A letter to a federal judge in 2013 appears to explain how a multimillion-dollar contract between the Alabama Administrative Office of the Courts (AOC) and a Mobile-based technology company was in fact awarded without a bid.
Contrary to what former Lt. Gov. Steve Windom told Lagniappe earlier this year, his company On-Line Information Systems Inc. (OLIS) was awarded the contract for statewide e-filing services as a “sole source” provider, after previous — and smaller — contracts were combined into one.
“[OLIS] advised me that it has had contracts with AOC in the past pertaining to various services,” attorney Matthew Lembke wrote in the letter to U.S. District Court Judge David Proctor on June 5, 2013. “Most of those contracts, including the contracts pertaining to ‘AlaPay’ (credit card services) and ‘Alacourt’ (subscription services), were the subject of a public bid process. In 2010, the various contracts were combined into the current contract which governs all services provided. That consolidated contract was created after [OLIS] had built its systems for AOC. At that point, [OLIS] had become a ‘sole source’ under Alabama law, such that the consolidated contract was not the subject of the public bid process.”
As Lagniappe reported last week, OLIS’s contract with AOC indicates that for the services provided — essentially digitizing state court records — the company is allowed to siphon off 33 percent of all court record-generated revenue in the state, as well as sell the data, subscriptions and documents for additional revenue.
While an exact dollar amount is unclear, information provided by AOC indicates the contract may have been worth upwards of $100 million since 2010. AOC’s 2014 annual report declared AlaFile, the system that allows court documents to be filed electronically, had already brought in $192 million in its first four years. By contract, OLIS was supposed to get 33.3 percent of that money, or roughly $64 million. AOC has not made available the numbers for intervening six years.
AOC initially denied a public records request for the contract, citing an exemption for “critical infrastructure.” But Lagniappe was subsequently tipped off to a pair of lawsuits filed in 2012 against OLIS over “convenience fees” it charges users to make credit card payments on the system. Attached to one lawsuit was a copy of the contract.
The contract’s initial 10-year term expired this year, but it was extended for an additional five years, according to Windom. On Tuesday, Windom sent a message indicating Lagniappe’s projections of the contract’s value was “way high,” but suggested he needed the permission of AOC to elaborate.
Lembke was representing OLIS in a federal lawsuit brought by a plaintiff who claimed the convenience fees represented a denial of due process rights, a denial of equal protection clauses, a violation of interstate commerce and “federal preemption of legal tender,” among other charges. Judge Proctor dismissed the bulk of those claims in October 2013, but along with a case in state court claiming the fees amounted to an “illegal tax,” the timeline of OLIS’s contract becomes clear.
AOC authorized a pilot program for electronic filing in civil court cases in 2005, allowing attorneys to voluntarily participate and pay the 4 percent convenience fee for credit card payments. By 2008, the program was expanded statewide, but remained voluntary. OLIS’s full contract was awarded in 2010 and the following year, former Chief Justice Sue Bell Cobb required all attorneys practicing in the state to register for AlaFile “to electronically receive notices, orders, and other papers from the trial courts by email.” But participation remained voluntary until 2012, when former Chief Justice Charles Malone, Cobb’s successor, issued a unilateral administrative order making e-filing mandatory. At that time, according to the state complaint, the convenience fee was no longer voluntary.
In an appeal to the Alabama Supreme Court filed after the complaint was dismissed, the court determined it “has never authorized mandatory electronic filing.” Instead, Malone’s order “had the effect of modifying the existing rules of filing and service established by this court.” Accordingly, “the chief justice exceeded his administrative authority” and his order was “no longer of any force or effect.”
But by that time, according to AOC, e-filing was already a big business in the state and its advantages over paper filing left attorneys with few options. Lagniappe also received documents indicating that shortly after Cobb retired from the Supreme Court in August 2011, she formed a company called Next Generation Consulting that itself billed OLIS for “professional services.”
Information gathered as part of a deposition in an unrelated lawsuit suggests Cobb attended a convention hosted by the National Association of State Courts in 2012 on OLIS’s behalf, promoting its “U.S. Courts” suite of software solutions. The company later entered into a contract with Cook County, Illinois.
But Lembke’s letter suggests OLIS’s contract was all above board. He told Proctor the “sole source” issue was vetted by the State Purchasing Division, “which approved the contract.”
“During the entirety of the negotiations process on combining the contracts, AOC was represented by outside legal counsel with expertise on intellectual property contracts,” he added.
Still, neither AOC nor OLIS has elaborated on the contract’s exemption under “critical infrastructure” protections, but OLIS’s own attorney seemed to disagree.
“[OLIS] also advised me that it understands that its contract with AOC is, and always has been, a matter of public record,” Lembke concluded.
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