Securus Protest Ltr

PI-3639742 v4

STATE OF GEORGIA

DEPARTMENT OF ADMINISTRATIVE SERVICES

In the Matter of:

SECURUS TECHNOLOGIES, INC.,

Protestor, vs.

DEPARTMENT OF

ADMINISTRATIVE SERVICES,

Agency.

DOAS FILE NO.

RFP No. 46700-GDC0000609

PROTEST OF SECURUS TECHNOLOGIES, INC.

REPRESENTATIVE: Bruce P. Brown, Esquire Jason L. Richey, Esquire

Bruce P. Brown Law LLC William D. Wickard, Esquire 309 N. Highland Ave. K&L Gates LLP Suite A K&L Gates Center Atlanta, Georgia 30307 210 Sixth Avenue

(404) 584-0400 Pittsburgh, PA 15222 bbrown@brucepbrownlaw.com (412) 355-6500 jason.richey@klgates.com william.wickard@klgates.com

RFP: RFP No. 46700-GDC0000609 (Inmate Telephone Service)

PROTEST SUMMARY: The NOIA to Telmate should be rescinded and Securus should be awarded the procurement because: (1) the State’s evaluation of the Cost Proposals was improper and violated Georgia law; (2) the State’s evaluation of the Technical Proposals was improper and violated Georgia law; and (3) Telmate failed to comply with a Pass/Fail requirement for location of technicians.

REQUESTED RELIEF: Securus seeks: (1) an immediate stay of the procurement; (2) cancellation or rescission of the NOIA posted on May 1, 2014; (3) award of the contract to Securus or, alternatively, a re-procurement; and (4) such other and further relief as may be appropriate.

TIMELINESS: This Protest is timely filed on May 11, 2014, which is within ten calendar days of the date the NOIA was posted.

i

TABLE OF CONTENTS

I. INTRODUCTION

II. FACTUAL BACKGROUND

III. GROUNDS FOR PROTEST

A. The State’s Evaluation of the Cost Proposals Violated the RFP and Georgia Law

1. Securus Offered the Most Competitive Cost Proposal Overall

2. GDC’s Financial Scoring Methodology Was Arbitrary and Capricious

3. Telmate Offered Multiple Commission Rates in Violation of the RFP

B. The State’s Evaluation of the Technical Proposals Was Improper and Violated

Georgia Law

1. Telmate Should Have Been Disqualified Because its Proposal Contained

Numerous Material Deviations

a. Liquidated Damages

b. Call Forwarding and Three-Way Calling Prevention

c. Subcontractors

d. Call Acceptance/Interruption

e. References

f. Storage of Recordings

g. Prohibition Against Fees

h. Traffic Detail Reports

i. Billing Files

j. CDRs

k. Automated Phone Tree Fraud Prevention

l. Transferring of Recordings ii

m. Paid/Debit Application

2. GDC Arbitrarily, Capriciously and Improperly Scored the Technical Proposals

a. Liquidated Damages

b. Call Forwarding and Three-Way Calling Prevention

c. Subcontractors

d. Call Acceptance/Interruption

e. References

f. Storage of Recordings

g. Prohibition Against Fees

h. Traffic Detail Reports

i. Billing Files

j. CDRs

k. Automated Phone Tree Fraud Prevention

l. Transferring of Recordings

m. Paid/Debit Application

n. Reconcilable Electronic Records

o. Voice Biometric Technology

p. Summary

3. There Was No Apples-to-Apples Comparison of the Technical Proposals

C. Telmate Failed to Comply With a Pass/Fail Requirement For Location of

Technicians

D. Securus Reserves The Right To Supplement This Protest As Information Becomes Available

IV. REQUESTED RELIEF

I. INTRODUCTION

Pursuant to Georgia Procurement Manual Rule 6.5, Securus Technologies, Inc. (“Securus”) files this Protest of the May 1, 2014 Notice of Intent to Award (the “NOIA”) by the Department of Administrative Services (“DOAS”) of the Georgia Department of Corrections (“GDC”) Inmate Telephone Service Request for Proposal No. 46700-GDC0000609 (the “RFP”) to Telmate, LLC (“Telmate”).

As explained below, the GDC improperly gave Telmate a higher score on its cost proposal – high enough to make up for a concededly inferior and nonresponsive technical proposal. The NOIA to Telmate is improper under Georgia law, arbitrary and capricious, and contrary to the terms of the RFP for the following reasons:

Improper Financial Evaluation:

(1) By no definition has GDC awarded this contract to the most competitive cost proposal, as required by both the RFP and Georgia law. It is undisputed that Securus offered the most competitive cost proposal overall under any analysis or scenario. Securus would have provided the State with the most revenue over the three year life of the Contract in the amount of at least $34,400,000. Securus offered guaranteed payment over three years of $34,400,000, which is $5,300,000 more than the guarantee offered by Telmate, and offered a commission rate of 85.1%, which is 3.1% higher than Telmate’s proposed commission rate. There is no scenario in which Telmate’s cost proposal, if accepted by the State, will yield more revenue to the State than Securus.

(2) GDC employed an arbitrary and capricious financial scoring methodology - which it never disclosed prior to the NOIA - which made no logical sense and placed unreasonable and arbitrary values on the various components of the financial proposals.

(3) In violation of the RFP, Telmate was permitted to offer multiple commission rates

- including a much lower 40% commission rate on calls that would be completed to mobile phone numbers. Not only did this bait and switch violate the RFP, this lower commission rate was never analyzed in any way during GDC’s financial evaluation.

Improper Technical Evaluation:

(1) Telmate should have been disqualified pursuant to the express terms of the RFP because its Technical Proposal contained numerous material deviations.

