choices for Families in March 2017.

But Magellan Choices filed a protest, and the state ultimately decided to reject both bids and to instead opt to extend PromiseShip’s contract through 2019.

During that period, DHHS commissioned an assessment of its outsourcing model in the ESA by New Hampshire-based The Stephen Group. A report, released May 8, found that the state has taken an inconsistent approach resulting in it failing to realize the full benefit of outsourcing the work. However, the consultant found PromiseShip had comparable costs and outcomes to the other areas served by DHHS and provided innovative services, and the report ultimately didn’t make a recommendation whether to continue the outsourcing model.

Among the report’s findings:

• “A lack of clear vision for the State’s objectives related to the outsource has made it difficult for the vendor and stakeholders to operate.”

• “A historical lack of collaboration between the State and vendor has prevented information and data sharing and undermined opportunities for innovation and development of system best practices.”

• “Uncertainty around the future of the contract has made it difficult for the vendor to make business decisions, invest in new services, and retain staff. The short-term incremental extensions undercut the vendor’s ability to make long-term investments.”

• “The existing contract between the State and vendor has little focus on performance, very few financial incentives to encourage innovation or drive performance improvement. The contract offers limited ability for the vendor’s flexibility and experimentation, which are the primary benefits of using an outsource model.”

The report concluded that the state could achieve lower costs and improved outcomes if it constructed “a different relationship with the future vendor” and if it “improved financial and performance management of the contract.” The consultant said the state needed “a clear vision for outsourcing that defines success, demands accountability, encourages collaboration and eliminates competition” with the vendor.

When the state crafted the request for proposals, it incorporated recommendations from the consultant. In a Jan. 9 news release announcing a request for proposals, DHHS said the consultant helped prepare the RFP.

“This RFP requires the subrecipient reach federal performance benchmarks and includes fiscal monitoring provisions while incentivizing a wider potential pool of applicants with the inclusion of more flexibility, clearer expectations and possible performance-based financial retainage,” Bo Botelho, interim DHHS CEO, said in the Jan. 9 news release.

RFP Requirements

The goal of the RFP was to shift the relationship between the state and the child welfare case manager for the Omaha metro.

It made numerous requests of bidders, and interested entities were invited to ask questions that clarified proposal elements.

PromiseShip alleges that Saint Francis failed to address several required elements in its proposal, which it argues should disqualify the bid as a lawful option for the state to have chosen.

The Omaha nonprofit also alleged that the state acted arbitrarily to award the contract to Saint Francis, arguing it lacked sufficient information to evaluate the Kansas nonprofit’s proposal. It argues that Saint Francis gave an “unrealistically low bid” that should have triggered further scrutiny from state officials, especially considering how many contract amendments for increased payments that Saint Francis has sought for its Kansas work.

In a response to PromiseShip, an official with the Department of Administrative Service acknowledged that Saint Francis won the contract because its proposed cost was significantly lower than the current provider’s bid. But he said state officials did adequately review the competing proposals and rightly found that Saint Francis should be awarded the contract. 

“PromiseShip’s failure to score higher in the qualitative sections of the RFP sunk its bid, because the costs were substantially higher than Saint Francis’ (costs),” said Doug Carlson, materiel administrator and deputy director of DAS, wrote in a July 3 response letter.

In its request for proposals, the state established a scoring matrix of 3,526 points, with 880 for cost – just shy of 25% of the total.

Saint Francis totaled 2,907.57 points, and it maxed out the cost part of the score. It scored less than PromiseShip for corporate overview, technical approach and financial requirements. But the Omaha nonprofit only received about 506 points for its cost proposal, and it ended up falling about 193 points short overall.

PromiseShip’s bid was about $341 million over five years, or about $145 million over Saint Francis’ bid for the same period.

Kenny, the attorney representing PromiseShip, alleged the Saint Francis failed to account for more than $44 million in case management salaries over five years, and he said it appeared that Saint Francis didn’t budget for the first six months of costs.

Additionally, Kenny estimated that Saint Francis would need to add an additional 35 caseworkers and seven supervisors to reach the current caseload ratio. That would push the gap in the proposal to about $55 million over five years.

