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State officials acted within the law when they awarded 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 company argued Friday.

In a letter to state Procurement Director Edward Armstrong, an attorney for Deloitte Consulting disputed a contention by a losing bidder, Accenture, that changes made to Deloitte's bid during negotiations with state officials required the state to allow other companies to revise their bids.

The attorney, Kevin Crass of Little Rock, also denied 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.

Although Deloitte didn't mention any problems in the written response, it had discussed that project further in a "rigorous" question-and-answer session with state officials in December 2017, Crass said in the letter.

"Based on the entirety of the procurement record, the State had a solid basis for determining that Deloitte's experience in other states did not render Deloitte non-responsible," Crass wrote.

Armstrong is reviewing the protest and Deloitte's response, said Scott Hardin, a spokesman for the state Department of Finance and Administration.

The Arkansas system Deloitte is tasked with installing would replace one that the state began installing in 2013 but never finished because of cost overruns and concerns about its performance.

The contract awarded to Deloitte on Oct. 4 calls for the state to pay the firm $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 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 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.

In the letter Friday, Crass argued that the changes didn't constitute "material revisions" that would require the state to allow other firms to revise their bids and submit a "best and final offer" as required under a 2017 law.

He also argued that the law doesn't apply to the procurement because it didn't take effect until July 31, 2017, after the companies had already submitted their bids.

As for the Rhode Island project, he said Deloitte's written answer "reasonably focused on project execution and how the project involved a completely different technology solution than will be implemented in Arkansas."

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 the 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.

Crass said the state's question showed it "plainly knew of Deloitte's project history in other states."

"Relying on its own subjective opinion, Accenture contends that Deloitte's description was insufficient," Crass wrote. "The State had no obligation, however, to agree with Accenture's assessment in making a responsibility determination."

Metro on 11/04/2018

Print Headline: Firm's lawyer weighs in on state deal

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