(2) GDC arbitrarily, capriciously and improperly scored the Technical Proposals in numerous respects. If the Technical Proposals had been evaluated and scored properly, Securus would have received the most overall points and should have been awarded the Contract (even without the necessary adjustment to the scoring of the cost proposal).

(3) There was no apples-to-apples comparison between Telmate and Securus.

Instead, Telmate was provided unfair competitive advantages because it did not comply with many of the mandatory RFP provisions that Securus did agree to comply with. As a result of its non-compliance, Telmate could submit a better financial offering (which still was not as high as Securus’ offering), technological offerings and other benefits, because Telmate was not burdened by the same RFP requirements as its competitors.

Improper Pass/Fail Evaluation:

(1) Telmate failed to comply with a Pass/Fail requirement for location of technicians.

For this reason alone, it should have been disqualified without any evaluation of its RFP response.

II. FACTUAL BACKGROUND

On or around July 16, 2013, GDC issued an RFP seeking proposals for “a single, qualified supplier” to provide a comprehensive inmate telephone service to GDC. See Exhibit 1, RFP at Attachment A, § 1.1. The RFP required the supplier to have the capability to provide service and support to 65 facilities that house approximately 60,000 inmates and generates a monthly average of 187,888 calls and 2,276,516 total minutes. See id. The RFP required the inmate telephone system to: (1) ensure public safety, (2) create opportunities for restoration to offenders through communication with family, (3) ensure safe and secure facilities, and (4) facilitate/support law enforcement. See id. The resulting Contract would have an initial term of three years and could be renewed for four one year options. See Exhibit 1, RFP at Attachment A, § 1.7; Exhibit 2, Addendum 4.

Vendors were to submit a Technical Proposal and a Cost Proposal. The Cost Proposal was comprised of the following three revenue sharing components:

• Commission Percentage Rate (“Commission Rate”): the commission rate that the vendor would pay the State, on a monthly basis, on the gross revenue (as defined in the RFP) based on the calling rates and fees specified in the RFP.

• Monthly Minimum Guarantee (“MMG”): the amount the vendor guaranteed would be paid to the State. In other words, each month, the vendor would pay to the State, either the commission or the MMG, whichever was greater.

• Financial Incentive (“Financial Incentive”): the vendor was also required to provide an incentive of monetary value to be paid to GDC throughout the term of the Contract.

See Exhibit 1, RFP at Attachment R, § 1.1.

Proposals were to be evaluated on a 1,000 point scale, with 650 points allocated to the Technical Proposal and 350 points allocated to the Cost Proposal. See Exhibit 1, RFP at Attachment A, § 6.4.

The GDC received responses to the RFP from Securus, Global Tel*Link Corp. (“GTL”), Embarq Payphone Services, Inc. d/b/a CenturyLink (“CenturyLink), Telmate, and Unisys. The GDC requested clarifications from offerors. Apparently, after initial scoring, GDC concluded Securus, GTL and Telmate were the three highest ranked offerors and elected to conduct further negotiations with these three offerors. Each of these three offerors were provided the opportunity to give a presentation. After the presentations, GDC requested they provide best and final offers (“BAFOs”) for their Cost Proposals. Securus, GTL, and Telmate each submitted BAFOs.

GDC’s final scores for Securus, GTL and Telmate were as follows:

Vendor Cost Points Technical Points Total Points

GTL 313 327 640

Securus 308 350 658 Telmate 330 343 673

See Exhibit 3, Georgia Department of Corrections Final Scoring Matrix.

Thus, GDC determined Telmate’s total margin of victory over Securus was 15 points. On May 1, 2014, the DOAS issued the NOIA to Telmate. Shortly thereafter, Securus filed requests with DOAS and GDC for the production of public records and documents regarding, among other things, the RFP and the evaluation of responses received in response to the RFP. Although Securus has not yet received all documents requested, a review of the documents produced to date demonstrated the NOIA to Telmate is illegal and such NOIA should have been issued to Securus. Securus accordingly files this Protest.

III. GROUNDS FOR PROTEST

A. The State’s Evaluation of the Cost Proposals Violated the RFP and Georgia Law.

1. Securus Offered the Most Competitive Cost Proposal Overall.

The RFP required GDC to “determine the most competitive cost proposal.” See Exhibit 1, RFP at Attachment A, § 6.3.1. In order to analyze the offeror’s cost proposals, GDC’s consultant, Praeses, LLC1, compiled a document entitled “Georgia Department of Corrections RFP Cost Analysis” (attached hereto as Exhibit 4), which utilized the historical calling data to project the amount of revenue the State would receive under each component of each offeror’s Cost Proposal. GDC’s projections for Securus and Telmate are summarized below:

1 Praeses had a consulting and non-scoring role in the GDC RFP. See Exhibit 5, Q&A at

7. Praeses held this exact same role in Allegheny County, Pennsylvania, where a Pennsylvania Court issued an opinion finding demonstrated bias by Praeses and its employee Ann O’Boyle (who was involved in the GDC RFP) in an attempt to steer the contract away from Securus. See Exhibit 17, D’Eramo v. Allegheny County, at 5-10.

TELMATE

Value Over Contract Term Commission Rate 82.0% Est. Annual Commission $14,056,025 Financial Incentive $3,000,000 Annualized MMG $26,100,000 Total Estimate Commission + Financial Incentive $17,056,025 Total Guaranteed Revenue (MMG + Financial Incentive) $29,100,000

SECURUS

Value Over Contract Term Commission Rate 85.1% Est. Annual Commission $14,587,411 Financial Incentive $2,000,000 Annualized MMG $32,400,000 Total Estimate Commission + Financial Incentive $16,587,411 Total Guaranteed Revenue (MMG + Financial Incentive) $34,400,000

See Exhibit 4, Georgia Department of Corrections RFP Cost Analysis.

