MORE SLAMMER JAM! Jail contract spurs pay-to-play lawsuit
Publication: Jersey Journal (New Jersey)
Date: Saturday, October 31 2009

Hudson County is in the cross-hairs of what may be the state's first pay-to-play lawsuit, a challenge to a $22 million contract for medical services at the jail and juvenile detention center.

CFG Health Systems of Evesham is accusing the county of circumventing the law when it awarded the contract to a campaign donor and former employee.

A $1,000 political donation made to Freeholder Anthony Romano should have disqualified the winning company from bidding, CFG contends, adding in other counts that the whole process violated the Local Public Contracts Law.

CFG officials say they believe their suit is the first to use the state's pay-to-play law to challenge a contract.

Geoffrey Perselay, president of Correctional Health Services of Verona and a former county administrator who once served as acting jail warden, made the donation on May 30, 2008. The contract was awarded to his company in April of this year.

The suit charges that the state's pay-to-play law prohibited the county from awarding a contract above $17,500 to a business that made a reportable contribution to an elected county official within the previous year.

"This contract is for tens of millions of dollars and a contract this size should be determined through a fair and competitive bidding process, not by selectively altering the terms," said CFG's CEO Les Paschall.

"More importantly, Hudson County should issue a new bid to erase the doubt that now lingers over the legitimacy of its behavior."

Pat Nolan, a spokesman for Correctional Health Services, responded that the company does not comment on ongoing litigation but said it feels strongly that the court will rule in favor of the county and CHS.

Hudson County spokesman James Kennelly called the suit baseless.

"This company that is suing is a disgruntled vendor that lost what was an eminently fair and open contracting process," he said.

In an interview with The Jersey Journal yesterday, Romano said he doesn't personally know Perselay and was unaware of the campaign contribution.

He also noted that he voted against the initial contract because he felt it was too expensive. As a result, the contract was amended before its adoption.

The original bids were solicited in July 2008.

Correctional Health Services was the low bidder, with a $29.7 million proposal. CFG bid $38.3 million.

The county then changed the specifications, cutting the hours of several medical positions and eliminating others before awarding an amended, five-year contract to Correctional Health Services for $22 million in April.

CFG contends that new bids should have been solicited for the new specs.

Asked whether CFG was given a chance to bid on the amended contract, Kennelly did not directly answer the question, but said the county obeyed the law.

"The bottom line is the process we followed was absolutely in the law and we believe their lawsuit is absolutely baseless and without merit," he said.

The suit names Hudson County, the county Board of Freeholders and Correctional Health Services LLC. It was filed this week and seeks to have the contract voided.