NY comptroller rejects protests against state award of Medicaid information contract to Xerox

New York's comptroller on Friday approved a $565 million contract award to Xerox to redesign and operate the information management system for the state's Medicaid program.

The comptroller's office said its review found insufficient grounds in the protests by Computer Sciences Corp. and Hewlett-Packard to overturn the award.

The current system is operated by Computer Sciences Corp., which declined to bid, saying the new requirements were "unreasonable," including providing only 18 months to implement the new system.

Hewlett-Packard bid against Xerox and pointed to problems its competitor has had with similar programs in some other states, including delays in California, Alaska, Montana, North Dakota and New Hampshire and issues in Texas where its contract was terminated.

Medicaid provides health care for millions of low-income New Yorkers, with total projected federal and state spending this year of $63.2 billion.

"In denying the protests, we noted that DOH has taken precautionary measures, including its proposed governance and oversight structure, to help prevent and/or manage the types of occurrences that gave rise to the performance issues with Xerox's contracts in other states," wrote Charlotte Breeyear, the comptroller's director of contracts. Her office declined to reverse the Health Department's determination that Xerox is a responsible vendor, and wrote to health officials that they're expected to closely monitor contract performance, particularly with security, staffing and meeting goals.

The five-year contract will now take effect in 14 days, according to the comptroller's office.

In a letter to Computer Sciences Corp., Breeyear wrote that health officials believed the contract timeline was aggressive but feasible, noting they got two responsive bids. While "staffing deficiencies" were determined to be Xerox's largest problem with past contracts, and the company has begun using a subcontractor to help with staffing and other issues, she wrote.