Audit shows problems with state sales-tax receipts

Source: By DON WALKER, Milwaukee Journal Sentinel (WI), Dec. 22, 2005

A new review of the troubled computer system used to manage state sales-tax receipts has found new problems, resulting in underpayments and overpayments to counties that receive proceeds from the tax. The Legislative Audit Bureau released the report on the troubled Integrated Tax System (ITS) this morning. …… State officials paid American Management Systems $12.2 million for the system, but the cost has since ballooned to at least $27.6 million. The higher costs also are reflective of changes in the contract and changes in the scope of the computer system. In 2003, software problems within the system forced 57 counties to repay the state $24.5 million after the department overpaid them. Last summer, another glitch resulted in 23 counties being shorted $1.3 million and 35 others being overpaid about $2 million.

S.D. County to consider hiring new tech vendor

Source: Craig Gustafson, San Diego Union Tribune (CA), December 21, 2005

……. Northrop Grumman would replace Computer Sciences Corp., which the county hired in 1999 to outsource its information technology services. At the time, the $644 million deal received national attention in technology and government sectors as one of the largest privatizations of government to date. The partnership had its ups and downs. In 2002, the county withheld a $44 million payment because of persistent problems, including computer outages, inadequate Internet bandwidth and lack of anti-virus software. The dispute was eventually settled. ….. The contract with Northrop Grumman calls for the county to spend about $93 million annually, plus additional startup costs in the first year. It is slightly more than the $92 million spent annually in the deal with Computer Sciences.

SCI: Back-tax agency padded bills by $1M

Source: SANDY MC CLURE, Asbury Park Press (NJ), 12/21/05

After a Chesterfield, Mo.-based company hired to collect back taxes and other revenue for New Jersey lavished state officials with food, gifts and drinks, those officials turned a “blind eye” to the company’s padded bills, costing taxpayers at least $1 million, according to a scathing report issued Tuesday by the State Commission of Investigation. Outsourcing Solutions Inc., also known as OSI Collection Services, gave the wide array of gifts, meals, alcohol and outings to at least 20 state employees who were senior and midlevel managers in the divisions of taxation and revenue in the state Department of the Treasury, the report said. ….. The investigative commission estimated that from 2000 through 2004, OSI overbilled the state by $1 million. It charged the state for employees whose work should have been considered administrative overhead and not billable, the report said.

Computer bidding process reviewed / Contract would replace tax system

Source: Eric Eyre. Charleston Gazette (WV), December 20, 2005

State investigators are reviewing a proposed $22.5 million contract to replace the West Virginia Department of Revenue’s antiquated computer tax collection system, according to state officials close to the inquiry. The contract is expected to be awarded later this week to Fast Enterprises, a Denver-based company that specializes in providing computer software to state government tax departments. The Legislature’s Commission on Special Investigations has requested copies of the proposed contract and related documents. State tax division employees have complained that the contract was tailored to Fast Enterprises, which was the only company to bid on the “integrated tax system” contract. Fast Enterprises officials have not been accused of wrongdoing.

Computer contractor dumped

Source: Mark P. Couch, Denver Post (CO), Dec 21, 2005

The state of Colorado ended months of protracted negotiations with contractor Accenture LLP on Tuesday, dumping the company after the state poured $35 million into a computer system that doesn’t work. The state and the company agreed not to sue each other and released a joint statement saying they “mutually agreed to terminate” the contract for a new unemployment-insurance system. In addition, Accenture agreed to refund $8.2 million and to release $7 million more that it claimed the state owed for work it already had completed, said Dan Hopkins, spokesman for Gov. Bill Owens. ….. Genesis is not the state’s only troubled computer system. The secretary of state fired Accenture in November after spending $1.5 million on a $10.5 million voter-registration system. And the $204 million Colorado Benefits Management System developed by EDS continues to roil lawmakers with requests for additional money.

A giant behind the scenes / Already growing fast, Convergys sees opportunity for more

Source: Dan Sewell, Associated Press, Wednesday, December 21, 2005

….. Convergys benefits from two powerful trends: outsourcing, in which companies contract out work to companies that specialize in operations to improve efficiency and save money, and globalization, with operations in some 30 countries, services in 30 languages and clients in nearly 70 countries. ….. In Florida and Texas, Convergys’ contracts and early operations have been subjects of controversy. In Florida, critics say the Bush administration’s $350 million, nine-year agreement with Convergys in 2002 to privatize personnel services for state employees has been marked by glitches and delays. “Since its inception, there have been hundreds of complaints, and it continues up until today,” said Florida Rep. Curtis Richardson, D-Tallahassee, saying something like a change in insurance coverage can still take months to get updated. He doesn’t think enough planning and testing went into the project, which backers in Florida say is improving. But Richardson and other critics acknowledge that such moves to privatization are likely to continue under conservative administrations.

Opinion: In Texas, where there's a need, there won't be wait /State streamlines welfare process, takes lead in reform

By JOE BARNETT and CHRISTY BLACK, Houston Chronicle (TX), Dec. 20, 2005, 9:18PM

In a major step forward for welfare reform, Texas is about to roll out an ambitious program using private sector principles to streamline the process of applying for public health and welfare programs. The reform is expected to save taxpayers more than $100 million a year, while making it easier for people who qualify for social services to enroll in programs and claim benefits. Texas is the first state in the country to implement such a comprehensive, statewide reform, and it could serve as a model for other states. ….. By using both state workers and private contractors who specialize in technology, data management and administrative duties, the system will be more efficient, will cost less and will allow state employees to focus on the people they serve, not the paperwork.

(Note: Barnett is director of publications and Black is a research associate with the National Center for Policy Analysis)

Private funding for I-95 scrapped

Source: MIKE BILLINGTON, The News Journal (DE), 12/21/2005

A controversial plan to form a public-private partnership to overhaul the most congested section of I-95 through Delaware has been scrapped, according to state Department of Transportation officials. The decision to abandon first-ever efforts to create such a partnership will not delay the start of work on the project near Christiana, Transportation Secretary Nathan Hayward III said Tuesday. Work is slated to start in the summer, he said.

Judge hears state, union claims

Source: Jennifer L. Boen, Fort Wayne News Sentinel (IN), Wed, Dec. 21, 2005

Allen Superior Court Judge Nancy Boyer heard nearly four hours of arguments and testimony during a hearing Tuesday related to claims that the state of Indiana failed to follow a state law requiring competitive bids be sought before entering into a public-private contract. Council 62 of the American Federation of State, County and Municipal Employees, or AFSCME, which represents about 200 Fort Wayne State Developmental Center employees, plus union member and 34-year employee Anita Stuller, allege the Indiana Family and Social Services Administration entered into a $95 million contract with Liberty Healthcare Corp. of Pennsylvania without seeking requests for proposals from other vendors.

Toll roads with a cash-out option

Source: Dennis Cauchon, USA TODAY, December 15, 2005

State and local governments are singing a new tune in operating toll roads: selling or leasing them for cash and letting private companies run them. The governments plan to use money from the transactions to build new roads, repair old ones or pay for other programs. The idea has caught fire since Chicago leased its Skyway — an 8-mile elevated highway that carries traffic from the city to the Indiana border — for $1.8 billion in cash to Spanish and Australian investors in January. The Skyway had lost money for decades and only recently had turned profitable, generating $40 million in tolls and $20 million in profits last year. The price for the 99-year lease was more than twice as much as any other company bid. Now other governments around the country are examining what their toll roads are worth and wondering whether they can get a Chicago-style windfall — or at least a good deal.