AUGUSTA – The state is accusing a longtime computer supplier of collecting excessive profits on state contracts from 2004 to 2008.

A lawsuit filed by the state in Kennebec County Superior Court claims the company that supplies desktop computers and related services to state offices made a higher profit than the contract allowed.

The Department of Administrative and Financial Services is suing Managed Technologies Partners, formerly known as CBE Holdings, of Massachusetts and an affiliate, CBE Technologies, formerly known as CBE/ValCom, of South Portland.

According to the complaint, CBE won a state contract in May 2004 in which it agreed to charge no more than 5.75 percent above vendor invoice pricing for standard desktop computer systems.

The systems were bought by state agencies, municipalities, political subdivisions and school administrative districts. The contract and yearly extensions ran from June 1, 2004, to Feb. 28, 2007.

The state continued to use CBE for items and services until Dec. 2, 2008, according to the lawsuit, and still buys items from CBE, said Assistant Attorney General William Laubenstein III.

Neither dollar figures nor the contracts were provided in the lawsuit. However, public accounting records available through maineopengov.org show that the state paid CBE $11 million from 2006 to 2009. The site does not show the amounts paid to CBE from 2004 to 2005.

The lawsuit, filed Sept. 15, was triggered by an audit of the contract last year by the State Office of Information Technology.

The companies deny the allegations and say the dispute is over interpreting the contract. Official notice of the lawsuit has not been served, as the parties work to resolve the dispute.

When CBE provided manufacturers’ invoices for items purchased, the state’s auditor “determined that CBE/Valcom’s percentage markup of the manufacturers’ invoice prices was greater than 5.75 percent,” according to the complaint.

The state wants the return of all money in excess of the contract price from July 1, 2004, to Dec. 2, 2008, plus interest and attorneys’ fees.

Greg McNeal, chief information officer of the Office of Information Technology, said most of the state’s computer purchases in those years came through CBE. Some others were made under the Western States Contracting Alliance, a group that’s open only to state procurement officers, McNeal said.

Invoices obtained through a Freedom of Access Act request by the Kennebec Journal detail some of the state’s computer contracts with CBE.

For example, a Sept. 25, 2007, invoice from CBE/ValCom bills the state $97,590 for 35 Gateway Profile desktop computers at $1,362 each, and for 20 Gateway laptop computers at $2,496 each.

Trade publications indicate Profile desktop computers were retailing at that time for about $1,200 each. And a PC Magazine review that appeared six months prior to the purchase shows the Gateway laptops were to hit the retail market for about $2,499 each. It’s unknown what the state believes “vendor invoice pricing” for such items was to be during that period.

CBE Technologies President George Mellor said in a statement that CBE “has been assisting in the investigation and negotiations and is hopeful that a resolution will be reached. We believe the pending lawsuit should not negatively impact the efforts of Managed Technology Partners and the state to reach a compromise.”

Laubenstein also said he hopes to settle the case before trial.

 

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