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Legal payments? PA Treasury holds back funds for new website manager

By   /   April 30, 2013  /   2 Comments

By Melissa Daniels | PA Independent

HARRISBURG – Pennsylvania taxpayers could pay more for updates to state online services than a recent contract would otherwise suggest.

MCCORD: The state treasurer's office is holding off payments to NIC until it hears back from the administration.

MCCORD: The state treasurer’s office is holding off payments to NIC until it hears back from the administration.

But first, state treasury officials must decide if the payments are even legal.

The Corbett administration entered a no-bid contract with eGovernment services firm NIC USA, in late 2012. The company provides all website design, hardware, implementation and management – and the state pays nothing up front.

Yet the administration is now asking the state Treasury for $2.6 million dollars to give to NIC. Those payments are on hold until state Treasurer Rob McCord and his office decide whether the payments are legal and appropriate.

Like 28 other states who use NIC, website design and development is meant to be self-funded, meaning the state’s ability to maintain its websites is contingent upon certain fees paid by website users. The company offers a broad variety of functions for businesses and residents to use online, like license renewals and records requests, some of which carry fees that fund website development.

But the administration won’t wait for those funds to roll in before it starts paying NIC.

The state wants to pay NIC what it already would have collected if the first fee, on obtaining driver history records, was already in place. The $2 fee, charged on insurance companies who request the records, is set to kick in on July 1, 2013.

If that fee was already in place, the total windfall would be $2.6 million, according to three invoices received by the treasury. The amount was calculated using a $2 fee on actual sales figures for January, February and March.

Dan Egan, press secretary for the Office of Administration, said the state is requesting payments because it faces a deadline of 2015 to get off its current platform, due in part to server and software issues. Because it takes 18 to 24 months to build a new software platform and redesign websites, the state didn’t want to delay the process, Egan said.

“The last time we redesigned the websites and moved to a new technology platform, it took about two years and still came down to the wire for some websites,” Egan said in an email to PA Independent.

Egan said the decision also allows the state time to notify companies who purchase these particular driver’s records about the fee before it kicks in.

MATZIE: The Beaver County lawmaker sees more than one red flag within the state's new eGovernment services contract.

MATZIE: The Beaver County lawmaker sees more than one red flag within the state’s new eGovernment services contract.

Rep. Rob Matzie, D-Beaver, said the administration doesn’t have the right to assess fees on residents or businesses without permission from the General Assembly – and he’s also concerned the state entered the contract without a competitive bid.

Matzie reached out to the state’s row officers, calling attention to the deal. And he asked McCord to halt payments. Matzie said there’s no language in the contract allowing these extra payments outside of transaction fees.

“If they wanted a transition to occur sooner and they put it out to bid, that could’ve been part of the RFP (request for proposals),” Matzie said.

In addition to enlisting McCord’s review, Matzie is also working on legislation that would require the General Assembly to sign off on any fees added to commonwealth web transactions.

Treasury press secretary Gary Tuma said the department is still waiting to receive answers from the administration about the payments before it decides whether they’ll be issued.

“Some of our questions revolve around some of the amounts contained in the contract, and the approval process for the contract,” he said.

But Tuma said this review process is fairly standard, as other payments are similarly screened. Tuma said the department receives millions of requests for payments each year, and several hundred a month or more require a review before the office signs the check.

To Matzie the review is a welcome opportunity to look into what’s going on with the administration and NIC.

“There’s a lot of questions that still need to be answered.”

Contact Melissa Daniels at [email protected]


Melissa formerly served as staff reporter for Watchdog.org.