An unsuccessful bidder claims bias by the Jindal administration in the selection of a new firm to run the state’s self-insurance program.
York Risk Services Group is challenging the award of the $80 million, three-year contract to Memphis, Tennessee-based Sedgwick Claims Management Services.
York is the current contractor, doing business through one of its companies, Mandeville-based FARA.
Its proposal was $6.5 million less than Sedgwick’s.
In an appeal to Commissioner of Administration Kristy Nichols, York lawyers argue that Sedgwick should have been disqualified for failure to comply with mandatory provision of the request for proposal.
“Sedgwick was granted opportunities not provided to other proposers. This provided Sedgwick with a decidedly unfair advantage,” Baton Rouge lawyer V. Thomas Clark Jr. wrote.
“The bias of the evaluation team to Sedgwick throughout the scoring process taints the outcome to such an extent that it merits rescission if the Commissioner is unwilling to disqualify Sedgwick for the material defects in its proposal.”
Clark noted that Sedgwick was allowed to negotiate items beyond that specified in the request for proposal and “in the midst of the interviews. … ”
York also claimed there were major changes that would result in increased liability for the state.
In addition, Clark wrote that the evaluation team for unknown reasons gave Sedgwick the opportunity to provide “a best and final offer” after the final evaluation was done.
The Office of State Procurement has already denied York’s initial appeal.
“The award to Sedgwick is supported by the law and the record,” wrote Paul A. Holmes, the state chief procurement officer.
Holmes wrote that the Office of Risk Management has “wide latitude in exercising its professional judgment whether a proposal meets minimum expectations of an RFP. … ”
He said the state reserved the right to conduct a best and final offer meeting with one or more proposers that the selection committee deemed “reasonably susceptible of being selected for award.”
Nichols’ office is the next step in the appeals process, which could end up in state court if there’s not a resolution satisfactory to York.
Four companies responded to the Office of Risk Management’s request for proposals to oversee claims processing and loss prevention services for Louisiana’s self-insurance program.
York’s F.A. Richard & Associates, or FARA, has had the private management contract since 2010. The contract ends June 30.
The legislative auditor reported that the state saved more than $10 million in the first two years after the privatization instead of handling the work in-house.
FARA had guaranteed $50 million in claims and litigation savings over five years. Last July, the auditor said FARA had achieved about $34.2 million.
In its appeal, York lawyers pointed to their client’s proven track record of delivering savings and its lower-cost proposal.
“The committee selected a proposal that will cost the state significantly more money ($6.5 million) than York’s proposal at a time when Louisiana is trying frantically to locate any and all financial savings possible such that discarding such savings, particularly in the absence of any compelling grounds for doing so is unconscionable,” the appeal letter says.
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