Dallas ISD Hit With $40-Million Breach of Contract Claim by Classroom-Tech Vendor
It's just been sued over a $40-million technology contract that the district awarded to Lewisville-based Delcom Group in May and yanked in June, when the board gave the contract to one of the company's competitors. At stake: the district's digital classroom initiative, which involves making classrooms wireless, interactive and portable. That $40 million is funded out of bond money (75 percent) and the general fund.
The reason the contract was canceled, according to the complaint filed yesterday in Dallas County District Court: In early May, before the contract was even awarded, an unknown John Doe "anonymously placed a calculated and subversive telephone call to at least one DISD trustee [that] caused the destruction of eight years of good will developed between Delcom and the DISD."
Per the complaint, the informant told the trustee that Delcom was employing a convicted felon. Delcom doesn't dispute that: It says in the suit that in 1995, the current director of sales who was then "a young outdoorsman" accepted some fishing equipment stolen off a UPS truck by friends who worked for UPS -- "a single, cursory and regretful decision." Since the $1,000 worth of equipment crossed state lines, the guy was popped with a federal felony, for which he had to make full restitution and received three years' since-served probation. Far as Delcom's concerned, the man's not an owner of Delcom, and that was a long time ago, and Delcom's been providing tech equipment and services to DISD for eight years already, so ... end of story.
Not so much.
On June 20, Gary Kerbow, the district's director of purchasing, sent Delcom's director of business operations Joe Mark Phillips a letter saying that Delcom "has not been forthright in reporting a Felony conviction for one of its operators ... [and] for this reason Dallas ISD has elected to end contract negotiations with Delcom."
According to Delcom, the district has opted to go with a Houston-based competitor, Prime Systems, whose proposal ranked second among prospective vendors. The complaint argues that "Prime is incorporating Delcom's propriety design solution," which, of course, Delcom says will destroy its competitive advantage in the marketplace. According to Delcom, it serves most of the major districts in the state.
The lawsuit claims this isn't the first time the employees' past has come back to "haunt" the company. Delcom says that a former Micro Systems employee once sent "a batch of anonymous letters to school districts across North Texas" over a different tech contract. Delcom now wants to find out "whether Defendant John Doe and the previous informant are one and the same." That Micro Systems employee was never named.
Michael Hurst, who's repping Delcom, tells Unfair Park this morning that "all evidence points" to the trustee being informed of the employee's past in mid-May -- before the contract was awarded on May 27. After the contract was awarded, Hurst says, "Delcom was out there working with DISD providing them with trade secrets, which included system designs, vendors, schematics" and so forth.
"Once DISD got everything that comprised the digital classroom design, Delcom never heard from DISD till the termination letter," he says, which came June 20. Two days later, Prime got the contract.
A message has been left for DISD spokesman Jon Dahlander, who probably hasn't even seen the suit since it was filed only yesterday. (Update: Dahlander says the district does not comment on pending litigation.) The complaint is below.08-04-11 Delcom v. DISD File-Stamped