Outsourced website no cost to state

Kansas company will be paid by transaction fees, officials say

Staff writerMarch 11, 2013 

State government plans to outsource the operation of its main face on the Internet to a private company that it says can run the Access Washington website at no cost to state taxpayers.

Kansas-based NIC Inc. will, of course, recoup its expenses – along with a profit – for running the Web portal and other “e-government” services for the state. But the money will come from transaction fees on businesses that, for example, want information about vehicle licenses.

“Under this model, there is essentially no cost to the state,” Gov. Jay Inslee’s budget director, David Schumacher, wrote in a March 5 letter giving the Department of Enterprise Services the go-ahead to award a contract to NIC.

Separately, the letter also allows contracts with at least two companies, possibly along with NIC and a fourth company, that state agencies can choose to design their own websites. The estimated savings to the next two-year, more than $31 billion state budget: at least $1.8 million.

It’s the first major outcome of a process that started with a state law passed nearly two years ago requiring an examination of government services that could be more efficiently performed by the private sector.

The 2011 law, which also created Enterprise Services in a merger, allowed it to look at the work while bypassing the usual outsourcing procedures of letting groups of state employees bid to keep the work in-house.

Enterprise Services solicited the Web bids along with two services that are still under review: state-government mail delivery outside Thurston County, and bulk printing. Under the current in-house setup for Web work, seven state employees at Enterprise Services maintain Access Washington and the websites of state agencies, nonprofits and local governments that choose to pay the equivalent of $161 per hour for the work.

Those seven jobs will be eliminated without layoffs, Enterprise Services spokesman Steve Valandra said.

“They’ll assume other duties within the agency. They won’t lose their jobs,” he said.

A spokesman for the largest state-worker union, the Washington Federation of State Employees, said it would monitor outsourcing to see if promised savings materialize.

The governor’s office, the Licensing, Health and Military departments and a few other agencies use the workers’ services, but most agencies and nearly all local governments run their own sites or go elsewhere.

Six companies bid to do Web work, including five that survived an initial disqualification and four that met the approval of Enterprise Services and OFM for the agency work.

Just one, Imex, offered prices dramatically lower than what is provided in-house. OFM concluded both Imex and the company Logic 20/20 would be cheaper and approved Enterprise Services to award contracts to both firms for agency work. OFM also opened the door to contracts with NIC and Valtech for the same services if lower prices can be negotiated.

All four would be master contracts with no guarantee that agencies and governments would choose to use the companies. Each project would require separate negotiation.

The more immediate change is the planned contract with NIC for financial transactions and Access Washington, an online portal with links to state agencies and services.

Schumacher wrote that while such agencies as Licensing and Revenue have moved key services online, others lag behind, citing a state auditor’s findings that just 16 percent of state business licenses are available through the state’s central licensing portal.

NIC manages the Web portals of at least 23 states, he wrote, and has created an e-government library of information that can be reused across states and agencies. It has the scale to provide services that Enterprise Services and many other agencies can’t, such as online payment processing, which requires an expensive security system, he wrote.

Asked to describe how the services work, a spokeswoman for NIC declined to comment, citing the ongoing procurement process.

But the new setup promises to allow people and companies who deal frequently with state government to set up accounts linked to their checking accounts or credit cards, as they do for private-sector companies.

The money-making part of NIC’s “self-funded” operation involves taking over “optional” transactions with businesses, such as an existing state offer of vehicle licensing information to brokers that resell it to insurance companies, employers and others.

NIC operates by making such transactions more convenient for businesses and then charging for the services, Valandra said.

Which services would qualify and how much would be charged in fees are still open questions, and would be approved by some kind of state overseer such as a board, according to OFM. Agencies would be able to choose whether to use NIC.

A lawmaker who pushed for the 2011 law welcomed the modest savings and said the transactions seem like an acceptable way for the company to recoup costs.

“As long as it’s voluntary, then it seems fine,” said Sen. Michael Baumgartner, a Spokane Republican who is now sponsoring another measure to expand the number of state services to be considered for outsourcing.

Jordan Schrader: 360-786-1826 jordan.schrader@ thenewstribune.com Download the Capital Update app for iPad and iPhone for a seven-day free trial.

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