ANNAPOLIS — A divided Board of Public Works voted Wednesday to defer for two months a vote to award a new contract for health services for state employees so the losing bidder, a 15-year incumbent, could mount an appeal.
The 2-1 decision that delayed a vote on the contract for 60 days featured a rare alliance between Comptroller Peter Franchot and Treasurer Nancy Kopp, both of whom voted to give the incumbent, Addison, Texas-based Concentra, time to plead its case before the Board of Contract Appeals. The vote also cut against the Board of Public Works’ stated desire to see fewer single-bid agreements or contracts that protect long-term incumbent contractors.
But Franchot, who has repeatedly railed against so-called incumbent protection contracts, questioned the five-year deal totaling more than $9.3 million with Newark, Delaware-based WorkPro, a deal with a significant projected savings for the state.
“Under our desire to have competition and protect the taxpayer that looks like it would be an easy, obvious move to support that,” Franchot said. “But on the other hand … I’ve seen over the last 10 years where the challenger has come in with a cost proposal that is completely out of sync with the incumbent, who theoretically would have a pretty good sense of what it actually cost to deliver the services and only after the fact do we find that the challenger’s number were never plausible to begin with.”
Franchot said the “most searing” example of such a contract was a recent $37 million deal between the state and Crystal Enterprises to provide food services for the state Department of Corrections. The state overestimated the number of daily meals needed and the cost was too low to absorb the cost of maintenance and repairs that was built into the bid.
“How do we know WorkPro can really deliver these services for the cost and we aren’t setting ourselves up for a costly contract modifcation?” Franchot asked.
Concentra has acted as the state’s medical officer and provider of occupational health services, including pre-employment drug screenings and vaccinations, for the last 15 years. This year, two other companies — WorkPro and Arbutus-based Occupational Medical Services — each bid against Concentra for the contract.
WorkPro’s bid narrowly edged out the Occupational Medical Services’ submission. Concentra’s bid came in at nearly $15.2 million.
State budget officials assured the comptroller they had confidence in the winning bid because it was in line with a second bidder on the same contract. The agency also did a market analysis of similar services in other states.
Paul A. Tiburzi, a lobbyist and lawyer representing Concentra, said his client has already filed an appeal with the Board of Contract Appeals and asked the Board of Public Works to reject the requested contract.
“Give us our day in court,” said Tiburzi, the managing partner at DLA Piper US LLP’s Baltimore office. “We’ve raised some serious issues.”
Included in those issues, he said, was a lack of a meaningful price analysis.
Representatives of WorkPro said the company stood by its bid and said Concentra’s appeal was weak.
Gov. Larry Hogan, who ultimately voted against a delay, questioned the validity of claims that WorkPro’s bid was too low to be valid.
“It seems like there are two low-ball bids or you have a high-ball bid,” Hogan told Tiburzi and an official from Concentra.
But Tiburzi said his client had concerns “the other two bidders worked together.” He argued for six months to complete the appeal process.
Kopp, the state treasurer, sided with Franchot and agreed to limit the deferral to 60 days to allow it to go before the appeals board and come back before the Board of Public Works in early December.
“It’s ironic because I am one of those who rails against incumbents keeping contract through this device and wants competition,” Kopp said. “I think it’s great that we’ve got competition. I hope the competition continues but if the criterion is ‘substantial state interest,’ I don’t see that this meets that criterion.”