As GDC’s own financial projections show, under every possible scenario, Securus would have provided the State with the most revenue over the three-year life of the Contract, by far. GDC estimated that the value of Securus’ commission offering over the life of the Contract was $14,587,410, and that the value of Telmate’s commission offering over the life of the Contract was $14,056,024. Moreover, GDC calculated the value of Securus’ MMG over the life of the Contract as $32,400,000, and the value of Telmate’s MMG over the life of the Contract as $26,100,000.

Even though Telmate’s Financial Incentive over the life of the Contract was $1,000,000 higher than Securus,’ GDC’s own projections show that even GDC does not believe the State would ever receive more overall revenue from Telmate than Securus. Telmate and Securus’ MMG proposals were well above the GDC’s estimated value of commissions (Securus’ MMG was well over double the projected value of its commission offerings). Because the Contract requires the vendor to pay the State the higher of the MMG or the monthly commission amount, the GDC’s Cost Analysis (at Exhibit 4) predicts that any offeror would always pay the State the MMG. As such, GDC predicted that over the life of the Contract, it would receive $34,400,000 in revenue from Securus (MMG + Financial Incentive) but would only receive $29,100,000 in revenue from Telmate (MMG + Financial Incentive). In other words, GDC’s own financial projections show that Securus would provide the State with $5,300,000 more in revenue than Telmate.2

2 Even if GDC’s consultant’s projections were incorrect, and enough revenue was generated by the system so the commission revenue was greater than the guaranteed minimum, Securus’ proposal would still yield more money to the State because the revenue generated by its higher commission would dwarf, by millions of dollars, Telmate’s slightly higher Financial Incentive. There is no scenario in which Telmate’s proposal yields more revenue to the State.

Therefore, under no definition was Telmate’s proposal “the most competitive cost proposal overall.” GDC’s own documents show Securus provided the most revenue to the State and thus, had the most “competitive cost proposal overall.” For this reason alone, the NOIA should be rescinded, and the Contract awarded to Securus as the vendor with the highest technical score and the most “competitive cost proposal overall” as required by the RFP.

2. GDC’s Financial Scoring Methodology Was Arbitrary and Capricious.

It is illegal for agencies to use a financial evaluation method that produces a misleading result.

See, e.g., Bristol-Myers Squibb Co., B-294944.2, 2005 DPD ¶ 16 at 4 (Comp. Gen. Jan. 18, 2005); AirTrack Travel, et al., 2003 CPD ¶ 117 at 22 (Comp. Gen. June 30, 2003). When an agency fails to give adequate consideration to cost and pricing, its decision making is deemed arbitrary and capricious as a matter of law. See, e.g., Arch Chems., Inc. v. United States, 64 Fed.

Cl. 380, 401 (2005) (finding it was irrational to not include a category of costs in government’s price evaluation methodology and the “public interest would be furthered” to include this category in price evaluation “as this will ensure that the evaluated prices accurately reflect the true costs to the taxpayers of a new … contract.”).

Instead of utilizing a financial scoring methodology that awarded the maximum cost points to the proposal providing the most revenue to the State, GDC covertly developed a scoring methodology that allocated sub-points to the three components of the financial proposal as follows:

Cost Component Maximum Points Commission Rate 150 Financial Incentive 125

MMG 75

TOTAL 350

Utilizing this methodology, GDC scored Securus’ and Telmate’s Financial Proposals as follows:

SECURUS TELMATE

Contract Value Points Contract Value Points Commission Rate 85.1% 150 82.0% 145

MMG $32,400,000 75 $26,100,000 60

Financial Incentive $2,000,000 83 $3,000,000 125 Total Guaranteed Revenue (MMG + Financial Incentive)

$34,400,000 Not Scored $29,100,000 Not Scored

Total Points 308 330

This scoring methodology is illogical and placed an unreasonable and arbitrary value on the components of Financial Proposals. GDC assigned the least amount of cost points (75) to the MMG component even though this component is guaranteed and is projected by the State to provide the most revenue to the State. No reasonable person would do this.

On the other hand, GDC assigned the most amount of cost points (150) to the Commission Rate component which will, according to its own estimates, never be relevant since the MMGs were significantly higher than the estimated revenue the State would receive from either Securus’ or Telmate’s Commission Rate. Indeed, GDC’s own financial projections show that GDC projected the value of Securus’ estimated annual commission over the life of the Contract at $14,587,410 and calculated the value of Securus’ MMG over the life of the contract as $32,400,000. See Exhibit 4, Georgia Department of Corrections RFP Cost Analysis. These same projections also show GDC projected the value of Telmate’s estimated annual commission over the life of the contract at $14,056,024 and calculated the value of Telmate’s MMG over the life of the Contract as $26,100,000. Id. In other words, there is no scenario where the State will receive more revenue from Telmate than it would have received from Securus, yet unbelievably, the Commission Rate was worth more points.

Additionally, GDC assigned an unreasonably high amount of cost points (125) to the Financial Incentive component which provides the least revenue to the State. In particular, the GDC assigned 36% of the total Cost Points to a component that in actuality represents approximately 10% of the total financial benefit to the State. This is arbitrary on its face.

The proof of the arbitrariness of the scoring methodology is in the pudding. Here, it cannot be disputed that Securus’ financial proposal is better than Telmate’s because no matter what happens, it will yield more money to the State than Telmate’s proposal. Regardless of the financial scenario, whether the revenues are extremely high, and the Commission Rate is the relevant factor, or the revenues are relatively low, and the guaranteed MMG kicks in, the State would be paid more money under Securus’ proposal. Obviously, a scoring methodology that would give more points to Telmate’s inferior proposal is arbitrary and capricious.

