How new company with no financial history got a $1.9 million school district contract

Last month. Administrative Law Judge R. Bruce McKibben ruled in favor of Pediatric Service of America’s challenge to the Escambia County School District’s awarding its nearly $1.9-million student health services contract to Aloa Care Group.

Pediatric Services of America performs student health services for 246 school districts across the nation and has more than 4,000 employees. The Atlanta-based healthcare provider boasts $355 million in assets and $95 million in net worth.

Aloa Care Group had no ontracts with school districts, no employees other than then the husband and wife that formed the company, and balance sheet, profit and loss statement, evidence of cash on hand or any identification of a bank account.

Yet the school district evaluation committee recommended Aloa be given the contract. And School Superintendent Malcolm Thomas agreed.

Please read the second and third paragraphs again and ask yourself how could that be true, particularly since the district had no complaints about PSA over the past five years.

The bids were judged on the following weighted criteria:

SERVICE MODEL: (45 points)
PROGRAM COST: (35 points)

Under experience: PSA had 20-plus years of providing school health services, including five years with Escambia County. PSA also handles school health for Santa Rosa and Okaloosa counties. Aloa Care was formed in August 2017 and had zero company experience. The experience listed in its proposal concerned founder Jodi Kendrick and her ll years working for PSA (who parted ways with her in May 2017). The references for Aloa focus on Kendrick, not the corporation. Recap: PSA-corporate experience 20+ years; Aloa Care-zero.

How did committee score the companies:

Aloa PSA
1 9 9
2 10 8
3 9 8
4 8 8
Total 36 33

Note: The Committee ignored PSA’s long history and treated the experience of its former employee as being worth the same or better.

Under financial ability: PSA submitted audited financial statements.  It has $1.9 million cash on hand. It’s total assets are $355 million. Aloa provided no balance sheet or profit and loss statement. The company didn’t show that it had any money in the bank or even a bank account. Aloa said it had worked with the Small Business Development Center; had hired Carr, Riggs & Ingram CPA to review financial plans and budgets; had a quote from an insurance carrier; was in the process of getting an SBA-backed loan; and would hire Regions Bank/Pay Cot to handle its payroll.  Recap: PSA-audited financials;  Aloa-no financial data.

Aloa PSA
1 7 8
2 10 5
3 7 8
4 6 8
Total 30 29

Note: Aloa got the most total points because one committee member (#2) gave it 10 points and PSA only five.  The other three gave PSA one to two points more than Aloa.  By any objective measurement, Aloa should have been given no points. The company provided no proof of financial ability.  Anyone can say they talked with SBDC,  will hire an accountant and payroll company, and get a quote from insurance carrier.  Aloa’s financial ability is tied to getting the contract.

Proposed service model: Aloa received high marks for being locally owned. PSA appeared to be penalized for being based in Atlanta.

Aloa PSA
1 45 44
2 45 40
3 45 43
4 43 42
Total 178 169

Note: Three committee members gave Aloa the maximum.  Again one committee member (#2) gave PSA its lowest grade.

Program Cost: The district provided this grade;   Aloa 35     PSA 34.83

Total scores:

Aloa PSA Difference
1 61 61 0
2 65 53 12
3 61 59 2
4 57 58 -1
Prg Costs 35 34.83 0.17
Total 279 265.83 13.17

Note: Committee member #2 skewed the voting towards Aloa by 12 total points.  Eliminating her scores would still give Aloa  an 1.17 advantage, but if the company experience and financial ability had been graded fairly, PSA would have been the clear leader.

See Scoring sheets