“Were those additional costs included in the Saint Francis cost proposal, it would have affected the relative scoring of both proposals given the equation used to calculate cost proposal scores,” Kenny wrote in the protest.

Carlson said that the state has set aside $300,000 separately from the cost proposals to cover startup costs for a new vendor and called PromiseShip’s premise speculative.

PromiseShip also alleged Saint Francis failed to describe how it would comply by a requirement that over half its board would be made up of Nebraska residents who are not affiliated with the agency.

Kenny said Saint Francis also failed to identify services for which it intends to use subcontractors, which are required for at least 65% of the contract services, or how it would comply with Public Service Commission requirements related to transportation services it would have to provide.

“Review of Saint Francis’ proposal reflects multiple areas in which it either fails to provide sufficient detail to ensure compliance, or specifically includes noncompliant proposals, which, if accepted, would violate Nebraska statutes,” Kenny wrote.

However, in his response to the PromiseShip protest, Carlson said a glossary in the request for proposal says the word “should” means “expected; suggested, but not necessarily mandatory,” and so the state has discretion to still accept proposals lacking information that should be included.

Carlson also rejected the protest’s “general litany of claimed failures” by Saint Francis, saying the state followed its established process for reviewing proposals.

“In evaluating an RFP, the State must consider and evaluate the information received,” Carlson wrote. “If a contract results from a vendor’s proposal, the vendor is then expected to uphold its obligations under the contract. Any failure on the part of a vendor to do so can and will be resolved through the terms of the resultant contract.”

Essentially, PromiseShip “predicting that somehow Saint Francis will not comply with a contract, once executed,” isn’t a valid reason to reject the vendor.

Carlson said the Department of Administrative Service found “that there is no reason to overturn the award,” and it denied the protest from PromiseShip.

Zychowski, PromiseShip president and CEO, told The Daily Record in a statement that the organization was “disappointed” to hear the contract with Saint Francis had been finalized late in the day right before a holiday.

PromiseShip said it received an initial letter July 1 from Carlson, the DAS official who reviewed the protest, stating that the state took protests “very seriously” and it would take another 10 days for an initial review of the challenge.

Two days later, though, the state denied the protest, executed the contract and responded to a public records request filed June 4 by PromiseShip seeking documents “vital to an understanding of the State’s award decisions” from the Department of Health and Human Services, PromiseShip said in a statement to The Daily Record.

PromiseShip claims it should have had an opportunity to seek a final decision from Department of Administrative Services Director Jason Jackson once its initial protest was rejected by the state.

Next Steps

With the contract finalized, DHHS plans to transition case management to Saint Francis with a target of Jan. 1, 2020.

However, litigation or other action by PromiseShip could put the brakes on moving forward.

Saint Francis told The Daily Record that it’s working with the state to plan the transition. Doing so will require working closely with PromiseShip, a spokeswoman for Saint Francis said, as well as developing deep relationships with Nebraska providers.

“It’s critical that we have a shared vision that allows us to approach the challenges inherent in serving children and families with innovative thinking and putting evidence-based best practices to work,” said the Rev. Robert N. Smith, CEO, president and dean of Saint Francis Ministries.

The organization said its decades of experience in child welfare taught it that open communications and working together are needed to reach the goals established by state leaders.

“With the continued cooperation of PromiseShip, and an intentional focus on maintaining the safety, permanency and wellbeing of children in the Omaha area, we are fostering a shared vision with Saint Francis Ministries,” Wallen said in the DHHS release announcing the contract finalization.

The five-year contract includes an option to extend it two years. Saint Francis agrees to provide child welfare case management services for the two-county area, while DHHS will continue providing initial assessment and community support services.

The state department also handles case management services across Nebraska’s other 91 counties.

The Eastern Service Area provides services to about 2,360 children, which is about 44% of the children served in the state.

The transition to Saint Francis will follow a readiness review. DHHS and PromiseShip will be working to develop a plan to execute the transition, Wallen said.

DHHS also plans community transition meetings across the two counties in the coming weeks to answer questions from the public and others interested in child welfare in the Omaha metro area.

Information on the transition is available on the DHHS website at www.dhhs.ne.gov/ESAtransition.


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