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PA treasurer denies website payments while admin continues contract

By   /   June 7, 2013  /   No Comments

By Melissa Daniels | PA Independent

SERVER TROUBLE: Pennsylvania’s technology infrastructure will be soon due for an upgrade. A contract with NIC USA for eGovernment services could provide such upgrades.

HARRISBURG — The Corbett administration is locked in a disagreement with State Treasurer Rob McCord over several million dollars for website work.

The administration wants $3.4 million for Pennsylvania Interactive, NIC’s local subsidiary, which Treasurer Rob McCord has officially denied to pay.

But the administration isn’t backing down, and work with NIC continues.

McCord said administration of Gov. Tom Corbett was “cutting corners regarding contracting practices,” partly because it asked for payments not included in the original contract.

The contract with NIC was supposed to be “self-funded.” NIC serves dozens of states with online services by charging user fees that, in turn, fund the company’s development. But after the contract was approved in Pennsylvania it was amended to pay NIC up to $5 million.

“Such a substantial amendment to the contract amount requires resubmission to the Attorney General for approval, which was not done in this instance,” according to a statement from Treasury.

Treasury, in a nine-page letter to the administration, explains its denial was also based on the administration’s failure to justify these payments and the granting of a no-bid contract — with the possibility of money changing hands.

“In light of possible direct payments from the commonwealth totaling $5 million (with $3.48 million requested so far), Treasury questioned how the commonwealth concluded there would have been no other bidders had a normal procurement process accurately described the commonwealth’s interest in contributing substantial revenue to the project,” Treasury official said.

McCord’s office said four separate invoices for the $3.4 million were not properly filled out. Though the administration said the fees would be for consulting services, standard information such as names of individuals and hourly rates were not included. Beyond the invoices, “apparent sweeping exemptions from existing state policy to avoid subjecting citizens to transaction fees for online services” also were noted.

But administration officials say the only thing unusual about this contract is Treasury’s treatment of it. McCord, though he has not made a formal announcement, is frequently considered a potential Democrat primary candidate for governor. A new Quinnipiac University Polling Institute release shows McCord besting Corbet,t 43 percent to 35 percent.

Nils Hagen-Frederiksen, press secretary for Office of General Counsel, said the administration stands behind the legality of the contract.

He points to other information technology contracts — such as one for data storage with Unisys and another for phones and web service with Verizon — that sometimes require invoices for additional payments beyond their multi-million contract figures. In those cases, there’s no standard or precedent for re-submitting contracts, and Treasury pays those without protest, Hagen-Frederiksen said.

“There are numerous other contracts out there that are structured very similarly to the NIC contract and operate in a very similar manner and are paid routinely by the Treasury department without any of the allegations or concerns or issues that have been raised by Treasurer McCord,” Hagen-Frederiksen said.

He called Treasury’s arguments “red herrings” and said it’s not McCord’s role to “like” the contract or decide how to solve the state’s computer problems, which include outdated websites, pending server upgrades and software expiration. 

The administration is “reviewing its options” regarding the NIC contract, Hagen-Frederiksen said.

Despite the payments quarrel, NIC isn’t going anywhere. The company issued a news release reiterating its commitment to being “the best private sector partner” with which Pennsylvania has worked.

And not getting the $3.4 million hasn’t stopped that work.

“We will continue to operate in good faith and make ongoing investments in Pennsylvania’s eGovernment program for the benefit of Pennsylvania agencies and the citizens and businesses they serve, as we work through these issues,” said a statement from Harry Herington, chairman and chief executive officer of NIC.

Dan Egan, press secretary, for the Office of Administration, said Pennsylvania Interactive continues to work in a diligent fashion, just as it did before McCord’s announcement. The state may begin to roll out new user fees on websites this summer to fund the web work, but some of that depends on the state budget plan, Egan said.

Still, the state will soon have a redesigned PA.gov, as well as websites for the governor and related content, Egan said. All of the sites will use responsive design, meaning the sites will adapt to smartphones and tablets.

NIC offers a suite of services that include user-based apps and back-end management of state websites. That includes setting up all new servers, a crucial point to maintaining the commonwealth’s websites as the state’s servers are upgraded in 2015.

“This hasn’t affected operations or progress towards migrating the websites, or anything like that,” Egan said.

Contact Melissa Daniels at [email protected]


Melissa formerly served as staff reporter for Watchdog.org.