The state of North Carolina has canceled its five-year, $171m Medicaid contract with Affiliated Computer Services Inc over what the state says were failures to meet deadlines. North Carolina in April 2004 awarded ACS the contract to develop a new Medicaid information system and replace EDS Corp, which had been running the state’s system for the past 25 years.
Under the deal, ACS was due to complete work on a new system and takeover management duties this month, but the deadline was extended until August 2007, according to an Associated Press report.
In a letter to ACS, the state has now canceled the deal and asked the company to terminate work on the project, according to Local Tech Wire, a publication serving the Southern technology corridor from North Carolina to Atlanta. ACS responded by noting the project was more than halfway done, and that the delays were brought on by the state itself, which owes ACS for past work.
The company also warned that the resulting lawsuit from a termination would be costly, as would the process of re-bidding and awarding a new contract to a different vendor, LTW reported.
North Carolina has turned down proposals from ACS to complete work on the project for an additional $42m, AP reported.
The original 2004 contract was originally protested by EDS and UNisys, which was also in on the bidding. A judge decided for North Carolina, but the ruling now faces appeal, AP reported.