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Or Government Ethics Commission Preliminary Review of Taaffe Conflict of Interest 2011

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OREGON GOVERNMENT ETHICS COMMISSION
PRELIMINARY REVIEW

CASE NO:

11-136EDT

DATE:

August 19, 2011

RESPONDENT:

TAAFFE, Michael, former Assistant Administrator, Health Services
Section, Oregon Department of Corrections

COMPLAINANT:

GALLEGOS, Vicki, Procurement and Contract Specialist, Purchasing
and Contracts Unit, Oregon Department of Corrections

RECOMMENDED ACTION:

Move to Investigate Possible Violations of ORS
244.040(1), ORS 244.040(3), ORS 244.040(4), ORS
244.040(5), ORS 244.047(2) and ORS 244.120(1)(c)

1

SYNOPSIS: Michael Taaffe was the Assistant Administrator of the Health Services Section for

2

the Oregon Department of Corrections (DOC) during, and prior to, the period of time relevant to

3

this preliminary review.

4

beneficial financial interest in a DOC contract, in which he participated in the authorization of

5

while employed by DOC, within two years of the date the contract was authorized. It was also

6

alleged Mr. Taaffe may have violated the conflict of interest provisions of Oregon Government

7

Ethics law.

The complainant alleged that Mr. Taaffe may have had a direct

s
9

Information available for this preliminary review appears to indicate that Mr. Taaffe may have

10

had a direct beneficial financial interest in a public contract in which he participated in the

11

authorization of while acting in his former official capacity as a public official representing DOC.

1

Information also appears to indicate that Mr. Taaffe may have been met with conflicts of interest

2

while participating in official actions, decisions or recommendations that could or would have

3

been to his private pecuniary benefit and may have failed to comply with disclosure requirements

4

identified in ORS 244.120(1)(c) and may have used or attempted to use his official position to

5

obtain prohibited financial benefits.

6
7

It appears an investigation is warranted to determine if violations of Oregon Government Ethics

8

law occurred.

9

10

RELEVANT STATUTES: The following Oregon Revised Statutes are applicable to the issues

11

addressed herein:

12
13

244.020(1) " 'Actual conflict of interest' means any action or any decision or recommendation

14

by a person acting in a capacity as a public official, the effect of which would be to the private

15

pecuniary benefit or detriment of the person or the person's relative or any business with

16

which the person or a relative of the person is associated unless the pecuniary benefit or

17

detriment arises out of circumstances described in subsection (12) of this section."

18

19

244.020(2)" 'Business' means any corporation, partnership, proprietorship, firm, enterprise,

20

franchise, association, organization, self-employed individual and any other legal entity

21

operated for economic gain but excluding any income-producing not-for-profit corporation

22

that is tax exempt under section 501 (c) of the Internal Revenue Code with which a public

23

official or a relative of the public official is associated only as a member or board director or

24

in a nonremunerative capacity."

25

244.020(3) " 'Business with which the person is associated' means:"

26
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TAAFFE PRELIMINARY REVIEW - Page 2

1

244.020(3)(a) "Any private business or closely held corporation of which the person or the

2

person's relative is a director, officer, owner or employee, or agent or any private business or

3

closely held corporation in which the person or the person's relative owns or has owned

4

stock, another form of equity interest, stock options or debt instruments worth $1,000 or

5

more at any point in the preceding calendar year."

6
7

244.020(12) " 'Potential conflict of interest' means any action or any decision or

8

recommendation by a person acting in a capacity as a public official, the effect of which could

9

be to the private pecuniary benefit or detriment of the person or the person's relative, or a

10

business with which the person or the person's relative is associated, unless the pecuniary

11

benefit or detriment arises out of the following:"

12
13

244.020(14) " 'Public official' means any person who, when an alleged violation of this

14

chapter occurs, is serving the State of Oregon or any of its political subdivisions or any other

15

public body as defined in ORS 174.109 as an elected official, appointed official, employee or

16

agent, irrespective of whether the person is compensated for the services."

17
18

244.040 "Prohibited use of official position or office; exceptions; other prohibited

19

actions. (1) Except as provided in subsection (2) of this section, a public official may not use

20

or attempt to use official position or office to obtain financial gain or avoidance of financial

21

detriment for the public official, a relative or member of the household of the public official, or

22

any business with which the public official or a relative or member of the household of the

23

public official is associated, if the financial gain or avoidance of financial detriment would not

24

otherwise be available but for the public official's holding of the official position or office."