The arbitrariness and capriciousness of GDC’s financial scoring methodology is further compounded by the fact that GDC never disclosed its scoring methodology to Securus. The RFP failed to include the subcategory point values. Moreover, even though offerors requested the financial point values at the pre-bid conference and during the RFP’s Question and Answer (“Q&A”) process, the GDC kept the point values secret and refused to disclose it. See Exhibit 5, Offeror Q&A at 26-29. Only after the NOIA was posted and Securus obtained documents in response to public records requests was it able to discern the points allocated to each component of the Financial Proposal. Keeping this unrealistic scoring method secret created a situation that reveals a clear potential to become a means of fraud, favoritism, or corruption to the detriment of Georgia taxpayers. Accordingly, the NOIA should be rescinded, and the Contract awarded to Securus as the vendor with the highest technical score and the most “competitive cost proposal overall.”

3. Telmate Offered Multiple Commission Rates in Violation of the RFP.

The RFP stated that commissions were to be paid on Gross Revenue before any deductions whatsoever:

Contractor shall pay commission on total Gross Revenue (as defined above) before any deductions are made for unbillable calls, bad debt, uncollectible calls, taxes, fraudulent calls, Local Exchange Customer (“LEC”) adjustments or any other Contractor expense.

Exhibit 1, RFP at Attachment O, § 1.2 (emphasis added). As such, the RFP requested proposers provide one fixed commission rate that it would pay on all Gross Revenues. Exhibit 1, RFP at Attachment R, § 1.1.2. Telmate failed to do this.

In its BAFO, Telmate submitted a Commission Rate of 82%. See Exhibit 6, Telmate Response to Request for Cost Negotiations (Best and Final Offer). However, elsewhere in its Response, Telmate made clear it would apply a much lower commission percentage of 40% to some undefined portion of inmate calls. In particular, in response to Attachment L, Section 1.8, Telmate stated as follows:

Additionally, Telmate is also in the final stages of implementing Telmate Mobile Bill which will allow Friends and Family whom are on a non prepaid mobile account to have calls billed directly to their mobile phone. The system will allow the applicable billable charge to be placed on the end users bill without the need for a credit card to accept the call. This billing product does come at a reduced commission of 40% of at the applicable charge [sic] however easily allows for communication of inmates with their friends and family no matter where they reside.

Exhibit 7, Telmate Additional Scored Response Document at 74 (emphasis added). Through this response, which will become part of Telmate’s Contract with the State, Telmate is only obligated to pay a 40% commission on calls completed to mobile phones through the Telmate Mobile Bill program - not the 82% Commission Rate GDC evaluated and scored. This was a bait and switch that could result in a significant loss of revenue to the State. Indeed, approximately 74% of all Securus’ current inmate calling terminates to mobile phones and this number is expected to climb to over 80% in the near future. See Exhibit 15, K. Eismann Affidavit.

Telmate’s submission of two different Commission Rates was a material deviation from the RFP’s requirements. For this reason alone, Telmate should have been disqualified (see Exhibit 1, RFP at Attachment A, § 2.1.7), and the Contract awarded to Securus as the next highest scoring offeror.

Moreover, GDC only evaluated Telmate’s 82% Commission Rate without any consideration of the fact that Telmate would pay a much lower 40% commission on calls completed to mobile phones through its Telmate Mobile Bill program. The fact that GDC did not analyze this pricing renders GDC’s financial evaluation arbitrary, capricious and illegal. See, e.g., O.C.G.A. § 50-5- 67(a)(7) (agency must consider pricing in awarding contract); see also Arch Chems., 64 Fed. Cl.

at 401 (it was irrational to not include a category of costs in government’s price evaluation methodology because resulting price evaluation would not “ensure that the evaluated prices accurate reflect the true costs to the taxpayers”); Omnicare, Inc. v. DPW, 68 A.3d 20, 27 (Pa.

Commw. Ct. 2013) (pricing must be considered in RFP process).

B. The State’s Evaluation of the Technical Proposals Was Improper and Violated Georgia Law.

1. Telmate Should Have Been Disqualified Because its Proposal Contained Numerous Material Deviations.

To be eligible for award pursuant to the RFP, a proposal could not contain any material deviations from the terms of the RFP. The RFP itself provided that “[a] supplier’s response will be rejected if the response contains any defect or irregularity and such defect or irregularity constitutes a material deviation from the eRFP requirements….” See Exhibit 1, RFP at Attachment A, § 2.1.7 (emphasis added). See also id. at § 4.4 (“To be considered responsive, responsible and eligible for award, any and all requirements identified in the Mandatory Scored Response Document must be met. … All requirements labeled “Mandatory Scored” must be met by the supplier. Failure to meet any mandatory scored requirements may result in disqualification of the supplier’s response.”). The State lacked any discretion to provide offerors the opportunity to cure material deviations. See id. at § 2.1.7 (response “will be rejected” if it contains a material deviation from the RFP requirements). Indeed, the State has no discretion to award a contract to a vendor whose response contained any material deviations from the RFP’s requirements. See In re: Request for Proposals 46700-GDC0000624 (RFP) - Statewide Commissary Services, (April 17, 2014). See also Amdahal Corp. v. Ga. Dep’t of Admin. Servs., 260 Ga. 690, 696 (1990) (“It is undisputed that DOAS is bound by the terms of the RFP.”).

