The Mills Administration’s spending via state contracts has come under increasing scrutiny in light of Democratic State Auditor Matt Dunlap’s report detailing material weaknesses and significant deficiencies in how the state evaluates and distributes roughly $2.1 billion per year on contracts for goods and services.
Now, one company that benefited handsomely from the Mills Administration’s slipshod management of the procurement process is teetering on the edge of bankruptcy, casting doubt on whether the company will survive for the duration of the multi-year MaineCare transportation contract it was awarded in 2023.
[RELATED: Maine Audit Reveals Systemic $2.1 Billion Financial Mismanagement and Corruption Risk…]
ModivCare — the company selected by the Mills Administration to handle the lucrative MaineCare transportation contracts for the entire state — now stands a 57.5 percent chance of filing for bankruptcy, according to Value Investing, and has received a notification from Nasdaq that it may be de-listed from the New York Stock Exchange.
According to documents ModivCare filed on May 8 with the Securities and Exchange Commission (SEC), the company faces delisting from the world’s biggest public investment market because its value has been below the required minimum for listing for 30 consecutive days.
The services provided under the contract include brokering and providing transportation for MaineCare enrollees who cannot drive themselves for medical care. Contracts for eight regions in Maine were put out for bid on May 15, 2023. 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 ModivCare.
The financial crisis ModivCare is facing only strengthens the claims made by two Maine-based nonprofits that the Maine Department of Health and Human Services (DHHS) erred in awarding the MaineCare contract to the out-of-state company rather than to the nonprofits, which had previously held the contracts for some regions of the state.
Those losing bidders, Penquis CAP and Waldo CAP, appealed the Mills Administration’s decision immediately after it was handed down.
On April 24, 2024, a three-person appeals panel led by Bureau of General Services Director William Longfellow found that the nonprofits “raised legitimate concerns” and that the appeal “had merit,” although the panel ultimately declined to reverse the contract award.
Longfellow later resigned from state government after the Maine Wire reported that he’d signed off on a six-figure landscaping contract to a company owned by his brother.
After the appeal failed, the nonprofits filed a lawsuit, claiming that they were unfairly disadvantaged during the Request for Proposals (RFP) process.
Based on available evidence, the claim that ModivCare had an unfair advantage during the bid evaluations also appears to have merit.
Court filings reported on exclusively by the Maine Wire showed state officials admitted in court depositions to violating basic state policies around evaluating the bids from ModivCare, Penquis, and Waldo CAP.
In the filings, the RFP evaluators admitted that the process was unfair to Penquis CAP, not carefully reviewed, and not based on any objective formula for scoring.
It’s not immediately clear how ModivCare’s financial distress will impact the MaineCare transportation contract or the lawsuit challenging the RFP.
“As a leader of an organization who has had the deepest pleasure of providing Non-Emergency Transportation (NET) services for over 12 years, I know the critical importance of NET to at-risk Mainers,” Penquis CAP CEO Kara Hay told the Maine Wire in a statement.
“These services help low-income and disabled, transportation-dependent, Maine people access medical services to improve their health outcomes,” said Hay. “Many highly vulnerable people rely on NET to live healthy and productive lives including those who need life-extending dialysis treatments, cancer care and chemotherapy, and substance use treatment and recovery, adults and children with intellectual disabilities who rely on NET to access community support programs and medical appointments, and children who need individualized services and transportation support to attend school.”
The troubling procurement episode may be a symptom of the lack of internal controls flagged by State Auditor Dunlap in his 2024 annual report.
The March 31 report found “material weaknesses” and “significant deficiencies” in the state’s procurement systems, particularly in how sole-source and no-bid contracts were managed.