25
26

244.040(3) "A public official may not solicit or receive, either directly or indirectly, and a

27

person may not offer or give to any public official any pledge or promise of future

28

employment, based on any understanding that the vote, official action or judgment of the

29

public official would be influenced by the pledge or promise."

30

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TAAFFE PRELIMINARY REVIEW· Page 3

1

244.040(4) "A public official may not attempt to further or further the personal gain of the

2

public official through the use of confidential information gained in the course of or by reason

3

of holding position as a public official or activities of the public official."

4

5

244.040(5) "A person who has ceased to be a public official may not attempt to further or

6

further the personal gain of any person through the use of confidential information gained in

7

the course of or by reason of holding position as a public official or activities of the person as

8

a public official."

9

10

244.040(7) "The provisions of this section apply regardless of whether actual conflicts of

11

interest or potential conflicts of interest are announced or disclosed under ORS 244.120."

12

13

244.047 "Financial interest in public contract. (1) As used in this section:

14

(a) "Public body" has the meaning given that term in ORS 174.109.

15

(b) "Public contract" has the meaning given that term in ORS 279A.010.

16

(2) Except as provided in subsection (4) of this section, a person who ceases to hold a

17

position as a public official may not have a direct beneficial financial interest in a public

18

contract described in subsection (3) of this section for two years after the date the contract

19

was authorized.

20

(3) Subsection (2) of this section applies to a public contract that was authorized by:

21

(a) The person acting in the capacity of a public official; or

22

(b) A board, commission, council, bureau, committee or other governing body of a public

23

body of which the person was a member when the contract was authorized.

24

(4) Subsection (2) of this section does not apply to a person who was a member of a board,

25

commission, council, bureau, committee or other governing body of a public body when the

26

contract was authorized, but who did not participate in the authorization of the contract."

27

28

244.120 "Methods of handling conflicts; Legislative Assembly; judges; appointed

29

officials; other elected officials or members of boards. (1) Except as provided in

30

subsection (2) of this section, when met with an actual or potential conflict of interest, a public

31

official shall:"
TAAFFE PRELIMINARY REVIEW - Page 4

1

244.120(1 )(c) "If the public official is any other appointed official subject to this chapter, notify

2

in writing the person who appointed the public official to office of the nature of the conflict,

3

and request that the appointing authority dispose of the matter giving rise to the conflict.

4

Upon receipt of the request, the appointing authority shall designate within a reasonable time

5

an alternate to dispose of the matter, or shall direct the official to dispose of the matter in a

6

manner specified by the appointing authority."

7

8

The following Oregon Administrative Rules is applicable to the issues addressed herein:

9

10

199-005-0035(6) "As used in ORS 244.047, a public contract is "authorized by" a public

11

official if the public official performed a significant role in the selection of a contractor or the

12

execution of the contract. A significant role can include recommending approval or signing

13

of the contract, including serving on the selection committee or team, or having the final

14

authorizing authority for the contract."

15
16

PRELIMINARY REVIEW: The Oregon Government Ethics Commission (Commission) received

17

a letter of complaint from Vicki Gallegos, Procurement and Contract Specialist, Oregon

18

Department of Corrections on 4/26/11 (#PR1 through #PR7). Ms. Gallegos alleged that Michael

19

Taaffe, former Assistant Administrator of the Health Services Section, Oregon Department of

20

Corrections (DOC), may have violated the conflict of interest provisions of Oregon Government

21

Ethics law and may have had a direct beneficial financial interest in a public contract, in which he

22

participated in the authorization of while employed by DOC, within two years of the date the

23

contract was authorized. Receipt of the complaint was acknowledged in letters to Ms. Gallegos

24

and Mr. Taaffe.

25

complaint.

26

Commission in conducting the preliminary review in this matter.

