Legislators lock horns over tech contract

The state Legislative Council adjourned midway through its agenda Friday after members clashed over whether to favorably review a technology contract worth at least $75 million over three years.

Under the contract, Deloitte Consulting would provide support for about 200 software applications used by the state Department of Human Services.

Some lawmakers questioned why the company, a division of New York-based Deloitte Touche Tohmatsu, was awarded the contract despite submitting a bid that was about $20 million higher than the current contract holder, Falls Church, Va.-based Northrop Grumman. No other companies submitted bids.

If the contract were extended to its maximum length of seven years, the cost under Deloitte would total about $170 million, compared with $123 million under Northrop Grumman.

Council members split largely according to chamber, with a majority of senators favoring a delay of the contract review and House members opposing it.

After the failure of two motions, each aimed at deciding whether the council should vote on a review of the contract or delay consideration until next month, the council’s Senate chairman, Bill Sample, abruptly gaveled the meeting into adjournment before another motion could be considered.

“We were just at a stalemate, and it was time to let tempers and passions get down,” saide Sample, R-Hot Springs.

A meeting was scheduled for Wednesday for the council to consider the issue again and finish its agenda.

Despite submitting a higher bid, Deloitte was awarded the contract after scoring higher in a technical evaluation by a committee of state employees.

The technical evaluation made up 80 percent of the overall score, while a score based on cost made up 20 percent.

But Edward Armstrong, the state’s procurement director, said Deloitte would have won the contract even if the cost score had made up 30 percent of the overall score.

Jeffrey Dean, the Human Services Department’s chief information officer, noted that Northrop Grumman’s contract for fiscal 2017, which ended June 30, was about $30 million — about $12 million more than the company’s bid for the first year of the new contract.

Extending the contract through the end of this calendar year is expected to cost $15 million, he said.

“What Northrop bid was 42 percent less than they’re charging us today,” Dean said. Comparing the current contract cost with the bid over seven years, he said, “that’s a substantial difference, and we have to wonder if that’s sustainable.”

He also noted that even Deloitte’s bid is about $5 million per year less than the cost of the current contract.

Sen. Alan Clark, R-Lonsdale, said it shouldn’t be surprising that a company would lower its cost once a contract is open to competition.

“If we’re saving money, it scares us,” he said.

Asked if state officials met with Northrop Grumman officials to inquire about their bid, Armstrong responded that the terms of the bid solicitation allow officials to negotiate only with the highest-ranked bidder.

Sen. Linda Chesterfield, D-Little Rock, questioned why the cost of the contract wasn’t a bigger factor.

The fact that Northrop Grumman has held the contract for 20 years shows that the company can do the work, she said.

“It doesn’t make sense to me that something this important and costly, money would be considered to be a 20 percent part of the conversation,” she said.

Although Northrop Grumman didn’t file a formal protest, Karen Hull, director of contracts for the company’s system modernization and services division, complained about the scoring system in a letter to Armstrong on Aug. 10.

In a letter dated Friday, Armstrong responded that the state’s procurement law requires challenges to the scoring methodology to be submitted 72 hours before the deadline to submit bids — in this case, Feb. 2.

“At this point, it is far too late to change the RFP’s [request for proposal document] evaluation methodology or to weigh price differently than as set forth in the RFP,” Armstrong wrote.

Hull also contended in the letter that Deloitte “will be relying on the same Northrop employees to perform the work,” but would lower their pay and eliminate their benefits by making them independent contractors.

The council’s Review Subcommittee Senate chairman, Scott Flippo, R-Mountain Home, pulled the contract from consideration by the subcommittee after subcommittee members raised similar questions during a meeting Wednesday.

Ending the council meeting early on Friday also postponed until Wednesday the council’s consideration of dozens of other contracts that had received favorable reviews from the subcommittee.

The council doesn’t have the power to reject a contract, but governors have traditionally held off on moving forward with a contract until it receives the council’s “review.”

For instance, the state this year took over operation of the state’s seven youth lockups after the council voted not to review a contract to run the facilities that had been awarded to an Indiana company.

Sen. Jason Rapert, R-Bigelow, said the legislators should respect the state’s procurement process, “so that we don’t get a reputation of putting politics into the process.”

Companies can spend hundreds of thousands of dollars responding to bid solicitations, he said.

“I honestly think Arkansas is going to begin to be in danger of not having companies even want to do business for us and want to provide service when the benchmark is always being changed on them,” he said.

A Section on 08/19/2017

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