Penquis CAP Alleges Maine Violated Procurement Policies to Award $750M+ Contract to Out-of-State Firm

A northern Maine nonprofit has accused the Maine Department of Health and Human Services (DHHS) of violating state procurement policies when it awarded a MaineCare transportation contract worth more than $100 million to an out-of-state corporation, according to documents obtained by the Maine Wire.

Penquis C.A.P., a 501(c)3 nonprofit and longtime provider of non-emergency medical transportation in rural Maine, has alleged that DHHS ran a “lawless” and “arbitrary” bidding process that favored ModivCare—a massive, for-profit, out-of-state transportation company.

Penquis’ allegations center on a Request for Proposal (RFP) issued by DHHS on May 15, 2023, in which the state agency sought bidders who could provide transportation for MaineCare recipients for eight regions across the state.

Together, Penquis and Waldo C.A.P., a similar non-profit, already held transportation contracts for three of the eight regions, and their new proposal sought to add regions that included Penobscot, Piscataquis, Somerset, Kennebec, Washington, Hancock, Waldo, Knox, Lincoln, and Sagadahoc counties as well as the towns of Brunswick and Harpswell. 

[RELATED: Maine Audit Reveals Systemic $2.1 Billion Financial Mismanagement and Corruption Risk…]

In Oct. 2023, the Maine Bureau of General Services (BGS), which administers the procurement of goods and services, decided to award contracts for all eight regions to the Colorado-based company, causing a significant loss of revenue for both the Penquis and Waldo C.A.P.s.

The two nonprofits together appealed the decision, but on April 25, 2024, BGS ruled against their appeal, leaving litigation as the only recourse for the Maine-based firms.

Penquis filed a legal challenge to the RFP appeal result, and the details now emerging suggest the nonprofit was unfairly harmed by the proposal evaluation process.

Documents obtained by the Maine Wire, including under-oath comments from DHHS’s RFP evaluators, lend credibility to Penquis’ allegations, revealing that the state workers who scored ModivCare’s and Penquis’ proposals admitted to lapses in judgement, sloppiness, and inconsistencies that materially harmed Penquis while advantaging ModivCare.

The details in the legal complaint also raise serious questions about the practices of the state’s procurement office and how it could have missed such glaring errors and inconsistencies during the appeal process.

According to Penquis, DHHS scorers admitted under oath that they couldn’t explain why points were deducted, frequently copied and pasted evaluations across regions, gave disparate ratings to identical question responses, and failed to review key parts of the proposals.

Typically, an RFP will outline a transparent process for evaluating bids, with a predetermined scoring system that is used to assess each proposal across four or five different dimensions, such as cost, quality, or prior history. Then, those sums are added up and the bid is awarded to the highest cumulative point earner.

In the case of the multimillion dollar MaineCare transportation contract Penquis was vying for, however, it appears that the normal transparent process was substituted for something inexplicably convoluted and inconsistent.

Roger Bondeson, one of the four DHHS reviewers, stated outright that there was “no formula” for scoring proposals, according to the filing. Instead, he said reviewers picked a number “somewhere close to the middle” of the total available points.

On multiple occasions, Bondeson couldn’t recall exactly why or how Penquis was penalized in the scoring process.

One RFP evaluator, Melissa Simpson, admitted that her RFP review was “fundamentally unfair to the bidders,” according to the legal filing.

“I probably could have done [a] better [job],” Simpson said, during a March 21 deposition recounted in the filing.

“It looked like I did not carefully, individually review each proposal,” she said.

Other deposition comment from DHHS RFP reviewer Steven Turner reflects similar confusion over how the award was handed out.

“There was no point value assigned to anything [that I reviewed], so I looked at it as a total, and then assigned points based on that total review,” Turner said, according to a transcript of his March 21 deposition included in the filing.

Taken together, the RFP evaluators’ comments point to a system that was, at best, inconsistent and incompetent.

Penquis’s legal filing also shows flaws and inconsistencies in how identical submissions were scored by the RFP evaluators. In some sections, Penquis submitted identical information across multiple regional proposals but received wildly different scores and conflicting feedback from scorers. In one head-scratching example, the nonprofit’s data was deemed acceptable in one region but “questionable” in another—with no explanation.

Penquis argued the entire evaluation process was marred by “arbitrary and capricious” decisions—including the inconsistent scoring, failure to consider local performance, and preferential treatment of ModivCare, a company that had previously faced sanctions in Maine in 2013-2014.

According to Penquis, ModivCare also had unfair advantages during the RFP process because they received information the nonprofit did not have access to and were credited for participating in programs that Penquis was not allowed to access.

Per the legal complaint, reviewers gave ModivCare credit for brokering COVID-19 vaccine transportation, a program in which Penquis was never invited to participate. “DHHS did not give Appellants the opportunity to broker the COVID-19 transportation program,” Penquis wrote.

Even more damning: the filing says ModivCare received no penalties for including incorrect tribal information in multiple regional bids—a mistake that cost other bidders points.

Meanwhile, Penquis’ comparatively spotless in-state record was seemingly brushed aside while ModivCare—facing over 370 lawsuits and a corrective action plan from DHHS itself for past noncompliance—got a pass.

“They failed to consider the numerous and serious complaints made against ModivCare,” the document states, noting that reviewers overlooked years of missed reporting requirements and call center failures.

“We were deeply disappointed by the panel’s decision and overall determination that the evidence we brought forward did not provide them with clear and convincing evidence that the law was violated, that there were irregularities that created a fundamental unfairness, and that the actions performed by DHHS reviewers were arbitrary,” Kara Hay, President and CEO of Penquis, told the Maine Wire.

“Given that multiple reviewers reported under oath that they either did not thoroughly review the proposals, that inaccurate information was copied and pasted across proposals in error, and that there were inconsistencies in how bidders’ proposals were treated among other things, it is very hard to understand that the panel did not feel that we met our burden of proof.”

“As a result of this decision and continued belief in the merit of our case and its impact, we determined it was best and appropriate to appeal this decision at the next level of court, the Business and Consumer Court,” said Hay.

“This decision was unjust, arbitrary, and unfair,” Penquis C.A.P. attorney Alfred J. Falzone III wrote in the closing statement of the agency’s RFP appeal.

“To protect the interests of not only the bidders, but also of Mainers in need, this panel must invalidate the award in its entirety,” he wrote.

Beyond Maine, ModivCare has also faced other concerning allegations. While the publicly traded company was valued at roughly $50 per share at the time the RFP was issued, it’s now trading on the New York Stock Exchange for only $1.19 per share. That’s in part due to a class action lawsuit filed against the company alleging securities fraud.

ModivCare did not respond to an email seeking an interview.

The details of this competitive bidding process are emerging as Maine State Auditor Matt Dunlap has placed Maine’s procurement process, especially the non-competitive, no-bid procurement process, under a spotlight for significant deficiencies and material weaknesses uncovered during his 2024 review.

[RELATED: Maine Audit Reveals Systemic $2.1 Billion Financial Mismanagement and Corruption Risk]

Those deficiencies and weaknesses concern nearly $2.1 billion in state spending for the fiscal year 2024, and suggest Maine’s no-bid procurement process is broadly vulnerable to fraud and corruption.