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Electronic Data Services, the Texas-based computer services company that processes Medicaid claims, will not protest the state's decision to replace it with a Virginia competitor.

EDS representatives met with Dan Stewart, assistant secretary with the state Department of Health and Human Services on Feb. 12, to present its case for the state to negate a new, $265.2 million contract with Computer Sciences Corp. EDS asked the state to let it keep the work, or to rebid the job, Lynn Bonner reports.

Stewart countered all EDS' points. EDS, which has processed the state's Medicaid claims for 32 years, decided to bow out.

In a letter to Stewart dated Friday, an EDS vice president said the decision not to file a protest was "based in the best spirit of cooperation."

The state today affirmed its decision to hire Virginia-based Computer Sciences Corp. to a $265.2 million contract to install and run a Medicaid claims system.

CSC’s competitor, Texas-based Electronic Data Systems, had asked for a review, claiming the contract had been improperly awarded, reports Lynn Bonner.

According to a letter from Dan Stewart, assistant secretary for the state Department of Health and Human Services, EDS asked the state to cancel the contract with CSC and award it to EDS or re-bid the job.

In his response to EDS, Stewart rebutted all nine issues the company raised in protest.  
EDS has operated the Medicaid claims system for more than 30 years. The company’s bid was $22.1 million higher than CSC’s.

The federal government pays 90 percent of the project costs. CSC will install the system and operate it for four years, starting in mid-2011.

Lanier Cansler's involvement in the successful bid for a multimillion-dollar Medicaid processing system should disqualify the company that won the job, according to competitor Electronic Data Systems.

EDS held a 'protest meeting' in Raleigh today where lawyers and EDS executives laid out their case to why the state should not have awarded a $265.2 million contract to its competitor Computer Sciences Corp., Lynn Bonner reports.

Cansler, now Health and Human Services secretary, was a registered lobbyist for CSC for a year before he took his new state job. His former company, Cansler-Fuquay Solutions, was also part of CSC's bid, with the company proposing to use Cansler-Fuquay while the billing system is being installed. The company is identified as a permanent hire for the project.

The request for proposals forbids bidders from using former DHHS executives or consultants who did work related to the company selection, EDS argued.

Cansler-Fuquay's involvement was one of nine reasons EDS gave to support its contention that state's decision to give the contract to CSC should be overturned.

More after the jump.

Electronic Data Systems, the jilted computer company that learned a few weeks ago that the state wants someone else to process its Medicaid claims, wants to talk it over.

Lanier Cansler, state Department of Health and Human Services secretary, doesn't want to hear anything about it, Lynn Bonner reports.

An EDS lawyer sent a letter last week asking Dempsey Benton for a meeting to talk about why the state chose Computer Sciences Corp. Benton was days away from leaving the DHHS secretary's job.

Cansler, who until last week was a registered lobbyist for CSC, sent a memo to a half-dozen administrators and the agency's lawyer Monday, telling them he would not participate in the decision whether or not to grant EDS a meeting, and asking them not to talk to him about it.

Cansler has promised to wall himself off from any potential EDS protest.

State rules allow an agency's executive officer to give the job of reviewing meeting requests to someone else. On Benton's last day as secretary, he assigned the job to deputy secretary Dan Stewart.

EDS has been doing the job for more than 30 years, but its bid was higher than CSC's $265.2 million bid.

A company that received a $265.2 million contract from the state gave to Gov. Beverly Perdue.

Computer Sciences Corp., a Virginia-based company, was awarded a contract to run a computer system to pay Medicaid claims in December, beating out longtime contractor Electronic Data Systems.

Officials with the N.C. Department of Health and Human Services. said they chose Computer Sciences because its bid was $22 million cheaper.

The company was in the news earlier this month because it hired former DHHS deputy secretary Lanier Cansler as a consultant while pursuing the contract. Cansler briefly registered as a lobbyist for the company, though he said that was strictly out of caution.

On Jan. 6, Perdue appointed Cansler as the new Health and Human Services secretary, a Cabinet-level position that pays $120,363 a year.

According to campaign finance reports made available today, the company's California-based political action committee donated $2,000 to Perdue's gubernatorial campaign on Oct. 22, just two weeks before the Nov. 4 election.

Gov.-elect Beverly Perdue on Tuesday chose Lanier Cansler to be the next head of the state Department of Health and Human Services, creating a thicket of conflicts of interest within one of the state's largest agencies, reports Lynn Bonner.

Cansler is a former DHHS deputy secretary who left his state job in 2005 after four years. He started a consulting and lobbying firm, Cansler Fuquay Solutions, and developed a client list that includes work for companies that do business with DHHS.

Cansler was the registered lobbyist for Computer Sciences Corporation, a Virginia company that won a $265.2 million contract a few weeks ago to build and run a Medicaid bill-paying system for the state.

Perdue said she carefully vetted Cansler. "I really believe Secretary Cansler understands that the mission of DHHS is to put our citizens first," she said.

Cansler said his experience inside and outside the department will help him. "My plan is to bring all this experience and background together," Cansler said.

Cansler told reporters that he registered as a lobbyist strictly out of caution. He did no real lobbying other than to introduce his clients to lawmakers.

Perdue said she talked about lobbying issues extensively and that Cansler will not participate in decisions that might present a conflict of interest.

More after the jump.

Update: Post now includes more complete response from Cansler and Perdue. Tense has been changed to reflect the fact that as of today, Cansler is no longer a registered lobbyist.

The federal government pays 90 percent of the cost, Sligh said. CSC will install the system and operate it for four years, starting in mid-2011.

The work involves processing more than 80 million payments each year to doctors, hospitals and others who care for patients under the government health insurance program.

A CSC spokeswoman would not answer questions about the contract, saying the company planned a formal statement. CSC has numerous contracts with the federal government and manages Medicaid claims for the state of New York.

Lanier Cansler, a former deputy secretary at DHHS and a former state legislator, is a registered lobbyist for CSC, according to the N.C. Secretary of State's office.

The parent company of EDS, Hewlett- Packard, has three registered lobbyists in the state. (N&O)