Provide excellent value and client service is the strategy used to preserve a $171 million contract award and shape the future of the Medicaid payment system. Affiliated Computer Services, Inc. (ACS) was awarded a $171 million contract, the largest technology contract ever awarded in the state, to develop a new information system to administer North Carolina’s $8 billion Medicaid program in 2004. ACS was soon in a contentious dispute with the competitive bidder, EDS, which managed the state’s Medicaid payment system for over 25 years. The ACS bid was approximately $81 million under the EDS bid.

Understanding our client’s business was a key factor in a favorable mediation settlement resulting in a $10.5 million award to ACS.

Successfully Defending the Contract
Parker Poe attorney Renee J. Montgomery put her 25 years of health care regulatory experience to work for ACS. Montgomery successfully got the attention of the North Carolina Department of Health and Human Services (the Department), which made the initial contract award to ACS.  An administrative law judge issued a summary, non-binding judgment favoring EDS which was later overruled following the contract review by North Carolina’s chief information technology officer. A subsequent appeal by EDS was ruled groundless in superior court. 

During the EDS dispute, ACS and the Department clashed over the implementation of the new Medicaid payment system. ACS blamed numerous delays and unforeseen costs on the state’s failure to comply with contract terms. The state cancelled the contract in 2006. ACS sued, accusing the Department of causing delays and breaching the contract.

Settlement Provides Damages, New Contracts
Understanding our client’s business was a key factor in a $10.5 million favorable mediation settlement for ACS to settle the contract dispute. The State also rescinded the termination for alleged default and agreed to enter into new contracts with ACS. Parker Poe and ACS were praised for finding creative solutions that paid the company for its work and left the ACS relationship intact. The settlement preserved ACS’s strong reputation in North Carolina and nationwide as an elite industry leader.