North Carolina ends $171M Medicaid pact with ACS

Citing breach of contract, the North Carolina Health and Human Services Department last week terminated Affiliated Computer Services Inc.'s contract to deliver a new Medicaid payment system to the Tar Heel State.

ACS of Dallas failed to meet staffing levels and did not complete terms of its contract, which called for the company to build and operate a new Medicaid Management Information System, Secretary Carmen Hooker Odom wrote in July 14 letter notifying ACS.

The five-year contract, which began in April 2004, was valued at $171 million.

North Carolina's award to ACS was troubled from the outset. Following the selection of ACS in 2004, both EDS Corp., and Unisys Corp., protested it.

The rancor between ACS and EDS continued through 2005, with EDS lawyers writing Gov. Michael Easley (D), asking him to stop ACS' work on the contract, according to media reports.

The contract also has been the subject of an ongoing lawsuit by EDS, which charged that the state improperly awarded it to ACS. EDS has run the state's Medicaid claims system for nearly 30 years, and continued to handle the work while ACS built a new system.

North Carolina had set a June 16 deadline for ACS' compliance with contract terms, then pushed the deadline back to July 13, and finally terminated the agreement through Hooker Odom's letter. The letter calls on ACS to stop work immediately and to preserve materials the state may want back.

The letter further instructs ACS to wait for the state's guidance on how to deal with various issues, such as assignment of terminated subcontracts, liability issues related to the terminated subcontracts, transfer to the state certain parts of the project, and the destruction or return of information and materials that North Carolina had given to ACS.

Reader Comments

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above

What is your e-mail address?

My e-mail address is:

Do you have a password?

Forgot your password? Click here
close

Trending

  • Dive into our Contract Award database

    In an exclusive for WT Insider members, we are collecting all of the contract awards we cover into a database that you can sort by contractor, agency, value and other parameters. You can also download it into a spreadsheet. Our databases track awards back to 2013. Read More

  • Navigating the trends and issues of 2016 Nick Wakeman

    In our latest WT Insider Report, we pull together our best advice, insights and reporting on the trends and issues that will shape the market in 2016 and beyond. Read More

contracts DB

Washington Technology Daily

Sign up for our newsletter.

I agree to this site's Privacy Policy.