27

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Mr. Taaffe was provided with copies of the information received in the

The parties were invited to provide any information, which would assist the

TAAFFE PRELIMINARY REVIEW - Page 5

1

The following is a summary of information provided by the complainant, Ms. Gallegos that relates

2

to the alleged violations of Oregon Government Ethics law:

3
4

Ms. Gallegos indicated, "On 4/8/11, I was informed by a coworker that our Assistant

5

Administrator of Health Service, Michael Taaffe, had retired from our agency (DOC) one day

6

and went to work for one of our contractors (CHP) the next day. The vendor has now set

7

Mr. Taaffe up as an on-site vendor representative in the same office he occupied when

8

employed by DOC.

9

information has been verified by my manager, Ray Brixey" (#PR1).

His new position title is CHP Account Manager Contracts.

This

10

11

Ms. Gallegos indicated that Mr. Taaffe had input on the development of the solicitation, was

12

a member of the "RFP review committee" and "played a significant role in authorizing the

13

contract with Physician Health Partners a.k.a. Correctional Health Partners (CHP); the

14

vendor with which he is now employed" (#PR1).

15

16

Ms. Gallegos also provided information related to post-public employment waiting periods as

17

described in page 17 ofthe Guide for Public Officials the Commission adopted on 10/26/10.

18

She then explained, "Mr. Taaffe left his official position and went to work for the Contractor

19

immediately; obtaining a direct, beneficial, financial interest in the contract and abandoning

20

the requisite two year. waiting period." Ms. Gallegos also noted, "Mr. Taaffe is still set up

21

with expenditure authority in our accounting system. That authority should be terminated as

22

soon as possible" (#PR1 and #PR2).

23

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TAAFFE PRELIMINARY REVIEW - Page 6

1

Ms. Gallegos provided copies of signed evaluation forms that indicated Mr. Taaffe

2

participated in the evaluation of the "Request for Proposal #3910, TPA for Inmate Off-Site

3

Health Care" which are summarized or excerpted as follows (#PR3 through #PR5):

4
5

•

LLC."

6
7

The evaluation forms identified the proposing firm as "Physician Health Partners,

•

The forms included instructions to the evaluator stating, "This form is provided as a

8

means to evaluate proposals received in response to Solicitation #3910. Please

9

review the specific sections of the Solicitation, copied below, and evaluate
Proposer's response, then indicate your rating for each evaluation category."

10

11

•

The evaluations appear to consist of a rating system that requires the evaluator to

12

rate each section of the RFP using a five step scale ranging from "excellent" to

13

"poor."

14

•

Each evaluation form included a section titled "Conflict of Interest Statement." The

15

form stated, "A conflict of interest exists whenever there is a situation in which an

16

Evaluation Committee member or relative, has or may have financial or other

17

interest or prejudice through current or past association or relationship with any

18

Proposer."

19

•

The forms require the evaluator to sign and date the "Conflict of Interest

20

Statement" following this statement, 'I hereby certify that I have read the above

21

policy statement defining conflict of interest; that I understand the contents thereof;

22

that no conflict of interest exists as therein defined which precludes an impartial

23

evaluation of propels to be considered by me, and that if such a conflict should

24

arise, I will immediately disqualify myself from this evaluation and selection

25

process." The records indicate Mr. Taaffe signed each form, providing the date as

26

3/6/09.

27
28

Ms. Gallegos also provided records illustrating scores submitted by three evaluators,

29

inclUding one identified as "Michael" for "RFP #3910 - Inmate Off-Site Healthcare" and

30

records that appear to indicate that the provider name changed from Physician Health

31

Partners to Correctional Health Partners (#PR6 and #PR7).

TAAFFE PRELIMINARY REVIEW - Page 7

1

Mr. Taaffe presented his position in response to these allegations in a letter dated 5/27/11. The

2

full text of his letter will be provided to the members of the Commission in their meeting book

3

materials. Information from his submission is summarized or excerpted below (#PR8):

4
5

Mr. Taaffe explained, "It is true that I retired from the Oregon Department and immediately

6

went to work for Correctional Health Partners (CHP). It is also true that I was a member of

7

an 'evaluation committee' in March of 2009 that contributed to the selection of a Third Party

8

Administrator (TPA) that ultimately led to the Department of Corrections selecting and

9

contracting with Correctional Health Partners. I also believe my role to have been less than
'significant' under the law since I was not a member of the 'selection committee'."

