The head of state purchasing on Friday rejected protests to the award of a lucrative state contract for Medicaid claims processing to the Maryland-based CNSI.

“I conclude that the award to CNSI is supported by the law and the record,” director of state purchasing Denise Lea wrote in letters to two firms that lost out on the competition.

The protesters — ACS State Healthcare, of Atlanta, and Molina Medicaid Solutions, of Long Beach, Calif. — have a week to appeal the decision to Commissioner of Administration Paul Rainwater.

The firms can still go to court to try to block the contract award to Client Network Services Inc., a company for which state health chief Bruce Greenstein worked.

A call to ACS’ attorney Robert Reiger Jr. was not returned late Friday.

“We are reviewing the material and discussing our next steps,” Molina said in a statement issued through its corporate office.

CNSI submitted the lowest cost proposal at $184.9 million over the 10-year contract period. ACS came in second on price at $238 million. A third company, Hewlett Packard ES, had the highest cost at $394 million and did not contest the award.

Molina did not make the cut on technical scoring to compete further.

In its protest, ACS claimed CNSI intentionally low-balled its cost by saying it would perform work and then did not budget personnel or dollars to do the job. ACS also alleged that CNSI did not spell out how it planned to meet certain contract requirements.

Lea wrote that CNSI envisions implementation of a system and/or solution which replaces a significant number of services performed by staff with automation, “thereby reducing the corresponding human hours and associated costs.”

“The SFP did not indicate the number of staff required of the contractor to perform a particular task,” Lea wrote. It simply required the contractor to “provide sufficient staff with the appropriate skill sets to meet the requirements … throughout the term of the contract.”

Lea also said any incorrect assumptions made by CNSI would not relieve the company from its obligation to provide the services required under the contract.

Molina, the state’s current Medicaid claims processor, alleged that the “consensus scoring” used to evaluate proposals allowed “great potential for human bias.”

“In the absence of any showing of bias against Molina in the evaluation of its technical proposal, your protest on this issue lacks merit,” Lea wrote.

The firm also claimed DHH altered requirements during the procurement process to allow CNSI to compete.

Lea said all proposers knew of the change and could have protested when it was made. The protest now is untimely, she said.