AlohaCare has lost a round in protesting the state's award of a $1.5 billion contract covering Hawai'i's aged, blind and disabled Medicaid beneficiaries to two Mainland-based companies.

The state Procurement Office this week rejected the protest by AlohaCare, a Honolulu-based health plan.

Aaron Fujioka, the state's chief procurement officer, said in his May 19 decision that there is no evidence the state Department of Human Services violated any state procurement laws or rules, the department announced yesterday.

The ruling "confirms that we conducted a fair and competitive bidding process and chose the two health plans that scored the highest," Human Services Director Lillian Koller said.

AlohaCare said it will appeal the decision and that its lawsuit challenging the award is still pending in federal court.

"We disagree with the Procurement Office's decisions, but it's important to remember that the state appeal dealt solely with technical issues relating to the scoring of the bid proposals and not the legality of the process as a whole," said Ed Kemper, an attorney for AlohaCare.

UnitedHealth Group and WellCare Health Plans were the two lowest bidders and the state split the Quest Expanded Access contract between the two firms. The contract covers services for 37,250 Medicaid beneficiaries.