EDS challenges North Carolina Medicaid award to ACS

EDS representatives appeared in a North Carolina court Tuesday to argue that the state improperly awarded a multimillion-dollar Medicaid management information system contract to Affiliated Computer Services last year.

At the hearing in Wake County Superior Court, EDS representatives planned to argue that ACS did not meet the state’s technical architecture standards and that a state expert said ACS did not satisfy the requirements in a February 2004 report.

EDS, which managed the system for more than 25 years, contends the state expert changed his conclusion based on new information during a closed-door meeting, which was not documented as required by state rules.

The company also alleges that information about the bids’ costs was shared with the state’s Department of Health and Human Services (DHHS) officials in violation of the bid process. Furthermore, EDS said the state’s chief information officer, George Bakolia, rejected a recommendation by an administrative law judge, who reviewed the matter after it was referred to him earlier this year, that the state conduct a new bid process.

“We believe that state officials did not follow their own clearly stated rules in the bid process,” EDS spokesman Ricky Pope said in a prepared statement. “Our argument already has prevailed in the one neutral forum in which this matter was heard – before the administrative law judge. We now will have our day in court, and we believe we will prevail again.”

A message to Debbie Crane, a spokeswoman at North Carolina’s DHHS, was not returned. A call to an ACS spokeswoman was also not returned.

The state awarded ACS the $171 million contract in April 2004 following a competitive bid process that also included a bid from Unisys. EDS filed an immediate protest and a stop-work order on implementing the new system, which was rejected by DHHS Secretary Carmen Hooker Odom in June 2004.

EDS appealed the decision to Bakolia, who referred the matter to an independent agency, the Office of Administrative Hearings, where Judge Fred Morrison reviewed the case and recommended that the state recompete the contract.

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