Judge advises re-bid of N.C. Medicaid project

An administrative law judge in North Carolina sided with EDS Corp. in its protest of a Medicaid contract won by Affiliated Computer Services Inc.

Senior Administrative Law Judge Fred Morrison ruled Tuesday that the state's award of its Medicaid contract to ACS of Dallas be canceled and the contract be re-bid, EDS said.

The judge ruled that North Carolina officials should have disqualified the ACS bid for failing to meet mandatory requirements in the department's request for proposal.

The nonbinding recommendation was sent to George Bakolia, North Carolina's chief information officer, who will make the final decision after the state Department of Health and Human Services, ACS and EDS have each had an opportunity to file exceptions and proposals and to present arguments to him, ACS officials said.

Bakolia has 120 days to decide whether to accept the recommendation, industry sources said. EDS said it hopes that the North Carolina CIO will act quickly on the judge's recommendation.

ACS won the five-year, $171 million contract to refresh North Carolina's Medicaid management information system in April 2004. EDS, which was the incumbent contractor, immediately filed a protest on the grounds that the ACS bid did not meet several the state's requirements.

Before ACS won the contract, the company's proposal was reviewed and approved by the North Carolina Information Technology Services group, as well as the federal Center for Medicare and Medicaid Services, ACS said.

The department denied EDS' protest June 3, and the company appealed the decision to Bakolia.

ACS said in a statement that it plans to vigorously pursue affirmation of the Department of Health and Human Services' contract award to the company. In the meantime, the department has instructed ACS to continue performing services under the contract.