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H. Ross Perot an Great Welfare Him The Wages of Poverty 0 X c 0: By Jackee Cox Austin All his life, H. Ross Perot has been a super salesman. Once a mere computer technician for Texas Blue Cross-Blue Shield, Perot parlayed his way into a multimillion dollar empire by selling data processing for welfare programs. As his company, Electronic Data Systems, Inc., grew, Perot took up other interests, from bringing American POWs home from Vietnam to running paramilitary rescue operations in Mexico and Iran. During the past couple of years, Perot has used his hard-driving skills on behalf of public morals, acting as pitch-man for Gov. Bill Clements’ drug control and wire tap projects. This summer, Perot turned his attention to the bureaucracy of the state of Texas, specifically to the board of the massive Texas Department of Human voted to switch a $2 billion, four-year group health insurance contract on Texas welfare recipients from a Perot company to a New York firm. In making its decision, the TDHR board had relied on the recommendations of its staff and independent consultants that dumping Perot would save the state $20 million to $50 million. The welfare insurance contract had been handled by Perot’s National HeriJanuary 1977. NHIC was awarded the business when the TDHR commissioner was Raymond Vowel!, who went to work for Perot two years later. Vowell is now dead. Between January 1977 and June 1980, the welfare insurance contract funnelled more than $1 billion through NHIC coffers. When NHIC was formed to handle the Texas welfare business in 1977, corporate assets totalled $100,000. In January 1980, NHIC assets exceeded Jackee Cox is a U.T. law student. She frequently writes about health and welfare. $146 million. The entire growth was funded out of Texas welfare dollars. When Perot learned of the TDHR contract switch, he began a round of high level state contacts, starting with Gov. Clements. Clements admits Perot contacted him but says he told Perot he knew nothing about the contract and refused to offer assistance. Clements referred Perot to TDHR board chairman Hilmar Moore, whom Perot promptly visited in person. Perot was clearly persuasive. On July 29, the TDHR board met in closed session with NHIC representatives. When they later convened publicly, the board heard testimony from five consultants that the New York firm, Bradford National Corp., had the cheaper and technically superior bid. Nonetheless, the board voted to reconsider the bid awards. Ross Perot had succeeded in completely undercutting the state bidding procedure. On August 14, TDHR Commissioner Jerome Chapman resigned. He admitted that controversy over the insurance contract was a factor in his decision. On the same day, Wesley Hjornevick, the agency’s deputy commissioner for finances, also resigned. Hjornevick was previously in charge of all procurement proceedings for the National Aeronautics Hjornevick’s evaluation system, under attack by Perot as inaccurate, used two teams of evaluators made up of TDHR staff and consultants. To avoid prejudicing the outcome, one team analyzed the fmancial aspects of the bids, while the other team analyzed the data processing capabilities of the two contractors. Bradford was found to have the better bid in both areas. But Perot could still come out the winner. On August 25, the TDHR board voted to spend $100,000 to hire another round of consultants to re-evaluate the bids. The consultants’ report is due October 25. In the meantime, the course of events raises serious questions about the legality of withdrawing a competitive bid award. The questions of possible political influence peddling and violation of state bidding procedures may yet be explored in court. Bradford National has promised to sue if they do not get the contract. The entire affair is a paradigm of the worst that can happen in state government. It may be instructive to see how and why. The Untouchables Three categories of people receive paid group health insurance from TDHR the elderly poor, the blind and disabled, and recipients of the Aid to Famprogram. The total cost of insuring these three groups in fiscal year 1980 was $345 million 24 percent of TDHR’s total operating budget. By contrast, the total cash assistance payments for AFDC were $143.4 million, only 10 percent of the department’s budget. A single parent trying to keep his or her family together on cash assistance payments from TDHR receives about $33 per person per month from the AFDC program. Not much, but the state THE TEXAS OBSERVER 3