Emails raise questions about award of Nevada DMV contract

Officials of a tech company that was awarded a contract to modernize the Nevada Department of Motor Vehicles’ computer system met with the agency’s former director and key staffers just months before the state issued a request for proposals for the project, emails show.

The emails raise questions about whether the company, Tech Mahindra, had an inside track for the failed $75 million contract. Officials involved in the meetings and representatives of other companies that bid for the project did not return calls or emails asking whether other bidders met with state officials before the RFP.

According to the emails, Tech Mahindra vice president Aman Sethi met with then-DMV director Troy Dillard on Feb. 18, 2015, to discuss the modernization. Three weeks later, Sethi scheduled a meeting that included Karuppuswamy Manivannan and Anand Vijayaraghavan, two state IT employees who would end up on the selection committee that picked Tech Mahindra, emails show.

The March 9, 2015, meeting between Sethi, his staff and Manivannan, Vijayaraghavan and other IT officials raised concerns from state purchasing officials, records show.

“Mark Froese – DMV IT Administrator had a meeting with State Purchasing regarding our meeting this afternoon,” Manivannan wrote Sethi at 11:50 a.m. that morning. “Nevada State Purchasing has informed Mark that the Nevada DMV is too far into the RFP processing and suggested to cancel the meeting scheduled for this afternoon.”

But purchasing officials later changed their minds to allow the meeting to go forward.

“I believe things have changed,” Manivannan wrote Sethi at 2:42 p.m. “(The) DMV contact from State Purchasing contacted Mark (Froese) and informed (him) that we can continue with the scheduled meeting this afternoon. We were advised that the meeting needs to focus on the demo and not include any DMV related RFP questions.”

The meetings with Dillard in February and IT staff in March were about five months before the July 17, 2015, release of the RFP, but Sethi already spoke about going forward with the project, emails show.

“NV DMV project is (a) key project for Tech Mahindra and we wanted to see how we can all prepare to make this into a successful endeavor for the state that you can be proud of,” he wrote state staff a day before meeting with Dillard.

The DMV awarded Tech Mahindra the contract a year after the meetings and a few weeks after Dillard, who retired from the DMV in October 2015, joined the company, records show.

Tech Mahindra was fired last year after a critical audit and scathing contractor report questioned its work. The failed project cost drivers about $26 million in wasted registration fees.

A lawsuit filed in Carson City by former Tech Mahindra executive Brian Coffey accuses Manivannan and Vijayaraghavan of sabotaging the modernization after Coffey blocked millions of dollars in bribes that Sethi and other Tech Mahindra officials promised. Manivannan and Vijayaraghavan are actively involved in the department’s current modernization plans, records show.

Dillard, Sethi, Manivannan and Vijayaraghavan did not respond to repeated requests for comment. Tech Mahindra issued a statement but declined an interview, saying the matter is settled. The company has previously denied any wrongdoing.

“We are steadfast in our ethics and have a long track record of exemplary conduct,” the statement said. “The allegations outlined in the complaint date back to early 2015 and were vetted thoroughly by all of the relevant authorities and were deemed to be without merit. We firmly stand by this decision.”

Bidding procedures

The Nevada Administrative Code requires agencies to set a contact person to answer questions during the process for awarding a contract and allows the administrator to disqualify a proposal if the company contacts other employees about the RFP.

But state Department of Administration spokeswoman Stephanie Klapstein said communications are allowed with potential bidders before the RFP is released.

“It can be helpful to learn what is out there in the private sector; for example, what features may be available from industry for an IT-related system,” she wrote in an email statement. “It is okay for vendors to meet and speak with state employees while an RFP is ‘on the street’ as long as they do not discuss the RFP.”

She did not know why purchasing staff expressed concerns or whether other companies met with DMV officials as the purchasing employees who worked on the project have since retired. DMV officials also did not know if staff met with other bidders.

After Tech Mahindra won the contract in March 2016, the project quickly ran into problems as the company failed to provide qualified programmers who spoke English and state officials and contractors did not meet milestones for modernization’s progress, according to a state audit.

In January 2018, the state parted ways with Tech Mahindra, allowing the company to keep more than $26 million in state money for equipment and work that the state concedes it will not be able to use. The agreement avoided a lawsuit, records show.

DMV officials hired Gartner Inc. to figure out what went wrong and how to move forward. Contractors wrote , and had “nonexistent” project management controls at the DMV that the for an undisclosed amount Tech Mahindra modernization was “one of the most troubled public sector modernization efforts that Gartner has seen in recent years.” The state used an “unproven” technology with no history of successful implementation, Gartner’s report said.

The project was funded by a $1 fee on all DMV transactions. The 2019 Legislature extended the fee, which was scheduled to expire in 2020, for two additional years to fund a continued modernization effort. Republican lawmakers are suing to block the fee extension and another tax extension.

Bribery allegations

The Coffey lawsuit filed in 2017 under seal, which a judge unsealed in July at the Review-Journal’s request, alleged that Sethi and other top officials pressured Coffey to pay Manivannan and Vijayaraghavan as much as $4 million in bribes through a third company. Coffey said he was fired when he refused to make the payments.

Tech Mahindra Strategic Accounts director Arvind Malhotra and Sethi “are the key Tech Mahindra players in the Scheme, having led the effort to win the Contract, agreeing to the bribery and corruption that made that ‘win’ possible,” the lawsuit said.

When Coffey blocked the bribes, Manivannan and Vijayaraghavan torpedoed the project with delays and demands for unreasonable changes, the lawsuit said. The lawsuit was settled last year.

Tech Mahindra contractor Thiagarajan Manoharan was fired when he learned of the bribery scheme, according to Coffey’s lawsuit. The Review-Journal contacted Manoharan and he confirmed that he was let go and that Manivannan and Vijayaraghavan rejected much of his programming work for what Manoharan said was no reason.

After Coffey was fired, Manoharan said he heard about the bribery allegations and was brought in by the Nevada Attorney General for interviews four months later. He never heard anything from investigators afterwards.

“There was something going on because I would propose solutions and they would deny them and not give me any response” as to why, he said in a phone interview from Washington state. “I’m a contractor so I don’t get a lot of inside information.”

The Nevada Attorney General’s office declined to provide interviews with the investigators who worked on the Tech Mahindra case. Froese also did not respond to requests for comment.

Repeated requests for comment from Gov. Steve Sisolak produced a statement that did not address the bribery allegations or that people who worked on the failed modernization, including Manivannan and Vijayaraghavan, continue to lead current revamp efforts.

“Like any new administration, we’ve inherited some ongoing issues that are a result of decisions made before (Sisolak) took office,” Sisolak chief of staff Michelle White wrote in an email. “We are working diligently to protect the integrity of any procurement process and to demand vendors deliver on their commitments to Nevada taxpayers.”

Contact Arthur Kane at akane@reviewjournal.com. Follow @ArthurMKane on Twitter.