SOLE SOURCE Third Party Liability System

The Illinois Department of Healthcare and Family Services (HFS) is seeking to award a sole source contract to Kunz, Leigh & Associates (KL&A) for the maintenance and operations of the Third-Party Liability Electronic Database (TED) system, a proprietary Medicaid recovery application. The contract encompasses comprehensive maintenance and operations support, cloud-based hosting services, optional public-facing portal hosting, and system enhancements to ensure continued federal CMS certification and compliance. Key deliverables include managing system interfaces with the Illinois Medicaid Management Information System (MMIS) and Enterprise Data Warehouse (EDW), providing disaster recovery and business continuity services, supporting payer onboarding activities, and implementing operational enhancements and federal mandates. The contract term runs from June 6, 2026, through June 5, 2030, with no renewal options. The deadline for written comments or requests for a public hearing is April 4, 2026, at 4:00 PM Central Time, and a public hearing is scheduled for April 9, 2026, at 2:00 PM CT via WebEx. HFS justifies the sole source procurement based on the proprietary and non-transferable nature of the TED system software, the substantial risk to federal compliance and potential loss of up to 75% in Federal Financial Participation if system continuity is disrupted, critical timing immediately before system go-live and CMS certification, and extensive customization of the system to HFS specifications.

This procurement is designated as a sole source award with no set-aside restrictions for disadvantaged enterprises or other designated business categories. Kunz, Leigh & Associates is the incumbent vendor and sole designated recipient for this contract based on its exclusive ownership and development of the proprietary TED system. The contract requires seamless integration with existing HFS infrastructure, including the MMIS and Enterprise Data Warehouse, as well as management of interfaces with multiple third-party payers. The estimated contract value is $21,608,407.80 over the four-year term, with an approximate annual cost of $5.4 million, inclusive of maintenance and operations ($12,419,229.24), cloud-based hosting ($4,526,119.08), optional public-facing portal hosting ($2,263,059.48), and enhancements and change requests ($2,400,000.00). HFS will receive a 6.3% discount throughout the entire contract term, resulting in approximately $1.4 million in total savings. Interested parties must submit written comments or hearing requests to Dianne Richman, Chief Procurement Office - General Services, at Dianne.Richman@illinois.gov or 217-622-1857.