State to spend at least $1 million in outside legal fees on Vermont Health Connect contracts


MONTPELIER -- Vermont is paying more than $1 million for outside legal counsel to help negotiate a mammoth contract with the technology firm that is building its beleaguered online health exchange.

The state has paid the high-profile Boston law firm Mintz, Levin, Cohn, Ferris, Glovsky and Popeo $855,800 since 2012 to provide legal advice on its contract with the CGI, the state's primary vendor for Vermont Health Connect. A contract signed June 9 is worth an additional $300,000, bringing the total to at least $1.15 million.

The state typically asks the Vermont Attorney General's Office to examine state contracts, officials said.

Mark Larson, commissioner of the Department of Vermont Health Access, said his agency needed additional resources to protect the interests of the state.

"The contract for a systems integrator is a very large contact," he added. "We brought in outside counsel for their expertise on IT projects, as well as to increase the resources available for legal representation."

About half of what will be paid to Mintz Levin has been billed since March 25, two weeks before the state announced a revised contract with CGI. The revised contract locks in $5 million in damages from the original contract, and allows for an additional $2 million in penalties going forward.

State officials have not said whether they will look to enforce the additional penalties, although CGI has already missed one deadline in the contract and the state has said it will likely miss the next.

Vermont has paid CGI more than $52 million of its $84 million contract. In January, Larson estimated the damages from missed deadlines at $26 million.

Users of the site still can't update information online, and the backlog of people that need to make changes prompted the state to hire another tech firm, OptumInsights Inc., for $5.7 million to eliminate the backlog and provide oversight of CGI.

The state has spent a total of $72 million on Vermont Health Connect, all of which is being paid for through federal grants. The state has $171 million in grants earmarked to finish the project.

All contracts related Vermont Health Connect require federal approval, including the state's contract with Mintz Levin, Larson said.

Around the time the Boston law firm was hired, Vermont's negotiations with software firm Oracle fell apart, and the state began work on an eleventh-hour contract with CGI.

The Attorney General's Office had only one attorney with the technical proficiency to scrutinize the massive contract that was then being negotiated, Deputy Attorney General Bill Griffin said.

Facing the Oct. 1, 2013, federal deadline to launch Vermont Health Connect, Griffin said he advised the state to seek outside counsel.

The state identified about seven firms, including four in Vermont, Griffin said, but even the larger in-state firms with commercial practices couldn't provide the resources that Mintz Levin offered.

As for why the state has continued to contract with Mintz Levin after the initial CGI contract was inked, Griffin said, "It really made more sense to stick with this firm because they know (the CGI contract) cold."

Griffin has worked in the Vermont Attorney General's Office since the 1970s. He said spending so much on outside counsel is highly unusual for the state, but it's a reflection of the complexity of the contract with CGI.

"I don't think we've ever seen a contract like this, it's a very complicated piece of work and a very complicated legal document," he said, "It's literally hundreds of pages of technical terms."

In the past decade, the attorney general's office has increased its capacity to represent the state in complex negotiations around IT contracts, but the office is still limited in what it can do in-house, Griffin said.

Republican political operative Darcie Johnston, an ardent critic of the Shumlin administration on health care issues, said paying Mintz Levin more than $1 million to work on the CGI contract is appalling.

"I do not understand why the state of Vermont had to hire a big Democratic Boston law firm to do this work and not a Vermont firm," she wrote in an email, "The argument that 'no Vermont firm' had the experience rings hollow."

Johnston also questioned why Larson or other state officials never mentioned Mintz Levin in testimony to the Legislature on their efforts to hold CGI accountable. The firm was never mentioned when legislative committees were briefed on contract revisions.

Continuing work on Vermont Health Connect is "throwing bad money after good," said Johnston, who renewed calls for the state to scrap the project and join the federal exchange.


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