As shown below, Telmate’s proposal contained numerous material deviations from the RFP, any one of which was sufficient reason for GDC to disqualify Telmate. Moreover, a fair scoring of Telmate’s proposal, given these deficiencies, would have resulted in an even greater gap between Securus and Telmate on their technical proposals.

a. Liquidated Damages.

The RFP prohibited vendors from charging fees without the prior written consent of the State and imposed liquidated damages of $350.00 for every day the vendor violated this requirement.

Attachment O, Section 1.4 of the RFP provided as follows:

Any charges/fees added to the called party’s bill without the express written consent of GDC shall incur a fine of $350.00 per day from the date the additional charges/fees were first added through the date the charges/fees were discontinued.

Exhibit 1, RFP at Attachment O, § 1.4.

Telmate refused to comply with the RFP’s liquidated damages requirement and responded as follows:

Read and do not comply. Any charges/fees added to a called party’s bill without prior discussion with GDC would be unintentional and without malice. Telmate agrees to a fine of $350 per day upon notification of such error up to the date the changes/fees are discontinued.

Exhibit 8, Telmate Response at Attachment O, § 1.4 (emphasis added).

The liquidated damages provision was one of the RFP’s most important provisions because it provided the State with a means to prevent vendors from charging unauthorized fees to inmates and friends and families receiving calls from inmates. However, Telmate unilaterally changed the State’s rules. As a result, Telmate took on much less financial risk than Securus (and other vendors that agreed to the clause) and could thus offer a higher financial proposal. Telmate can freely charge unauthorized fees with impunity and without penalty, until GDC happens to notice the fee and notifies Telmate to stop. For instance, if a GDC contractor that complied with Section 1.4 received notice that it was charging an unauthorized fee 1,000 days after it began charging the fee, and stopped charging the fee 5 days later, it would be liable for $350,000 in liquidated damages ($350 * 1,000 days). However, Telmate would only be liable for $1,525 in liquidated damages - or $348,475 less than a contractor that complied with this clause -because it only agreed to a fine “upon notification…to the date the fee is discontinued.” By no means is this a level playing field.

Telmate’s clear failure to comply with this mandatory requirement was a material deviation.

Telmate’s material deviation from the RFP’s liquidated damages requirement rendered Telmate non-responsive and its proposal should have been rejected. See, e.g., Exhibit 1, RFP at Attachment A, § 7 (“Contract exceptions which grant the supplier an impermissible competitive advantage, as determined by the State Entity, in its sole discretion, will be rejected.”).

b. Call Forwarding and Three-Way Calling Prevention.

Call forwarding and three-way calling by inmates is a critical security issue in correctional facilities. Through call forwarding or three-way calling, an inmate call to an approved number (such as a relative) can be forwarded to another number that may not be on the inmate’s approved number list. If call forwarding is undetected, once a call originated by an inmate has been successfully forwarded to another number, all visibility into the actual terminating location is lost for monitors and investigators. There are numerous examples of inmates using call forwarding or three-way calling schemes to contact victims, witnesses, judges or law enforcement employees. Additionally, through call forwarding or three-way calling, inmates can more freely conduct criminal activity including drug and gang-related activity.

As such, as a mandatory requirement, the RFP required the successful contractor to be able to detect and prevent fraud by preventing call forwarding and three-way calling. For instance, the RFP at Attachment J, Section 4.7 provided as follows:

The ITS, upon detection of a three-way call, forwarded call, conference call, etc.

shall be able to flag the call immediately. If so required by GDC, the ITS shall have the capability to also terminate the detected three-way call.

Exhibit 1, RFP at Attachment J, §4.7. Moreover, the RFP at Attachment J, Section 4.8 provided as follows:

Indicate whether the ITS is capable of detecting and terminating Remote Call Forwarding (‘RCF’) calls. If Contractor’s ITS is unable to detect RCF, provide the status of Contractor’s research and development relative to RCF calls.

Id. at §4.8.

Telmate’s response did not comply with either of these critical fraud prevention requirements.

Indeed, a small and inexperienced company such as Telmate does not even have this technology.

In fact, Telmate never mentioned (either in response to Section 4.7 or 4.8) whether it can detect or prevent call forwarding, let alone how it would do it. See Exhibit 7, Telmate Additional Scored Response Document at 49. For this reason alone, Telmate should have been disqualified.

Further, in response to Section 4.8, Telmate merely stated “Read, agree and will comply.”

Exhibit 8, Telmate Response at Attachment J, §4.8. Such a response did not inform GDC whether Telmate’s system can detect and terminate Remote Call Forwarding calls. Nor does it provide the State with a status on the development of such a solution.

To make matters worse, Telmate’s various submissions actually make clear that Telmate will not be able to detect or prevent three-way calling in accordance with its proposal. In its initial RFP Response, Telmate explained that it uses live operators to listen to and or flag suspected three-way calls. See Exhibit 7, Telmate Additional Scored Response Document at 49 (“Every suspected 3-way call is flagged and immediately reviewed by a live, trained operator. The call can be terminated if desired by GDC.”). Telmate also made clear that in order to provide three-way calling detection, it would have to assess certain charges to pay the cost of manually reviewing, flagging and terminating thee-way calls: “When a suspected 3-way call is confirmed, charges for the second call are assessed. These charges…cover the cost of reviewing 3-way calls by multiple operators.” Id. at 50 (emphasis added). However, because the RFP prohibited any such fees, the GDC later required Telmate to agree to withdraw these charges. See Exhibit 9, Telmate Response to Request for Clarification No. 3. In agreeing to withdraw the necessary charges to pay for the live operators needed for its three-way calling detection system, Telmate never explained how it would now flag and terminate three-way calls. See id. Indeed, Telmate would have to hire hundreds of live operators solely to listen to suspected three-way calls in an account as large and complex as Georgia. It is highly questionable whether Telmate would hire the necessary operators and/or provide the three-way calling detection service or if the operators could ever successfully perform this function. This threatens to compromise (if not eliminate) GDC’s ability to monitor and prevent fraudulent three-way calls and therefore, prevent crime.

