Kentucky Wired tech-refresh stalled amid contract dispute; vendor warns services could stop Sept. 1

Representatives for Kentucky Managed Technical Services (LTS/KMTS) and for Kentucky Wired Operations (Quoc) testified to the Information Technology Oversight Committee that a long-running dispute over the service-provider contract and a required 10-year technology refresh has left equipment uninstalled, raised billing disputes and created a risk that essential maintenance could stop.

Jimmy Burn (LTS/KMTS) and company counsel summarized their view of the project agreement and Schedule 19, which governs the 10‑year refresh and market-test process. Burn said LTS submitted pricing in April 2023 that KCNA rejected; after a shorter-term alternative was also rejected, LTS provided equipment pricing and received KCNA authorization for some deliveries. "We have not performed any upgrade work," Burn said, and LTS representatives said approximately $2.5–3 million of equipment was received and paid by KCNA while additional shipments valued at roughly $7–8 million were canceled by LTS but appear to be held in a KCNA warehouse and remain unpaid to the equipment vendor.

LTS told the committee it does not believe it remains under the original service-provider contract and that it has been providing maintenance while billing on a month-to-month, market-rate basis. Rebecca Moss (associate general counsel, Ledcorp group) said LTS will provide the committee a follow-up showing the delta between the prior contracted rate and current month-to-month charges. Committee members expressed concern that month-to-month billing has produced a growing discrepancy between what LTS bills and what the Commonwealth has paid.

LTS warned that much of the equipment already deployed in the field is approaching end of life, with manufacturer support and spare parts potentially disappearing over a 2–3 year window; Mike Murray (LTS) said that could lead to increased outage risk and SLA implications if the refresh is not completed.

Quoc representatives, including Tom Snyder (chief operating officer, Kentucky Wired Operations) and Robert Morfonios (CEO, Quoc), disputed LTS’s legal characterization of contract status. Quoc argued that the original service agreement commences 09/03/2015 and, under its terms, continues for the later of the expiration date or until obligations are fully discharged (they cited the contract's 30‑year framework). Quoc said it conducted the market test and recommended a vendor that would have provided significant savings; KCNA declined that recommendation and a disagreement over acceptance and dispute-resolution procedures followed.

The committee pressed for documentation and clarity. Senator Williams asked for unredacted communications where possible; Quoc said both parties provided redacted responses to a public-records request and that redactions were prepared by counsel to remove confidential company names and other information. Committee members requested unredacted copies for the legislature’s review where appropriate and asked LTS and other parties to provide invoices, an equipment inventory and a list of installed field equipment with end-of-life dates.

Both sides acknowledged that mediation and negotiated resolution would be preferable to protracted litigation. LTS warned that if the dispute is not resolved within the timeline it has signaled internally, it may pursue formal contractual dispute remedies; LTS indicated an internal operational "end date" of concern around Sept. 1 for performing refresh work if no clear path forward is agreed. Quoc said that contractual dispute procedures exist and that mediation should be used to get parties in the same room.

Chair Locket closed the item urging all parties to mediate quickly to avoid additional taxpayer expense on litigation and to preserve network service continuity for Commonwealth customers. Committee staff requested follow-up documentation from LTS, Quoc, KCNA and Ledcor as part of next steps.