Finding: Contract awarded properly
Ruling in response to protest filing
Arkansas officials acted properly in awarding a contract potentially worth $342.8 million over seven years to a firm to install a new system for enrolling Arkansans in Medicaid and other government assistance programs, the state’s procurement director ruled Wednesday.
The finding by Procurement Director Edward Armstrong came in response to a protest filed by Accenture, which argued that it should have been allowed to submit a revised bid in response to changes made to Deloitte Consulting’s winning proposal during negotiations with state officials.
Armstrong also rejected Accenture’s argument that Deloitte should have been disqualified for failing, in its written response to a question from state officials, to
disclose problems with an eligibility system it installed in Rhode Island.
He said the written answer didn’t deprive state officials of any “material information” because they had an opportunity to ask about the Rhode Island project during a presentation by Deloitte representatives in December 2017.
“Far from finding Deloitte to not be a responsible offeror, after the evaluators had the opportunity to meet with Deloitte and have their questions answered, they gave its proposal the highest technical score,” Armstrong wrote.
The Arkansas contract, awarded Oct. 4, calls for Deloitte to replace a system the state began installing in 2013 but never finished because of cost overruns and concerns about its performance.
The state would pay Deloitte $95.9 million to install the new system and about $30 million a year to maintain and operate it.
In a protest submitted last month, Accenture, which has a corporate headquarters in Dublin, complained that the cost is more than $96 million higher than what Deloitte estimated when it submitted its bid on June 30, 2017.
At that time, Deloitte, a division of Deloitte Touche Tohmatsu, estimated that its seven-year cost would total $246.3 million — about $87,000 less than the estimated cost of Accenture’s proposal.
Deloitte’s estimated costs grew after state officials began negotiating with the firm and added items to the contract, including $3.7 million to create a new system for tracking compliance with the Arkansas Works
work requirement.
Accenture argued that a law passed last year required state officials to allow the other bidders to revise their bids in response to the changes to Deloitte’s bid.
Act 696 says that each bidder “determined to be responsible and reasonably susceptible of being awarded a contract” should be allowed to revise its bid when “discussions conducted after the receipt of proposals necessitate material revisions of proposals.”
In his ruling, Armstrong said that requirement only kicks in when the need arises for multiple bids to be revised. For instance, he said, officials could allow bidders to revise their bids if they realized that none of the submissions would meet the state’s needs.
He also said Accenture was not “reasonably susceptible of being awarded a contract” because it scored lower than Deloitte in an evaluation by staff members with the departments of Human Services and Information Systems.
And he said Accenture wasn’t unfairly affected by the changes because they were made after the bids had already been evaluated.
In a footnote, he added that if Accenture and the other bidders were allowed to submit revised bids, the state would have to conduct a new round of evaluations and negotiations, which could result in further changes “and so on and so forth (ad nauseum if not strictly ad infinitum).”
“This would be an unwieldy, unworkable, and inefficient system that would discourage the State and offerors from negotiating,” Armstrong wrote.
The poor functioning of the Rhode Island system led to a lawsuit by the American Civil Liberties Union alleging that the state was not processing applications for food stamps within the time frames mandated by federal law.
The judge in that case last year appointed a special master to develop a plan to speed up the processing of applications and ensure that the state provides accurate reports on its compliance.
The federal government also ordered Rhode Island to submit a plan to fix problems with the system, the attorney for Accenture said in its protest.
When questioned about it by Arkansas officials, Deloitte said in the written response that it had not had to implement a corrective action plan for an eligibility system it had installed in the past five years.
Arkansas officials had also asked the firm to include “a description of the circumstances surrounding the issues” with the system in Rhode Island. Deloitte said in the response that the system “went live via a statewide ‘big bang’” in September 2016, but didn’t mention any problems.
The Arkansas contract will go to the Legislative Council for review before being executed, Scott Hardin, a spokesman for the state Department of Finance and Administration, said.