Here's a story I did on Friday for The News Service of Florida:
The Department of Corrections and a contractor accusing the agency of reaching a secret deal with a competitor clashed in a courtroom on Friday in the opening round of a hostile bid dispute.
The end result in the case could decide which company gets a contract worth at least $15 million a year to provide mental health services to roughly 17,000 inmates in South Florida prisons. The current contract for the services expires at the end of this month.
But it's clear that the department, MHM Correctional Services and successful bidder Correctional Medical Services have starkly different accounts on how the contract was awarded in April. And the ultimate decision in the case will hinge on several factors, including whether or not the department even had to follow certain procurement laws when it decided to give a 5-year contract to CMS.
The now public fight over the contract comes at the same time that state lawmakers have ratcheted up complaints about how state agencies award contracts and the terms and conditions included in them. Gov. Charlie Crist recently vetoed a bill that would have given the Legislature more say over contracts.
Both vendors have brought on high-powered and politically-connected firms to represent them.
MHM is represented by a team of lawyers from Foley & Lardner LLP, while the St. Louis based CMS is represented by GrayRobinson.
Attorneys for the state and for CMS argued at the start of a day-long hearing Friday that after the department initially deemed the four bids for the mental health contract as "non-responsive" the agency was allowed under Florida law to proceed with negotiations outside a normal bidding process. Administrative Hearing Judge Suzanne Hood, however, allowed the hearing to begin without ruling on this key point.
Hood also began the hearing despite the attempts of attorneys for Virginia-based MHM to delay its start. Lawyers for the company asserted they needed more time to conduct additional depositions and evidence requests after the department was ordered this week by a Leon County circuit judge to turn over e-mails it had initially contended were not subject to Florida's public records law.
Susan Stephens, assistant general counsel for DOC, asserted that new information that was handed over "is not a revelation" and that it cited the same legal arguments the agency made when it publicly noticed the contract award.
The key e-mail was from Stephens to another DOC employee stating that the agency could "deviate" from the bidding requirements and that the state was not obligated to negotiate with the "next best proposal.''
MHM has been providing mental health services for two and a half years now. When it submitted a new bid to keep the current contract, the company offered up a bid worth $15.54 million a year, keeping in line with a request by DOC to cap expenses at $70 per inmate per month. The initial bid by CMS was worth $16.53 million annually.
But evaluators with the department concluded that all four bids it received for the contract did not satisfy bidding requirements, contending that MHM did not meet standards for financial viability because a stock repurchase plan had affected the company's debt ratios, while CMS did not meet the per inmate price cap.
Susan Ritchey, the chief Financial Officer for MHM, testified on Friday that she was surprised when her company lost the bid. She said her company had no idea the state was negotiating with CMS until the bid award was announced.
"It's baffling to us how they choose the vendor they did,'' Ritchey said.
Ritchey also testified that the ultimate contract reached between CMS and the state had significant differences that were not allowed under the initial request for proposal, or RFP. The final 5-year deal allows CMS to raise the per-inmate cost each year and they have flexibility in staffing levels. The contract also gives the company 30 days to correct any problems before the state can assess penalties. The contract is worth an estimated $83.2 million or about $5.5 million more than what MHM said it wanted.
Ken Fields, a spokesman for CMS, however, pointed out that the final deal reached with the state is cheaper than what the state is paying MHM under its current contract.
"While we cannot comment in detail on the litigation filed by MHM, the negotiation process is specifically allowed by Florida law and will save the state nearly $1.7 million in the first year compared to what the current vendor is charging the state for the same services,'' said Fields.
The hearing is scheduled to resume on Wednesday.
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