On the other hand, Securus utilizes state-of-the art technology - not human operators - to prevent three-way calling. See Exhibit 14, Securus Response at Attachment J, § 4.2. Securus’ technology has been awarded several patents and is one of the best systems in the world. See id.

Telmate’s failure to comply with the RFP’s call forwarding and three-way calling prevention requirements were material deviations from the RFP that rendered Telmate non-responsive. As a result of these material deviations, the State is now presented with a significant safety risk;

inmates can use call forwarding and/or three-way calling to intimidate witnesses, victims or judges or to commit crimes. The GDC should not allow this to happen. Telmate should be disqualified.

c. Subcontractors.

The RFP required offerors to disclose whether it would utilize any subcontractors on the GDC Contract, define their role, and describe the background of their relationship with the offeror:

If any third party will be supporting your bid by providing software or professional services, please disclose that information at this time and provide some background on their relationship with Contractor. Define what role they will have from both an implementation and on-going support perspective.

Exhibit 1, RFP at Attachment G, § 1.3. Further, the RFP required offerors to “provide the names and resumes of Contractor’s employees, consultants, and subcontractors which will be involved in providing the requirements in this RFP and Contract.” Exhibit 1, RFP at Attachment N, § 1.5.

In its RFP response, Telmate unequivocally stated in all capital letters that it would not be using any subcontractors at all on the GDC contract:

TELMATE WILL FULFILL ALL OF THE WORK REQUIREMENTS FROM

WITHIN OUR OWN ORGANIZATION. WE DESIGN, BUILD, SUPPORT

AND SERVICE ALL OF OUR OWN SOFTWARE, AND PROVIDE ALL

PROFESSIONAL SERVICES WITH TELMATE EMPLOYEES.

Exhibit 8, Telmate Response at Attachment G, § 1.3. See also Exhibit 7, Telmate Additional Scored Response Document at 95 (“We do not plan to use any subcontractors for this work.”).

These responses were false. Indeed, by looking at Telmate’s other submissions, one can tell that Telmate actually is going to use subcontractors for the GDC contract, but for some reason was attempting to conceal the identity of these subcontractors.

In particular, Telmate stated that “Plant Telecommunications” will be a technician at 13 different GDC facilities that would be “maintaining, servicing and performing work under the Contract.”

See Exhibit 7, Telmate Additional Scored Response Document at 95. Plant Telecommunications’ own website states that it provides a full line of telecommunications services, including technical support. See Exhibit 10, Plant Telecommunications website.

Further, Telmate stated that Mark Counts, located at 306 Parker Road, Sylvinia, Georgia, will be a technician at 17 different GDC facilities and would be “maintaining, servicing and performing work under the Contract.” See Exhibit 7, Telmate Additional Scored Response Document at 95.

See also Exhibit 11, Telmate Supplemental Request #4 for GDC RFP at 2. Information available on the internet shows that Mr. Counts is the president of a company called Counts Communications, which has six employees and 306 Parker Road, Sylvinia, Georgia, is the address for this company. See Exhibit 12, internet information regarding Counts Communications. In other words, it appears that at least 30 of GDC facilities will be serviced by subcontractors - not Telmate.

Telmate’s response to Attachment G, § 1.3 was not accurate and not responsive. Further, Telmate failed to comply with Attachment N, § 1.5 by failing to “provide the names and resumes of [Telmate’s] subcontractors.” GDC has no idea what individuals or companies will be working in their facilities, whether they are qualified and whether they present a security risk. These are material deviations from the RFP and Telmate should have been disqualified.

d. Call Acceptance/Interruption.

Attachment J, Section 1.11.4 of the RFP requested offerors provide the following information regarding the ability of the offeror’s system to permit called parties to accept or interrupt calls received from inmates:

Contractor shall indicate the number of times the ITS plays the call acceptance information to the called party and whether the called party may interrupt the prompts by selecting a digit on the keypad. Contractor shall provide a script of the call acceptance information provided to the called party.

Exhibit 1, RFP at Attachment J, § 1.11.4.

In response, Telmate merely responded “Read, agree and will comply.” Exhibit 8, Telmate Response at Attachment J, § 1.11.4. Telmate did not: (i) “indicate the number of times the ITS plays the call acceptance information”; (ii) state “whether the called party may interrupt the prompts by selecting a digit on the keypad”; or (iii) “provide a script of the call acceptance information provided to the called party.” As such, GDC was unable to evaluate whether Telmate’s system adequately identified to called parties that they were receiving a call from an inmate and whether the called party could efficiently interrupt the call. This is an important safety feature that prevents inmates from contacting and harassing victims, witnesses, and/or law enforcement. Now the GDC faces yet another potential safety risk from Telmate. Accordingly, this is a material deviation from the RFP and Telmate should have been disqualified.

e. References.

The RFP required offerors to provide three customer references “where Contractor provides the equipment and services comparable to the requirements in this RFP as well as comparable in scope as requested by GDC.” See Exhibit 1, RFP at Attachment G, § 1.4 (emphasis added).

Telmate failed to comply with this requirement.

