Idaho Legislature passes reforms to government contracting process

Almost three years ago, Idaho awarded the state government’s biggest contract — valued at $1.2 billion over four years — to run Medicaid mental health benefits.

The new CEO for the company that won the contract, Magellan Health, was a former state staffer, David Welsh, who judged companies’ bids for the contract, the Idaho Capital Sun reported in 2024. Welsh was among at least three former Idaho Department of Health and Welfare employees that Magellan hired. 

Idaho Medicaid mental health contractor hires three state government employees

Now, the Idaho Legislature passed a bill that would ban contractors from hiring state employees for at least a year. House Bill 889 proposes a ream of reforms to the state of Idaho’s government contracting process, called procurement. 

And it’s coming at a critical juncture. The state is gearing up to put out for bid what will likely be the state’s biggest contract: For a private company to run all Medicaid benefits, which is called managed care. In recent years, two large state contracts — for Medicaid mental health benefits, and for the state’s health insurance plan for state employees — drew losing bidders to sue the state. 

Rep. Britt Raybould, a Rexburg Republican sponsoring the bill, said those contracts were part of what caught her attention. She said she’s been working on the bill for years. 

“I didn’t necessarily view it as, ‘Oh, somebody did something wrong,’” she told the Idaho Capital Sun in an interview on March 18. “I viewed it more as it felt like the two sides were either potentially talking past each other, or weren’t necessarily on the same page about something until after the fact.”

The Senate passed the bill on a 21-14 vote Monday, more than a week after the House passed the bill on a 57-11 vote. 

The bill now heads to Gov. Brad Little. Once the bill is transmitted to the governor’s desk, he has five days — excluding Sundays — to decide on it. He has three options: Sign it, allow it to become law without his signature, or veto it. 

What does the government contracting bill propose?

The 14-page bill proposes:

• Defining key terms that guide the procurement process, including allowing the state to award one contract to multiple bidders. That’s the state’s plan for the Medicaid managed care contract.
• A one-year “cooling-off” period that prohibits vendors from hiring a state employee or official who “participated in the solicitation, bid, or contract process.”
• A one-year ban on anyone who served in elected public office from participating “in the solicitation, bid, or contract process … on behalf of a vendor.”
• Requiring the state to publish the process for analyzing or scoring bids. 

The bill would also allow the state to weigh bidders’ performance on past contracts. 

If the state finds a contractor had a performance failure, the administrator of the Idaho Division of Purchasing can “debar a vendor from bidding on any state project or service” for up to three years. Vendors could challenge debarment or disqualification. 

People or companies that want to protest a bid must pay a “protest bond,” with values based on how large the contract is. If companies win their protest, they get the bond back. But if the protest is found to be “frivolous,” meaning in part that the challenge “lacks any arguable basis in law or fact,” the state can keep the bond. 

If the bill becomes law, it would take effect July 1.