State awards major contract

Virginia-based CSC has the winning bid for a Medicaid computer system. Rival EDS may protest the decision

The state has awarded one of its biggest service contracts to Computer Sciences Corp., a Virginia-based company that bid $265.2 million to build and operate a computer system to pay Medicaid claims.

The state selected CSC last month over Electronic Data Systems, a Texas company that has had the job since 1977. EDS bid $287.3 million for the work.

"Both the vendors were competitive," and both could have done the job, said Angie Sligh, director of the office of Medicaid Management Information Systems for the state Department of Health and Human Services. The decision to choose CSC came down to price, she said.

The federal government pays 90 percent of the cost, Sligh said. CSC will install the system and operate it for four years, starting in mid-2011.

The work involves processing more than 80 million payments each year to doctors, hospitals and others who care for patients under the government health insurance program.

A CSC spokeswoman would not answer questions about the contract, saying the company planned a formal statement. CSC has numerous contracts with the federal government and manages Medicaid claims for the state of New York.

Lanier Cansler, a former deputy secretary at DHHS and a former state legislator, is a registered lobbyist for CSC, according to the N.C. Secretary of State's office.

The parent company of EDS, Hewlett- Packard, has three registered lobbyists in the state.

Hiring a company to build and run a new Medicaid bill-paying system has been a long and contentious process. This is the second time in about four years that the state has tried to find a company to manage its Medicaid claims.

In 2004, the state gave a $171 million contract to Texas-based Affiliated Computer Services to do the work, turning down a bid from EDS.

EDS fought the decision in administrative appeals and lawsuits, saying the state improperly awarded the contract to its competitor.

The state ended up fighting with ACS over deadlines and project oversight. Then-Health and Human Services Secretary Carmen Hooker Odom canceled the contract. EDS continued doing the job while the state solicited bids for the job again.

This time around, Sligh said, the state asked the companies to provide different information.

Instead of setting deadlines and telling the bidders how it wanted the system constructed, the state set out a list of objectives and asked the companies to explain how they would meet them and how long it would take, she said.

EDS will continue to process Medicaid claims until the CSC system is ready.

EDS has until today to protest the decision. An attorney for the company, in a letter dated Friday, asked the state chief information officer, George Bakolia, to extend the deadline to Monday. Bakolia denied the request.

In a statement, EDS spokesman Bill Ritz said the company has asked the state for records on the process and how the companies' bids were scored.

"To date, we have not yet received the detailed information necessary to make a complete review," he said. "To preserve our opportunity to make that review, EDS on Tuesday will file a letter with the secretary of Health and Human Services requesting a meeting with the secretary to lay out our concerns about the procurement."