DynTek withdraws from Va. transportation deal

DynTek Inc. and Virginia have agreed to terminate a $58 million contract that the company held with the state for brokerage transportation services for Medicare patients, the company announced Dec. 11.

The contract, which the company inherited through its merger with DynCorp Management Resources Inc. last year, had been scheduled to run through June 2003. As a result of the agreement, DynTek of Irvine, Calif., will discontinue services Dec. 15, the company said.

The contract had been operating at a loss since its inception, said Steve Ross, DynTek's chief executive officer. The fixed price set in the contract did not allow the company to provide the additional services required by the state at no additional charge, he said.

"Rather than compromise the critical services provided under this contract, we were able to reach a mutually acceptable agreement that allows the services to be transitioned in an orderly manner," Ross said.

Both DynTek and LogistiCare Solutions LLC of Atlanta held brokerage contracts for separate regions of the state as part of two-year contracts signed in July 2001. DynTek served three of Virginia's seven regions, and LogistiCare served four.

In light of the development, the Virginia Department of Medical Assistance Services asked LogistiCare to serve DynTek's regions "on a urgent basis," the company announced Dec. 10.

LogistiCare's initial contract was valued at $74 million. Company officials declined to disclose the amount LogistiCare will receive as compensation under the new terms of the contract.

LogistiCare will serve the additional regions until July 2003. At that time, the Department of Medical Assistance Services has agreed to exercise its right to negotiate the company's contract for an additional year.

Under a brokerage transportation services contract, a company negotiates the most cost-effective transportation for Medicare patients who need rides to hospitals, doctor's offices and other health care facilities.

DynTek now will be able to devote its resources on revenue growth opportunities, such as additional merger and acquisition activity and increased focus on network security services, Ross said.

"This is the first of several steps we have taken to produce profitable results within the fiscal year," he said.

About the Author

William Welsh is a freelance writer covering IT and defense technology.

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