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LR Firm Accused of Betrayal in $65M BidLock Icon

4 min read

After a Little Rock technology firm won a $65 million contract from the state of Nevada in 2018, Chase Global Services of Reno felt betrayed.

After almost four years, an appeals court has ordered the Little Rock firm, Protech Solutions Inc., to turn over documents that Chase Global believes will support its claim that it was cheated out of millions of dollars.

Chase Global accused Protech of stealing its trade secrets to win the contract for software services for Nevada’s child support enforcement unit. It also claims Protech prevented it from bidding for the work.

“What began as an ‘unbeatable’ joint bid to provide services to the State of Nevada’s child support enforcement program turned into an underhanded scheme,” according to Chase Global’s lawsuit, which was filed in 2019 in Pulaski County Circuit Court.

Nevada initially sought bids on the project in 2016. Chase Global and Protech thought they would win the job by working together, with Protech being the contractor and Chase Global as the subcontractor with a minimum of 20% of the project.

Chase Global had worked on projects for Nevada’s child support enforcement unit for eight years. And Protech has a long-term contract to run Arkansas’ child support information system. That contract, signed in 2016, was worth $42 million. Protech does similar work for other states.

Chase Global said it shared confidential information with Protech that was used to submit a bid for the project in 2016. But before the bid applications were open, Nevada withdrew the request for proposals amid financing issues and returned the unopened bids to the companies.

A year later, Nevada issued another bid request for the project.

Chase Global said in court filings that it tried to talk to Protech’s leaders about a potential joint response to that bid request, but didn’t hear back from the company. Chase Global said that it didn’t know if Protech would make another team bid or even any new bid at all.

Chase Global said that it couldn’t “in good faith” bid on the project or team up with another company to submit a proposal because it felt it had an agreement with Protech, according to the lawsuit.

Meanwhile, Protech went ahead and submitted a bid — without Chase Global but with information that was part of their joint bid. And it won.

“This is not the first time that Protech Solutions has engaged in similar conduct as to this case,” one of Chase Global’s attorneys, Andrew King of Kutak Rock LLP’s Little Rock office, said in a July 2020 proceeding.

He said that Protech obtained  help from a local company to respond to a requests for proposals in two other cases. “Protech won the contract but then refused to permit the said contractor to participate in the other project,” King said in the July 2020 hearing.

An attorney for Protech, Jim Phillips of McDaniel Wolff of Little Rock, said in the 2020 proceeding that the cases were different from the dispute with Chase Global, and one of the cases dates to 2005.

On Nov. 29, the Arkansas Court of Appeals upheld a ruling by Pulaski County Circuit Judge Alice Gray that said Protech must turn over 45 pages of emails to Chase Global.

Chase Global said in court filings that it believes the documents will show that Protech allegedly had a scheme to blame the state of Nevada for excluding Chase Global from the bid.

Phillips, in a statement provided Monday to Arkansas Business, said Protech’s agreement with Chase Global Services expired after Nevada pulled the first bid request. Protech later “received information indicating that Chase Global Service’s reputation with the State of Nevada was not what Protech had been led to believe.”

“When Nevada issued a new RFP,” Phillips said, “Protech informed Chase Global Services that it would not include Chase Global Services in its response to the new RFP.”

The Attraction

The founder of Protech Solutions, Nagaraj Garimalla, said in a 2020 deposition taken for the case that he didn’t remember when he first learned that the state of Nevada was going to issue a request for bids to replace its child support enforcement system.

Garimalla said in the deposition that it would be helpful to Protech to submit a joint bid with Chase Global because it was familiar with the Nevada system and had a good reputation with the state.

In an effort to woo Chase Global, Garimalla sent an email on Aug. 22, 2016, to Robert Malmrose, president of Chase Global. Garimalla said that he thought Malmrose was “a bright person with a great organization that I respect very much. … We will be very fair with you and we expect a strategic partnership with you.”

Chase Global agreed to work with Protech for the bid in 2016.

But after the state withdrew the request for bids, potential bidders thought that the state would seek new bids, which it did a year later.

Garimalla said in his deposition that the teaming agreement with Chase Global ended with the cancellation of the first request for proposal.

“The teaming agreement was written that it ends if the client cancels the RFP,” he said.  “And the client canceled the RFP, so the teaming agreement ended.”

Chase Global is seeking a multimillion-dollar judgment stemming from its allegations, which include breach of contract and fraud.

Protech denied the allegations of wrongdoing in its court filings.

A court date hasn’t been set.

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