Updated at 12:40 p.m., July 18: Revised to include reaction of Sen. Jane Nelson.

AUSTIN — Texas’ sprawling bureaucracy for regulating health care and providing social services is vulnerable to a “perception of impropriety” because it routinely lets individual contracting personnel open bids on their own, without any witnesses, a new internal audit says.

The Health and Human Services system also unwisely allows program managers and division leaders who control billions of dollars of spending to ask for the same contracting specialist every time, the audit said. That potentially creates a coziness that could harm taxpayers’ interests, it said.

Problems highlighted in the audit, which was released to state GOP leaders last week, are the latest in a long line of problems at the Health and Human Services Commission.

Six officials have stepped down since early April, when Gov. Greg Abbott called revelations of sloppiness and mistakes in scoring of bids “unacceptable.” At the time, Abbott, who is up for re-election, noted that there had not been any suggestion of "malfeasance," such as purposeful preferences for some bidders over others.

Gov. Greg Abbott shakes hands with executive commissioner of health and human services Charles Smith during a Child Protective Services and foster care bill signing on May 31, 2017. (Robert T. Garrett / Staff Writer)

But the new audit warned that trust in the commission’s impartiality in big-money decisions could be eroded because “controls to ensure the integrity of the procurement process are lacking.”

“Consistently having the same procurement staff member work with the same divisions increases the risk that the purchaser may not be able to be unbiased in their dealings with the division, leading to the perception of impropriety,” it said.

Another audit released Tuesday by an independent arm of the Legislature looked at nearly 70 percent of the $6.7 billion worth of contracts that the commission awarded in a recent 27-month period. There were problems with every single one of the 28 separate calls for bids or grant proposals that the State Auditor's Office examined.

"The errors identified for all 28 procurements included formula errors such as omitted scores, incorrect scores, and inappropriate application of best value weights," the legislative branch audit said.

Both the commission's internal audit and the State Auditor’s Office review sharply criticized sloppy handling and scoring of bids for billions of dollars worth of work for the Medicaid program for the poor and other health and social services programs.

The commission, which is currently without a top leader, said in “management responses” to both audits that it is fixing the problems identified.

"We're continuing to work hard to strengthen our processes and make sure our procurements are done correctly going forward," said agency spokeswoman Carrie Williams. "This work has been a major focus of the agency, and we won't stop till we get it right."

In May, the commission created a Compliance and Quality Control team. It has agreed to pay Ernst & Young about $640,000 to work as an outside consultant to help it redesign its besieged Procurement and Contracting Services division, Williams said.

A longtime state government ethics watchdog, however, said the Legislature will have to look at other states’ best practices and try again to correct the commission’s contracting woes.

“This has been an ongoing crisis for decades at Health and Human Services, where they can’t be trusted to fairly evaluate billion-dollar proposals and you can’t rely on their analyses,” said Tom “Smitty” Smith, who recently retired after 32 years as state director of the consumer protection and ethics monitoring group Public Citizen.

In 2015, lawmakers led by Flower Mound GOP Sen. Jane Nelson passed legislation that overhauled contracting practices, a response to reports the previous year that a $110 million Medicaid fraud-detection contract was awarded without any competition, using back channels and the help of a commission official.

“While Senator Nelson attempted to develop reforms that would solve many of the identified problems, it’s clear that her reforms didn’t go far enough,” Smith said. “The Legislature needs to make sure bid evaluators are unbiased and there are no political or economic benefits to them for making a biased decision.”

Not having witnesses present to watch bid openings “is outrageous,” he said. “It opens the door to rigged bid evaluations.”

On Wednesday, Nelson said the latest report confirms "what we already knew" -- that the Legislature's push to overhaul commission purchasing practices must continue.

"I am disappointed that after two straight sessions of contracting reforms, major problems are still occurring," she said in a written statement. "There will be a third reform bill next session, and contracting will continue to be a major focus of our budget hearings."

Problems piling up

Former Executive Commissioner Charles Smith requested the review by internal audit director Karin Hill in March after learning from the State Auditor’s Office, which is controlled by the Legislature, about numerous flubs by the commission in its purchase of a “TxEVER,” or Texas Electronic Vital Events Register.

Procurement and Contracting Services repeatedly botched its tally of internal evaluators’ scores of bids by five companies competing for a $15.6 million contract to revamp online reporting of births, deaths, marriages and divorces, the Legislature’s auditor found.

The disclosures about TxEVER came as the commission had to cancel about $350 million worth of Children’s Health Insurance Program managed-care contracts for rural and South Texas. There were similar mistakes made in scoring of bids, forcing the commission to re-bid the CHIP contracts.

In mid-April, Abbott sent an aide, former Houston-area GOP Sen. Tommy Williams, to the commission to correct the problems. In May, Smith, a longtime Abbott aide, retired.

The commission’s internal audit noted that Procurement and Contracting Services buys goods and services and evaluates would-be recipients of federal and state grants for three huge agencies. Its biggest client is the commission, which runs Medicaid and regulates health-care providers. But it also runs the bid-award process for the old state health department, which the commission recently absorbed, and the freestanding Department of Family and Protective Services, which oversees Child Protective Services.

Bids arrive at the commission and are placed in a locked “bid room,” the audit says.

“When it is time to open them, the purchaser [an employee of Procurement and Contracting Services] generally does this on their own with no witnesses,” it says. “The proposals are loaded onto a shared drive and a SharePoint site for the evaluators to review. This increases the risk of the perception of impropriety.”

According to the audit, “The current procurement process relies heavily on the integrity of each procurement staff. The process does not have checks and balances in place.”

Every contract reviewed had problems

According to the separate State Auditor's Office audit, every single one of 28 contracts it reviewed, and which the commission awarded in the past 2 ¼ years, had problems.

Five that accounted for $3.4 billion of value had "significant evaluation scoring errors and missing documentation," the Legislature’s audit said.

They include not only the CHIP contract for rural areas, but a $3 billion managed care contract in Medicaid known as STAR Kids. Under the new program, rolled out in late 2016, about 6,000 severely disabled children enrolled in the Medically Dependent Children Program and nearly 160,000 other disabled children left traditional fee-for-service medicine to have their care managed by private insurance companies.

As The Dallas Morning News reported last month, parents of medically fragile children have complained of service denials and inadequate provider networks under Centene Corp.'s Superior HealthPlan, which won the contract.

On the five contracts with “significant” scoring errors and missing documentation, the State Auditor’s Office said its personnel couldn't determine “whether evaluation scores that supported the award recommendations ... were accurate,” the Legislature’s audit said.

On half of the 28 bids, evaluators didn't all use the same grading scale they're supposed to, which is 1 to 10. Instead, some used 0 to 10, 2 to 10, 0 to 5, 1 to 5 and 1 to 7, the audit said.