Gov. Asa Hutchinson sent a letter to legislators Thursday outlining steps his office is taking to stem cost overruns in state contracts.
All information-technology contracts that could cost more than $100,000 will now be reviewed by the governor's office and the Department of Information Systems before bids are requested.
The governor also said his office is already reviewing all new contracts that have possible values of more than $1 million.
"I wanted the General Assembly to know the steps that this administration has taken to deal with these contracts that have been problematic," Hutchinson said. "We've taken a number of steps in terms of oversight of not only these contracts but also the entire contract procurement process, insisting upon better statements of scope of work, review by procurement office at [the Department of Finance and Administration], review engaged by our office depending on the level of the contract."
Janet Wilson, Information Systems Department spokesman, said in an email that the department now has an enterprise architect and general counsel directly engaged in the review process to ensure that contracts are sound.
The goal, she said, is to make sure technology procurement "leverages the state's buying power to maximize taxpayer dollars."
"It appears the governor is reinforcing that directive with his letter to the Legislature," she said.
The move comes after legislators questioned the state's payments to CH Mack Inc. to provide an electronic tool to evaluate developmental disability clients that the company was supposed to develop for $2.14 million by 2012. The Department of Human Services originally contracted with the company in 2011.
The department extended the contract and asked for additional services. By 2014, CH Mack had been paid $4.8 million but had not developed a suitable tool. CH Mack has since changed its name to AssureCare.
Tim Lampe, director of the office of quality assurance at the Human Services Department, said in May that the contract was handled as a purchase order, limiting what the department can do to recover any money.
Hutchinson said Thursday that he wants lawyers to look at contracts in the future to ensure that they have enforceable provisions so that "if there's a failure of performance, we can actually pursue against the vendor."
The Human Services Department dropped CH Mack in 2014 and shifted work on the project to CoCENTRIX.
That company has been paid $8.8 million so far, and DHS expects to spend about $16.4 million for a five-year contract to use the company's software.
The software would be used to evaluate about 12,200 people.
Between CH Mack and CoCENTRIX, the project is set to cost more than $21 million -- about $1,700 per person served.
Hutchinson wrote in his letter to lawmakers that the Human Services Department is working with CoCENTRIX to reduce the cost.
More than one of the department's contracts has had problems. The department is withholding $1.2 million from IBM Curam, which runs the enrollment and eligibility framework for the agency.
"The primary problem that brought this about was the fact that two modules within IBM's Curam software that we would need to use would not integrate, which meant that DHS caseworkers would have to enter a client's data multiple times if the client was applying for more than one assistance program," said Amy Webb, a department spokesman. "That clearly isn't the most efficient approach, so we want a solution to that before moving forward."
Hutchinson highlighted the problem but did not reveal the company name in his letter and would not disclose it when asked by a reporter. Webb provided the information in response to a state Freedom of Information Act request.
The governor said the Human Services Department employed Gartner Group to find a possible replacement for the framework.
The contract to employ the consulting company also was criticized by lawmakers at an Arkansas Legislative Council committee meeting Tuesday. The Department of Information Services did not ask for different companies to bid on the work, and the contract was given to legislators at the last minute.
Mark Myers, Information Systems Department chairman, said a sole-source contract was chosen because speed is needed to deal with the problems created by the IBM Curam software and because the Gartner Group already had expertise with the department's systems.
The company doesn't sell any software or equipment, so its advice isn't biased, he said.
State Sen. Joyce Elliott, D-Little Rock, said greater scrutiny is needed on sole-source contracts.
"I'm not sure I understand at this point, other than preference about how you want to proceed, why we're not engaged in a [request for proposals] process," she said during Tuesday's meeting.
Hutchinson said in his letter that sole-source contracts will receive a higher level of scrutiny by the Department of Finance and Administration.
"This heightened review, which calls for additional questions by DFA and a requirement that vendors provide a detailed 'scope of work' for each contract, is intended to reduce the number of sole-source contracts let by the state and renew the state's commitment to competitive bidding."
Information for this article was contributed by Michael Wickline of the Arkansas Democrat-Gazette.
A Section on 06/12/2015