IT company sues Bevin administration over AT&T contract amendments

Louisville-based IT company Tier3 Technologies has sued the Bevin administration for allegedly violating the state’s competitive bidding rules when it amended a services contract with AT&T — echoing the complaints Tier3 made in a formal protest that was rejected by the Kentucky Finance and Administration Cabinet last year.

As first reported by Insider Louisville, Tier3 lodged a protest with the cabinet last September asserting that the Commonwealth Office of Technology improperly awarded a series of contract amendments to AT&T worth $6.5 million and duplicated services that Tier3 was already contracted to provide.

The protest also accused the state’s chief information officer Charles Grindle of delivering and incorporating Tier3’s confidential and proprietary information into several of the AT&T amendments.

The Finance Cabinet rejected Tier3’s protest in December, stating that the company did not have the proper standing to dispute the AT&T amendments and calling its “provocative and misleading” claims meritless. The cabinet’s denial also called the allegation that Grindle misused Tier3’s confidential and proprietary information “deceptive and inflammatory.”

Tier3 and its CEO Michael Paynter filed the complaint in Franklin Circuit Court on Thursday, seeking to have the cabinet’s denial of their protest in December reversed, a judgment declaring the AT&T amendments void and ordering the cabinet to rebid them competitively, plus damages awarded for its lost profit.

In a statement to Insider about its decision to sue the administration, Paynter said that “despite several meetings with state officials and multiple actions to address this matter, the state has forced Tier3 to take legal action to protect our contractual rights. We do not take this action lightly and the filing was made only after much thought.”

Paynter added that Tier3 intends to pursue the litigation vigorously “to explore all aspects of the complaint, including whether Tier3’s proprietary information was improperly shared by the Commonwealth with others. All businesses, regardless of their size, should have a fair opportunity to compete for Kentucky’s business on their own records, capabilities, and offerings through an open and transparent process.”

The complaint is before Judge Phillip Shepherd in Franklin Circuit Court.

Grindle and a Finance Cabinet spokeswoman, Pamela Trautner, did not immediately respond to a request for comment on the Tier3 lawsuit, nor did a local spokesman for AT&T.

As Insider reported in February, Grindle told an audience at AT&T’s annual business summit last September that his department had been empowered by the Bevin administration to “minimize contracts” and find a “trusted partner” in AT&T for IT services.

Three months before speaking on a Dell conference panel last year about that company’s integration with Kentucky’s virtual server platform, the cabinet signed a no-bid contract with Minnesota-based Winthrop Resources Corporation to provide $40 million of mostly Dell EMC equipment — amending a master agreement in which Kentucky-based companies were to provide IT equipment.