AUSTIN — Gov. Greg Abbott's top appointee over social services profusely apologized to legislators Wednesday for his agency's failure to take care of the basics as it awards lucrative health-insurance and other contracts to private companies.

On two recent contracts, bid evaluators and other officials at the Health and Human Services Commission botched their job of "tabulating scores, quality control and making sure that people obtain the appropriate approvals prior to moving forward" with a bid solicitation, Executive Commissioner Charles Smith told a legislative panel.

"We failed," he said.

On Wednesday, Smith accepted the resignation of Heather Griffith Peterson, the commission's chief operating officer. Among other things, Peterson was in charge of purchasing. As the agency's third-highest-paid official, she made $235,000 last year.

She appeared to be the fourth subordinate to leave the agency this month because of the muffed contracts, though officials declined to discuss her departure.

The mistakes have raised the possibility that the commission, which grants many billions of dollars' worth of contracts during each two-year state budget cycle, may have to cancel and seek new bids on other contracts that were incorrectly handled, costing taxpayers more money.

And lawmakers, especially in the Texas House, have spoken scornfully of the agency's ability to police vendors and make sure they provide the services to vulnerable Texans that the state is paying them for.

On Monday, Abbott sent a top aide, former state Sen. Tommy Williams, to the agency on a temporary assignment to try to correct the contracting problems.

Mistakes, not sneakiness

Smith, testifying before House budget writers, warned that if his subordinates involved with contracting don't follow the state's laws and rules, they'll be fired.

The commission currently oversees more than 108,000 contracts worth more than $60 billion, he noted.

Smith took pains to distinguish his agency's recent fumbles from what he described as "contracting scandals" four years ago.

He was alluding to a $110 million Medicaid fraud contract that was awarded to the Austin-based firm 21CT under his predecessor, Kyle Janek, an appointee of then-Gov. Rick Perry.

In 2014, several top commission officials were fired or left the agency following reports that the data analytics contract had been awarded without any competition, using back channels and the help of a commission official.

"While the contract issues we're going to discuss today are totally different from those that occurred at the agency in 2014 and 2015, they are problems nonetheless that must and will be fixed," Smith told the House Appropriations Committee.

For many years, Smith ran the child-support division when Abbott was state attorney general. Last year, after a brief stint running Child Protective Services, he assumed command of the mega-agency that runs Medicaid and other sensitive safety-net programs.

'Mind-boggling'

On Wednesday, he received a friendlier reception from veteran House Democrats than from top allies of House Speaker Joe Straus.

Several Republican members of the committee expressed indignation and amazement after Smith and Deputy Executive Commissioner Ron Pigott recounted one mistake after another that their subordinates made on recent children's health-insurance contracts and a new IT system for recording births and deaths.

Rep. Giovanni Capriglione, R-Southlake (2014 File Photo / Fort Worth Star-Telegram)

Pigott testified that last week he had to cancel about $368 million worth of Children's Health Insurance Program contracts for rural and South Texas after he verified that "keying errors and 'copy and paste' errors" had wound up in the spreadsheet used to score bids.

On the vital statistics IT system, the flubs included low-balling its value as only $7.7 million, Pigott said. That kept it under a $10 million threshold that triggers a requirement for a "letter of attestation" by a top agency executive that all laws and rules were followed. The threshold also requires fast reporting of the contract to the Legislative Budget Board, which maintains a searchable database of state contracts. The contract wound up being worth more than double the amount initially guessed, Pigott said.

"Mind-boggling," Rep. Giovanni Capriglione, R-Southlake, said of the errors.

"Really sloppy contracting," added Rep. Sarah Davis, a West University Place Republican.

Longview GOP Rep. Jay Dean exclaimed, "If I ran my business with regard to contracts the way this agency has been run, I'd be out of business."

Agency's size at fault?

Democratic Reps. Richard Raymond of Laredo and Helen Giddings of DeSoto were more sympathetic.

Rep. Helen Giddings, D-DeSoto (2017 File Photo / Staff)

Raymond complained that unspecified media accounts had likened the recent flubs to those involving 21CT.

"This was not something where someone was potentially trying to commit fraud," he said.

Giddings, who is retiring after 13 terms, told Smith, "When you came into this agency, there were problems."

Referring to consolidations of 12 social services agencies into just a couple over the past 15 years, she said, "When you have an agency this large, you are going to have some opportunities for errors."