According to an unreleased General Accounting Office report, CMS Administrator Tom Scully acted without legal authorization when he intervened to exclude a subcontractor from a three-year, $1.6 million research contract. Senate Finance Committee Chairman Charles Grassley (R-Iowa) requested the report after hearing that Scully rescinded a nursing home study subcontracted to the University of Wisconsin Center for Health Systems Research and Analysis through RAND, the primary contractor. According to the GAO report, it appeared Scully was retaliating against the center because of previous criticism by its director, David Zimmerman. Scully "was not authorized to effectively change the substance of the proposal" and his action "undermined the integrity of the procurement process," the report concluded. GAO officials said the report would be posted on the GAO Web site later today.
In a written response, Jacquelyn White, director of the CMS' Office of Strategic Operations and Regulatory Affairs, disagreed with the report's conclusions and said Scully had good reason to believe Zimmerman was "obstructing and deterring the consensus-building process." White agreed with the GAO that new bids should be solicited for the contract. At deadline, neither Zimmerman nor Scully could be reached for comment. Grassley, in a letter to HHS Secretary Tommy Thompson, called Scully's actions "unacceptable." -- by Mark Taylor