10
11

12

Mr. Taaffe indicated, "Additionally my role on the 'evaluation committee' in the 2009 selection

13

process was important to completing the process but not instrumental or, in any way, unduly

14

influential in which company was selected. As a member of the committee I carried out the

15

due diligence required of me and when my task was completed I shared my work with the

16

decision makers. While those who participated in the rating and ranking process (evaluation

17

committee) did score all of the vendors on predetermined scoring criteria the entire list went

18

forward to the Health Service Administrator for further steps in the selection process. While I

19

don't recall all of the additional process steps and was not involved in them, I do know there

20

was an effort to investigate corporate backgrounds and some determination of ability to

21

perform under a contract, as well as, discussions of best fit for DOC. Ultimately, the Health

22

Services Administrator in consultation with the Assistant Director for Operations and the

23

Director of Corrections weighed all of the information available to them, including the results

24

of the rating and ranking evaluation and were, 'de facto' the 'Selection Committee'."

25
26

Further Mr. Taaffe explained, "At this writing I do not know who signed or authorized the

27

contract into existence but it would be at least two pay grades above my former position and

28

may have well been the Director of Corrections."

29

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TAAFFE PRELIMINARY REVIEW· Page 8

1

Mr. Taaffe provided information that indicated that once CHP had been selected and the

2

contract was established the employee that was named as the contract administrator

3

reported directly to him. Mr. Taaffe also explained, "... 1would have signed any request

4

paperwork that would begin the process to amend this contract. Over the course of the last

5

two years I can think of only two amendment requests moving forward, both of those

6

amendments were indicated by DOC. Due to their complexity both amendments had to be

7

written by the Department of Justice (DOJ) and were ultimately signed, once again, by a

8

Department Representative at least two pay grades above me."

9

10

Mr. Taaffe indicated that CHP, in the terms of the DOC contract, was required to provide an

11

account manager. He explained that that the account manager position was vacated when

12

the incumbent CHP employee left the company for an outside employment opportunity. Mr.

13

Taaffe stated, "Correctional Health Partners initiated a process to fill the position first by

14

posting the position within the company (as is their policy) and only then advertising the

15

position openly when there were no interested candidates internal to the company. It is at

16

the point that CHP did an open solicitation that I applied for the position and went through a

17

multi-step interview process before being selected to fill the position."

18
19

Mr. Taaffe provided information related to his current responsibilities as the account manager

20

for CHP. He explained, "It is true that part of my responsibility in my Account Manager role

21

with CHP is to see that the company is fulfilling all of its obligations to the Department of

22

Corrections in the performance of the existing contract and to report to corporate

23

headquarters if I see any problems or issues. I do not manage the contract CHP has with the

24

Department of Corrections nor do I have any involvement in its authorization or

25

reauthorization. The position I interviewed for and ultimately was selected for with CHP is the

26

equivalent of a represented position in State government. Since I am not in a management

27

position with CHP I do not get involved in management decisions related to any contracts."

28

Mr. Taaffe explained he had made his DOC supervisor, "... aware of my desire to pursue the

29

job opportunity at the time I responded to the solicitation. He reviewed the internal Code of

30

Ethics and Code of Conduct and sought out additional opinion (sic) from his supervisor as

31

well as other Assistant Directors. As a result the ethics question was reviewed independently

TAAFFE PRELIMINARY REVIEW - Page 9

1

by the Department's Assistant Director of Human Resources, the Assistant Director for

2

General Service and the Audits Administrator and to my knowledge none found fault with my

3

departure and subsequent employment with correctional Health Partners."

4

5

In addition to information provided by Ms. Gallegos and Mr. Taaffe, select records were obtained

6

from the Oregon Department of Corrections (DOC). Relevant information is excerpted as

7

follows:

8
9

An e-mail dated 5/10/11, appears to describe the circumstances involving Mr. Taaffe from

10

Max Williams, DOC Director, to representatives of the Governor's Office, the Department of

11

Administrative Services and DOC. It appears Mr. Williams indicated, "Michael Taaffe worked

12

most recently in our Health Services office in a budget/business role. He retired sometime

13

last month and immediately went to work for our contracted third-party administrator for

14

Health Care. Apparently, Mr. Taaffe was on a panel of three people that made the contract

15

selection choice (about a year and a half ago) for this vendor, although I'm told he did not

16

make the final selection nor did he administer the contract.