GDC has approximately 60,000 inmates and 65 facilities. Telmate’s references were Oklahoma County, Oklahoma (Average Daily Population (“ADP”) 1,994), Oregon Department of Corrections (ADP 14,000+), and Montana Department of Corrections (ADP 1,717). Exhibit 7, Telmate Additional Scored Response Document at 4-12. As such, Georgia has over 40,000 more inmates than the combined total inmate population of all three of Telmate’s references. None of these references can assess Telmate’s ability to manage a project anywhere near as large or complex as Georgia. Indeed, never in Telmate’s history has it had an account as large or complex as Georgia, and, therefore, it has no ability to provide a reference for something it has never done. This company is simply not qualified to provide inmate telephone services for a contract of this size.

Under no definition are Telmate’s references (one of which is a small county) “comparable in scope” to Georgia, “comparable to the requirements” of the RFP or compliant with the RFP.

This was a material deviation from the RFP which rendered Telmate non-responsive for award.

f. Storage of Recordings.

The RFP required the vendor to store all recordings online and offline for two years after the expiration of the Contract, stating as follows: “All recordings shall be stored online for a minimum of 2 years and offline for a period of 2 years following the expiration or termination of the subsequent Contract and any Addenda and/or Amendments.” Exhibit 1, RFP at Attachment K, §1.9.

Telmate failed to comply with this requirement. Instead, Telmate only agreed to store the recordings for the life of the Contract, stating: “Telmate will store all call recordings and associated data for the life of the contract, plus any extensions. We will be happy to arrange an additional extension as desired by Georgia DOC.” Exhibit 7, Telmate Additional Scored Response Document at 56. An agreement to discuss arranging an “additional extension” is not an agreement to store all recordings for two years after the expiration of the Contract. Telmate’s failure to agree to store recordings for two years after the expiration of the Contract was a material deviation and Telmate should have been disqualified.

These recordings are necessary for criminal investigations and are often evidence admitted in court. As such, any failure to properly maintain these recordings into the future presents a safety risk. Further, since Telmate only agreed to store recordings for the life of the Contract, it is entirely plausible Telmate could seek some type of compensation from Georgia to store recordings following the end of the Contract - an opportunity no other compliant vendor had.

g. Prohibition Against Fees.

The RFP provided that “Contractor shall not impose any fees other than those that are approved by GDC and identified in this RFP.” See Exhibit 1, RFP at Attachment O, § 4.4. The only permissible fees identified by the RFP were a pre-paid collect fee and universal service fund fee.

All other fees were prohibited.

Telmate proposed charging fees prohibited by the RFP. For example, in response to Attachment J, Section 1.20, Telmate made clear it would be assessing fees for quick connect calls. See Exhibit 7, Telmate Additional Scored Response Document at 38 (“These charges would be placed directly on the end users cell phone bill and allow for a non credit card option to receive a phone call.”). Moreover, Telmate made clear, in response to Attachment O, Section 4.5, it would be charging a Convenience Fee for Credit Card Transactions. See id. at 104. (“Telmate will charge a convenience fee for credit card transactions processed through the Telmate system and billed by the credit card processor.”). Telmate’s charging of impermissible fees was a material deviation and Telmate should have been disqualified.

GDC even recognized Telmate had materially deviated from the RFP’s requirements with respect to charging these prohibited fees in a Request for Clarification it sent to Telmate. See Exhibit 9, Telmate Response to Request for Clarification No. 3 at 2 (“In Telmate’s response to at least two of the GDC requirements/questions (J1.20 and J4.7), additional charges, fees, etc. were identified/included.”). GDC lacked any discretion to provide Telmate the opportunity to cure these material deviations. See Exhibit 1, RFP at Attachment A, § 2.1.7 (response “will be rejected” if it contains a material deviation from the RFP requirements). Indeed, the purpose of a request for clarification is to clarify an offeror’s response and obtain more information - not provide an offeror a chance to cure a material deviation from the RFP requirement that no other vendor received. See id. at § 2.1.5. As such, GDC’s attempt to request Telmate cure its deviations violated the RFP and was illegal. Telmate should be disqualified based on its initial submission.

h. Traffic Detail Reports.

The RFP required the chosen offeror provide traffic detail reports that provide commission information for each inmate telephone. See Exhibit 1, RFP at Attachment O, §§ 5.2.7, 5.2.8, 5.2.9, 5.2.10, 5.2.11, and 5.2.12. Telmate failed to agree to comply with these six requirements and made clear it was unable to provide per phone commission information in its traffic detail reports and stated in response to these six requirements:

Read and do not comply. Telmate’s traffic detail reports comply with this requirement with one exception: they do not contain commission information.

Commission information is available separately on a 24/7/365 basis from our Web-based Telmate Command application, and we will issue monthly commission reports as well.

See Exhibit 8, Telmate Response at Attachment O, §§ 5.2.7, 5.2.8, 5.2.9, 5.2.10, 5.2.11, and

5.2.12 (emphasis added).

The RFP required commission information to be supplied in traffic detail reports; Telmate could not supply such information in its traffic detail reports and merely referred GDC to other sources for this information. This is a material deviation for the RFP’s requirements and Telmate should have been disqualified.

i. Billing Files.

The RFP required the chosen offeror to provide billing files and specified certain information that must be included in the billing files, such as: Batch Number/ID, Multiple Rate Indicator, Rounded Bill Time Indicator, Message Type, Additional Fees and Line Surcharges, Specialized Calling Indicator, Validation Indicator, Specialized Calling Indicator, Validation Indicator, Required Tax Exempt Indicator, Rate Period, Required Rate Class. See Exhibit 1, RFP at Attachment O, §§ 5.5.6, 5.5.12, 5.5.18, 5.5.22, 5.5.24, 5.5.25, 5.5.26, 5.5.27, 5.5.28, 5.5.29.

