CMS Administrator Seema Verma mismanaged more than $6 million in strategic communications contracts, HHS' inspector general said in a report Thursday.
The watchdog found Verma and other senior officials broke federal rules when they used government contracts to bring in Republican communications experts to support the agency's public relations and outreach efforts.
HHS' inspector general said the agency gave far-reaching authority over CMS employees to a Verma ally, allowing him to "perform inherently government functions." OIG compared his power in the agency to a "CMS senior leader" because he often accompanied Verma to meetings, directed agency employees and told agency staff he was one of three people who could approve tweets.
The watchdog said CMS used the wrong contracting process to secure consulting services and sidestepped "civil service laws that require hiring federal employees under competitive appointment or other allowable procedures."
The subcontractor referred to as "Brian Smith" in the OIG report is Marcus Barlow, whose services were covered by a contract with Nahigian Strategies, a Republican public relations firm with close ties to the Trump administration. Barlow previously served as a spokesperson for Verma when she consulted Indiana about its Medicaid program under then-Governor Mike Pence.
Verma defended the contracts last year, arguing that CMS needed to bring in outside expertise to supplement the agency's busy staff. But OIG disagreed with her line of reasoning, saying that CMS' Office of Communication could have filled up to 15 vacant positions instead of using the consultants. By contracting for the services, it would have been easier for Verma to hire the people she wanted and pay them more than federal employees.
But the findings don't support earlier news reports or claims by Congress members that the contracts were improperly awarded or intended to boost Verma's public profile.
HHS spokesperson Michael Caputo said the report is proof that "some in the media and highly-partisan members of Congress (want) to make a mountain out of (a) molehill."
He also downplayed the inspector general's findings of wrongdoing, arguing that they're "based on arcane contracting rules that remain the subject of long-standing confusion and debate across the entire federal government."
Verma took issue with the report, writing in her letter to OIG that the watchdog didn't have enough evidence that subcontractors acted as government employees and accusing the inspector general's office of misunderstanding federal contracting rules.
"CMS contractor employees never had ultimate 'direction or control' of any government employees; instead, they were part of a collaborative effort to effectively communicate policy announcements, develop and propose recommendations for messaging, and craft cross-cutting agency communications strategies," Verma wrote.
OIG recommended HHS "provide training to political appointees and senior leaders related to proper contract administration" and take other steps to improve the agency's management of federal contracts.