17

employees are embedded with DOC Health Service staff in our offices, and Mr. Taaffe is one

18

of those." It also appears Mr. Williams explained, "I am sorry to say that I wasn't made aware

19

of the situation until the retirement was complete and he had been hired by the contractor.

20

What is unfortunate is that his immediate supervisor didn't not (sic) recognize any concerns

21

(even internal policies) with this approach and told Mr. Taaffe he didn'tthink it was a problem.

22

The supervisor did not ask DOC leadership or DOJ for any opinion or advice on the issue

23

and did not feel it was a problem since Mr. Taaffe was retiring from state service" (#PR9).

24

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TAAFFE PRELIMINARY REVIEW - Page 10

Some of the contractor's

ORS 244.320 requires the Oregon Government Ethics Commission to prepare and publish a
2

manual on government ethics that explains in understandable terms the requirements of ORS

3

Chapter 244 and the Commission's interpretation of those requirements. Although there was no

4

indication that Mr. Taaffe consulted the Commission's publication, the complainant provided

5

information related to post-public employment waiting periods as described in the Commission's

6

current manual adopted by the Commission on 10/26/10. The Guide for Public Officials states on

7

page 17:

8

9

"How would Oregon Government Ethics law apply when a former public official is employed

10

by a business that has a contract with the public body previously represented by the former

11

public official?

12

13

For two years after a public official ceases holding or being employed in a position as a

14

public official, that public official may not have a direct beneficial financial interest in a public

15

contract when one of the parties to the contract is the public official's former public body if

16

the contract was authorized by [ORS 244.047(2) and (3)]:

17

18

•The former public official, who authorized the contract while acting in the capacity

19

previously held as a public official.

20
21

'The former public official, as a member of a governing body [board, commission, council,

22

bureau, committee], participated in official action to approve the contract.

23

24

'Authorized by' is defined in OAR 199-005-0035(6) as meaning that the former public official

25

had a significant role in the contracting process to include participating on a selection

26

committee, recommending approval, voting, giving final authorization or signing a contract.

27

The definition in the rule is as follows:

28

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TAAFFE PRELIMINARY REVIEW - Page 11

1

'As used in ORS 244.047, a public contract is "authorized by" a public official if the public

2

official performed a significant role in the selection of a contractor or the execution of the

3

contract. A significant role can include recommending approval or signing of the contract,

4

including serving on a selection committee or team, or having the final authorizing

5

authority for the contract.'

6
7

8

What are the restrictions on employment after I resign, retire or leave my public official
position?

9

10

·ORS 244.040(1) prohibits public officials from using their official positions or offices to

11

create a new employment opportunity; otherwise, most former public officials may enter

12

the private work force with few restrictions.

13
14

·ORS 244.040(5) prohibits a former public official from attempting to use confidential

15

information for personal gain if the confidential information was obtained while holding the

16

position as a public official."

17

18

CONCLUSIONS: Michael Taaffe was the Assistant Administrator of the Health Services Section

19

for the Oregon Department of Corrections (DOC) during, and prior to, the period of time relevant

20

to this preliminary review. He was a public official as defined in ORS 244.020(14).

21

22

ORS 244.047 prohibited Mr. Taaffe, as a public official, for two years after he ceased being

23

employed in his position with DOC, from having a direct beneficial financial interest in a public

24

contract when one of the parties to the contract was DOC, if Mr. Taaffe "authorized" the contract

25

while acting in the capacity previously held as a public official.

26

27

OAR 199-005-0035(6) identifies, as used in ORS 244.047, a public contract is "authorized" by a

28

public official if the public official performed a significant role in the selection of a contractor or

29

the execution of the contract. A significant role can include recommending approval or signing of

30

the contract, including serving on a selection committee or team, or having the final authorizing

31

authority for the contract.

TAAFFE PRELIMINARY REVIEW· Page 12

1

Mr. Taaffe has taken the position that his role in the aforementioned contract was "less than

2

significant" based on the premise that he was the member of an "evaluation committee" in March

3

2009, not a member of the "selection committee." If the Commission moves this matter to

4

investigation it would be necessary to clarify these circumstances.

5

6

ORS 244.040(1) prohibited Mr. Taaffe, as a public official, from using or attempting to use his

7

official position or office to obtain financial gain or to avoid financial detriment, if the opportunity

8

for financial gain or avoidance of financial detriment would not otherwise be available but for his

9

holding an official position with DOC.