Once again, Telmate failed to comply with these requirements and made clear it was unable to provide such information by stating in response to each requirement: “Read and do not comply.” See Exhibit 8, Telmate Response at Attachment O, §§ 5.5.6, 5.5.12, 5.5.18, 5.5.22, 5.5.24, 5.5.25, 5.5.26, 5.5.27, 5.5.28, 5.5.29 (emphasis added). Telmate’s failure to agree to supply the specified Billing Files was a material deviation from the RFP that rendered Telmate’s response ineligible for award.

GDC even recognized Telmate had materially deviated from the RFP’s requirements with respect to the billing files requirements in a Request for Clarification sent to Telmate:

Attachment O - 5.5 Contractor’s response did not comply with providing Additional Fees and Line Surcharges in the billing files. Fees and charges may be assessed by the LEC but are specified to be assessed by the Contractor. Contractor shall provide a method for reporting all additional fees and charges associated with a billed call.

Contractor shall specify how it can provide GDC all Additional Fees and Line Surcharges added to each completed, billed call.

Exhibit 13, Telmate Response to Request for Clarification No. 2 at 2 (emphasis added). Again, GDC lacked any discretion to provide Telmate the opportunity to cure these material deviations.

See Exhibit 1, RFP at Attachment A, § 2.1.7 (response “will be rejected” if it contains a material deviation from the RFP requirements). As such, GDC’s attempt to request Telmate clarify its response violated the RFP and was illegal. Nonetheless, Telmate provided a non-responsive answer to the clarification that did not cure its material deviation:

Telmate always commits to work with the Customer to determine LEC fees and line surcharges. Upon award we will determine exactly the charges and fees to be accessed with the input of GDC. Telmate will not add ancillary charges or line fees outside of the already agreed upon charges to the end user bill.

Exhibit 13, Telmate Response to Request for Clarification No. 2 at 2. Not only does this not answer GDC’s question, it says nothing about how Telmate intended to cure its failure to comply with the requirements of Section 5.5.

j. CDRs.

For the GDC to efficiently monitor its inmate telephone system, the RFP required the chosen offeror to provide Calling Detail Records (“CDRs”) that contained certain information, including, Batch Number/ID, Pre-Paid Card ID, Validation Result, LIDB Status. See Exhibit 1, RFP at Attachment O, §§ 5.7.6, 5.7.15, 5.7.24, 5.7.26.

Telmate failed to comply with these requirements and made clear it was unable to provide such information in its CDRs by stating in response to each requirement: “Read and do not comply.”

See Exhibit 8, Telmate Response at Attachment O, §§ 5.7.6, 5.7.15, 5.7.24, 5.7.26 (emphasis added). Telmate’s failure to agree to supply the specified CDRs was a material deviation from the RFP that rendered Telmate’s response non-responsive and ineligible for award.

GDC even recognized Telmate had materially deviated from the RFP’s requirements with respect to CDRs in a Request for Clarification sent to Telmate:

Attachment O - 5.7 Contractor’s response did not comply with providing a Validation Result in the CDRs or a Validation Indicator in the billing files….Contractor shall identify its method for validating calls and how Contractor can provide this information for each call in the CDRs ….

Attachment O - 5.7

Contractor’s response did not comply with providing a LIDB status in the CDRs….Contractor shall identify its method for submitting calls to LIDB and how Contractor can provide the result for each LIDB validation in the CDRs

Exhibit 13, Telmate Response to Request for Clarification No. 2 at 2-3.

Although GDC lacked any discretion to provide Telmate the opportunity to cure these material deviations (see Exhibit 1, RFP at Attachment A, § 2.1.7), Telmate once again provided evasive, non-responsive answers that did not cure its material deviations:

Telmate always commits to work with the Customer to provide an acceptable result. Telmate Verified is our solution to providing 100% depositor and called party verification. When a party who has been Telmate Verified is called, Telmate can see all their validation information that has been stored in our system. We are happy to provide this data to GDC in an acceptable format.

Telmate will provide allowable information we receive from our LIDB providers as a result of the validation, a pass of LIDB validation typically means a Collect call is allowed, a fail of LIDB validation typically means a Collect call is not available. Telmate has other validations based upon specific products within the Telmate platform based upon a unique customer basis.

Exhibit 13, Telmate Response to Request for Clarification No. 2 at 2-3.

These responses do not answer GDR’s questions and they say absolutely nothing about how Telmate intended to cure its failure to comply with the numerous requirements of Section 5.7.

Indeed, Telmate’s clarification, including its reference to Telmate Verified3, has nothing to do with this requirement at all. If anything, these responses only reinforce the fact that Telmate cannot provide CDRs containing the information required by the RFP and that Telmate’s response is a material deviation from the RFP’s requirements.

k. Automated Phone Tree Fraud Prevention.

Attachment J, Section 1.15 of the RFP required offerors to provide information regarding the ability of the offeror’s system to prevent fraud with respect to automated phone trees:

Contractor shall provide information on any security configurations available within the ITS to prevent fraud relative to automated phone trees (e.g., inmates pressing digits and getting a live operator, etc.).

Exhibit 1, RFP at Attachment J, § 1.15.

3 Notably, Telmate offered Telmate Verified as an optional service at a 3% reduction in commission. See Exhibit 8, Telmate Response at Attachment R - Cost Proposal. If GDC has agreed to this clarification, it may have also unwittingly agreed to a 3% reduction in commission required to use Telmate Verified. This could cost GDC approximately $783,000 over the three-year Contract term.

Once again Telmate merely responded “Read, agree and will comply” without actually providing the requested information. Exhibit 8, Telmate Response at Attachment J, § 1.15.