Perry: Top Official Resigning Over No-Bid Contract

AUSTIN (AP) — The widening fallout over $110 million in no-bid state contracts awarded to an Austin tech company forced the resignation of a second top state official Friday, this time at the request of Republican Gov. Rick Perry, as criminal prosecutors prepare for a likely investigation into the taxpayer-funded deal.

Texas Health and Human Services Commission Inspector General Doug Wilson submitted his resignation after the governor expressed a loss of confidence, Perry spokeswoman Lucy Nashed said. Wilson's office is in charge of preventing waste and abuse within Texas' massive health agency.

Several other high-ranking state health officials were also placed on paid leave Friday. It comes a day after public corruption prosecutors in Austin said they expect to open a criminal investigation into how Austin-based 21CT was hired to help Texas root out Medicaid fraud without going through the usual competitive bidding process.

"It may take a little time to sort out fact from fiction, rumor from truth, but we will get to the bottom of exactly what happened and make a full public accounting of how this unfolded," state Health Commissioner Kyle Janek said.

The escalating response has begun to recall the unraveling of the Texas' $3 billion cancer-fighting agency two years ago, when a lucrative award to a private company was found to have skipped necessary scrutiny, setting off resignations and freezing operations at the Cancer Prevention and Research Institute of Texas.

Criminal prosecutors also dug into that case. Gregg Cox, an assistant district attorney in Travis County who heads the state's Public Integrity Unit, said Thursday he expected his office to soon begin an investigation into how 21CT landed the contracts.

No state officials have been accused of criminal wrongdoing, and Janek has said that he does not believe anyone acted illegally.

But his sprawling agency has come under mounting scrutiny since the publication last month of an Austin American-Statesman investigation into how 21CT was awarded the job. Jack Stick, former chief counsel for Texas Health and Human Services, steered the agency toward hiring 21CT and has defended the company's performance.

Stick announced his resignation last week. His wife, Erica, is the agency's chief of staff and was among those placed Friday on paid administrative leave. So was Franita Wilson, the wife of the inspector general who works in the purchasing department of the state's Department of Family and Protective Services, which also had a $450,000 contract with 21CT.

Franita Wilson signed the purchase order for that DFPS contract with 21CT. Health commission spokeswoman Stephanie Goodman said signing the order was consistent with her job and that "there was not even a hint of wrongdoing" on her part.

Janek "felt it was best to remove anyone who might be perceived to have a conflict" to protect the integrity of a review, Goodman said.

Democratic state Sen. John Whitmire, who formally requested a criminal investigation, said the amount of money awarded and questions raised deserve a look from prosecutors.

"It just doesn't pass the smell test," Whitmire said.

Health officials also announced Friday a freeze on new contracts at the agency until stronger safeguards are put in place.

21CT chief executive Irene Williams has defended the contract and rejected claims that the company did not win a competitive bid. She announced this week that the company would begin laying off workers after losing the contracts but did not say how many.