CMS sues crisis-alert company to recoup more than $1 million spent on failed security system

Charlotte-Mecklenburg Schools is suing the maker of the district’s troubled crisis alert system to recoup the money spent on the product, alleging that the company knew its system did not work and misled the district.

The district already paid Centegix, the Georgia-based company behind the security system, more than $1 million before Superintendent Earnest Winston told the public that the system was not working. On Jan. 10, he gave Centegix a 30-day deadline to fix the system, which the company failed to meet.

CMS refused to pay the remaining $600,000 of its $1.75 million agreement. In its lawsuit, filed in federal court Wednesday, CMS is seeking a full refund in addition to damages, such as loss of employee time.

A CMS spokesman said the district had no comment on the lawsuit.

In a statement, Centegix denied that their product failed to meet the requirements of the district’s request for proposals, and said that it was confident the product was fully operational.

“Contrary to what CMS alleges, the CENTEGIX system worked and protected CMS’s students and teachers on multiple occasions,” the company said. “We stand by our solution, the results of the testing conducted by district personnel, and live operational results. Our system works as promised.”

The district adopted the system under former Superintendent Clayton Wilcox, who pushed for the deal with Centegix and built a relationship with the company’s founder before the district began purchasing its products.

The CMS board did not vote to approve a contract with the company, though contracts of this size usually require board approval. Instead, the district used purchase orders to authorize all payments.

District documents, including emails and records of testing, show repeated flaws with the crisis alert system, which gives teachers and employees panic cards to wear with their badges. When pressed a certain way, the system is supposed to trigger a series of color-coded lights and alerts across the campus.

But records show that the system often played the wrong emergency message, components fell out of the ceiling and the badges failed to work properly.

Government and school finance experts have said that the way CMS executed its financial dealings, without a dedicated written contract, could complicate legal proceedings.

CMS, in its lawsuit, says that when the district solicited bids, the request for proposal included its standard terms and conditions.

Those terms state that “goods and services that are defective in workmanship or material or otherwise not in conformity with the requirements of the contract documents may be rejected and returned at the seller’s expense.”

The district said that when Centegix submitted its signed bid, it agreed to CMS’s terms to submit a working product, which the company failed to do.

CMS is also alleging that the company knew the product was not working at the time it was pitching the district, and that the district would not have pursued a deal with the company if that information had been disclosed.

This story was originally published April 29, 2020 at 1:10 PM.