New York's Department of Health has amended a Medicaid technology contract with Deloitte Consulting to more than $1.1 billion, a nearly sevenfold jump from its original $177 million award in 2023, and the expansion happened without a new round of competitive bidding. The August 2026 amendment added $866 million to the deal, pushing its monthly cost from roughly $9 million to $25 million.
A Contract That Kept Growing
The state Department of Health originally awarded Deloitte Consulting a $177 million contract in 2023 to centralize part of the Medicaid application process into a single statewide portal, according to the New York Post. By the time the state approved the August increase, the contract's value had already grown to $317 million, the Post reports, before the $866 million amendment pushed the total past $1.1 billion.
Bill Hammond said the contract expansion should have been rebid, the outlet's reporting notes. Government watchdogs argue that fiscal additions of this magnitude should trigger open competition to ensure cost control, and Rachael Fauss said the amendment deserves scrutiny to ensure taxpayers receive the best deal for the services provided, per the same account. Watchdogs say the amendment should have triggered a public bidding process, the report adds.
How the State Justifies Skipping the Bid
Governments are generally required to follow competitive bidding procedures and choose the lowest responsible company, though those requirements include specific exemptions for emergency deals and amendments to existing contracts — an exemption New York appears to be leaning on here. New York State Finance Law Section 163 permits single-source or sole-source contract awards without formal competitive bidding only under limited or unusual circumstances, and agencies must formally document that justification in the procurement record, according to the NYS Senate. Separately, Section 112 of state law requires the Office of the State Comptroller to pre-audit and approve any state agency contract or amendment exceeding $50,000 before it can legally take effect, per the Comptroller's own reporting on independent oversight safeguards.
Cadence Aquaviva said the Hochul administration's Deloitte deal followed the law and was necessary to sunset an outdated, error-prone system, per the state Department of Health. The state maintains the new Medicaid platform will save taxpayers hundreds of millions of dollars, strengthen the Medicaid program, and reduce the potential for waste, fraud and abuse, the Post reports. Neither Deloitte nor the governor's office returned requests for comment for the original story.
Federal Dollars Cover Most of the Cost
Part of the state's rationale rests on how much of the bill Washington picks up. The Centers for Medicare and Medicaid Services pays 90 percent of Deloitte's new portal design and implementation costs and 75 percent of the portal's ongoing operations costs, according to the Post's reporting. Those matching funds significantly reduce New York's direct budget exposure even as the sticker price climbs into ten figures.
The stakes are large by any measure: New York's Medicaid program serves roughly 6.9 million enrollees, about 35 percent of the state's population, with total spending reaching $115.6 billion in State Fiscal Year 2025 and projected to grow to $133.7 billion by 2029, per the Comptroller's office. In SFY 2025 alone, the state assumed nearly $7.4 billion in local Medicaid costs that counties would otherwise have borne, bringing cumulative local relief under the state's takeover policy to $45.3 billion since 2015, according to the NYS Division of the Budget.
Deloitte's Pandemic-Era Track Record
This isn't Deloitte's first high-profile New York tech project. The firm built the COVID-era Excelsior Pass, which gave New York residents a digital health record for vaccines and testing, the Post reports. That system cost more than $60 million and was ultimately sparsely used.
Deloitte's history with the state also comes with an ethics cloud. Former State Budget Director Sandra Beattie admitted to violating ethics laws and, per the Post's reporting, schmoozed with Deloitte's lobbyist while the firm received major state contracts. Beattie agreed to pay a $5,000 fine to settle state ethics charges after regulators found she had brought a lobbyist friend onto a pandemic-era project who was later hired by Deloitte as a paid subcontractor earning over $300,000, according to the NYS Commission on Ethics and Lobbying in Government. Regulators said Beattie approved a Deloitte payment invoice while her lobbyist friend was actively lobbying her agency.
A Pattern of Departures and Penalties
Beattie was terminated by Governor Kathy Hochul in March 2023 amid an Inspector General review of pandemic consulting contracts, during which officials discovered her state-issued mobile phone had been erased and lacked required record-retention software, according to Newsday. She had worked in the Division of the Budget since 2016 before her dismissal. Former state Chief Technology Officer Rajiv Rao, who oversaw government technology contracts alongside Beattie, separately agreed to pay a $5,500 fine to settle ethics charges. Rao resigned from state government in 2023 during a contract review, Newsday reported.