10
11

If Mr. Taaffe used or attempted to use his public position to create, advance or accept an outside

12

employment opportunity that would not otherwise be available but for holding the official position,

13

it could constitute a gain or an attempt to gain financial benefits or avoid financial detriments

14

prohibited by ORS 244.040(1).

15

16

It appears Mr. Taaffe contends he participated in an open, competitive hiring process while

17

seeking post-public employment. If this matter moves to investigation it would be necessary to

18

clarify these circumstances.

19

20

ORS 244.040(3) prohibited Mr. Taaffe from soliciting or receiving, directly or indirectly, future

21

employment based on any understanding that his vote, official action or judgment as a public

22

official would be influenced by the pledge or promise.

23

prohibited Mr. Taaffe from furthering or attempting to further his personal gain through the use of

24

confidential information gained in the course of or by reason of holding a position as a public

25

official or the activities as a public official.

Further, ORS 244.040(4) and (5)

26

27

Although Mr. Taaffe does not appear to address these issues at this time, if this matter moves to

28

investigation it would be necessary to clarify these circumstances.

29

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TAAFFE PRELIMINARY REVIEW· Page 13

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1

In brief, Mr. Taaffe would have been met with an actual or potential conflict of interest, as

2

defined in ORS 244.020(1) and ORS 244.020(12), each time he acted in his official capacity as a

3

public official and that action, decision or recommendation would or could have been to the

4

private pecuniary benefit or detriment of himself or a business with which he is associated.

5

6

When met with a conflict of interest, ORS 244.120(1)(c) required Mr. Taaffe on each occasion to

7

notify, in writing his appointing authority of the nature of the conflict of interest and request that

8

the appointing authority dispose of the matter giving rise to the conflict.

9

10

Information available in this preliminary review appears to indicate that Mr. Taaffe may have

11

participated in official actions, decisions or recommendations that could have resulted in financial

12

benefits or avoidance of financial detriments to him. If this matter moves to investigation, it

13

would be necessary to clarify these circumstances.

14
15

There appears to be a substantial objective basis to believe that violations of Oregon

16

Government Ethics law may have occurred and that Mr. Taaffe may have committed such

17

violations.

18

The Oregon Government Ethics Commission should move to

19

RECOMMENDATIONS:

20

investigate whether Michael Taaffe may have violated ORS 244.040(1), ORS 244.040(3), ORS

21

244.040(4), ORS 244.040(5), ORS 244.047(2) and ORS 244.120(1)(c) (Motion 4).

22
23

ASSOCIATED DOCUMENTS:

24

#PR1

received on 4/26/11.

25

26

#PR2

#PR3

31

Copy of selected page of an evaluation form titled, "Request for Proposal #3910,
TPA for Inmate Off-Site Health Care.

29
30

Copies of selected pages from the Oregon Government Ethics Commission's
Guide for Public Officials, adopted 10/26/10.

27

28

Oregon Government Ethics Commission complaint signed by Vicki Gallegos

#PR4

Copies of selected pages of ·an evaluation form titled, "Request for Proposal
#3910, TPA for Inmate Off-Site Health Care.

TAAFFE PRELIMINARY REVIEW - Page 14

1

#PR5

TPA for Inmate Off-Site Health Care.

2

3

#PR6

Copy of a selected page of a scoring matrix titled, "RFP #3910 -Inmate Off-Site
Healthcare."

4

5

Copy of selected page of an evaluation form titled, "Request for Proposal #3910,

#PR7

Copy of selected pages of an "Award Summary" titled, "TPA for Inmate Off-Site
Health Care System."

6

7

#PR8

Michael Taaffe, letter to Deborah Tuss dated 5/27/11.

8

#PR9

Copies of selected pages from an electronic mail communication of Max Williams,

9

Director, Oregon Department of Corrections dated 5/10/11.

21ti»a!11tj

PREPARED BY

D orah M. Tuss
Investigator

APPROVED BY

GV4v

gil? IIJ
Date

$'L--

Date

Rol'(ald A. Bersin
Executive Director

REVIEWED BY

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Assistant Attorney General

TAAFFE PRELIMINARY REVIEW - Page 15

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