Updated at 4:05 p.m. with reaction from Speaker Joe Straus.

AUSTIN — The state has canceled five new managed-care contracts for low-income youngsters enrolled in the Children's Health Insurance Program after finding errors in a spreadsheet used to evaluate bids.

In addition, the Health and Human Services Commission on Monday fired associate commissioner for procurement operations Michael Parks and two of his aides "for their involvement in this procurement," said commission spokeswoman Carrie Williams.

Gov. Greg Abbott, whose office held emergency meetings on the matter late last week, called the mistakes "unacceptable."

In a letter asking two outside state entities to investigate, Abbott said that he has no reason to believe the agency's flubs were intentional.

Nor, he said, has there been any suggestion of "malfeasance," such as purposeful preferences for some bidders over others.

Still, the Republican governor noted that losing bidders have filed two protests since the CHIP contracts for rural areas and South Texas were awarded in December.

The canceled managed-care contracts were for the regions circled in green — Medicaid Rural Service Areas for West, Northeast and Central, and the Hidalgo region. The notations in green pen are the managed care organizations that in December were awarded 16-month contracts in each region. The contracts were supposed to begin Sept. 1. They have been canceled. Molina and Superior will continue providing CHIP coverage in the four regions until new contracts can be awarded. They will begin Jan. 1, 2020. (Health and Human Services Commission)

The contracts cover more than 30 counties in northeast Texas, such as Grayson, Fannin and Van Zandt, as well as 10 mostly urban South Texas counties and vast rural swaths of Central Texas and West Texas.

On Monday, Speaker Joe Straus said he has asked the House Appropriations Committee, which has a meeting scheduled for Friday, to further examine the commission's contracting practices.

House lawmakers have tried to help improve procurement by state agencies, said Straus, a San Antonio Republican.

"There is clearly still a need for more oversight," he said in a written statement. "While the Legislature should examine practices across all state agencies [the commission] in particular has been plagued by problems and warrants additional scrutiny."

Owning mistakes

The losing bidders' protests led to an acknowledgement by the commission's Procurement and Contracting Services staff and its internal auditors that the spreadsheet was flawed, Abbott said in a letter to First Assistant State Auditor Lisa Collier and the commission's Inspector General, Sylvia H. Kauffman.

"Medicaid managed care is a critical program in Texas that has both saved taxpayers money and improved health outcomes," he wrote.

"Collectively, the managed care programs in Texas account for the vast majority of all state dollars spent on Medicaid. That is why today I was disappointed to learn of disturbing news regarding the Texas Health and Human Services Commission's procurement for the Children's Health Insurance Program services in rural and Hidalgo service areas."

Abbott asked Collier and Kauffman to conduct separate inquiries into "the underlying procurement process to uncover any and all errors with this system. And while I do not have any direct knowledge of any malfeasance, it is important that you conduct a thorough inquiry to get to the bottom of this issue."

Firing three officials, rebidding

Williams, the commission spokeswoman, said in a written statement that it "welcomes a close review of our practices" and will cooperate fully with Collier and Kauffman.

"The agency has terminated an associate commissioner [for procurement operations] and two of his staff members for their involvement in this procurement," she said in a later email, referring to Parks and two unnamed aides. As of last fall, Parks was making $155,000 a year, according to research The Dallas Morning News conducted for a story about big pay raises at the agency.

In her statement, Williams said, "We agree with the governor that procurement errors are unacceptable and the agency shoulders the responsibility to ensure the quality and accuracy of every procurement."

The five canceled contracts were for managed care plans for CHIP kids in the state's three Medicaid Rural Service Areas and a 10-county region of the Rio Grande Valley called the Hidalgo Managed Care Service Area. They were to begin Sept. 1 and end Dec. 31, 2019.

The awarded contracts that are now being canceled were with Blue Cross and Blue Shield of Texas, Driscoll Children's Health Plan, Texas Children's Health Plan, Molina Healthcare of Texas and Superior HealthPlan, Williams said.

"We are issuing contract extensions to the two existing MCOs for those areas," Molina and Superior, she said.

On Friday, the commission issued a request for proposals that "will include these services that will begin Jan. 1, 2019," Williams said.

Children served by CHIP will not notice any changes to their coverage or delivery of care, she said.

"We will make any system changes necessary, including adding extra safeguards and quality assurance steps on the back end as warranted," Williams said.

A history of problems

Contracting at the commission has come under fire before.

In 2014, several top commission officials were fired or left the agency following reports that a $110 million Medicaid fraud-detection contract had been awarded without any competition, using backchannels and the help of a commission official.

That official, former chief counsel Jack Stick, was publicly accused of steering a contract to Austin-based data analytics firm 21CT with the expectation that he would later leave state employment to become a company executive. Stick has denied the allegations.

Those reports prompted state and federal criminal investigations and a top-down review of the commission's contracts, the largest of which are given to Medicaid contractors.

In fiscal 2013, the commission and the four agencies it then oversaw awarded more than $24 billion worth of contracts, according to a 2015 report by the Texas Sunset Advisory Commission.

According to a contracts tabulation tool on the Legislative Budget Board's website, the commission in fiscal 2018, which ends Aug. 31, has awarded about 1,750 contracts worth a total of nearly $101 billion.

Staff writer J. David McSwane contributed to this report.