Gov. Laura Kelly finalized the decision Thursday to terminate a pair of 10-year contracts with CGI Technologies valued at $111 million that were negotiated by now-departed officials at the Kansas Department of Revenue who engaged in a secretive bidding process.
The contracts with CGI, voided for nonperformance issues, included the 2017 deal to upgrade the revenue department's tax collection, fraud analysis, auditing and deposit systems. The other contract, signed in 2018, put CGI in charge of maintaining the agency's internal IT systems.
"CGI was not able to adequately perform its obligations under the contracts," said Mark Burghart, revenue secretary in the Kelly administration. "After a thorough review, we determined it was necessary to end these contracts and take a different approach to obtaining enhancements to the state’s tax operating systems."
The state has paid $28 million to CGI under the agreements reached while Republicans Sam Brownback and Jeff Colyer were governor.
Last year, the revenue secretary under Brownback and Colyer, Sam Williams, said he was sufficiently confident in the ability of CGI to deliver that he moved to privatize technology services at the agency and drop more than 50 state employees from the payroll. Williams also said he was unconcerned about criticism of his handling of the CGI deals.
"The decisions I make, the negotiation of whether that was a good decision or a bad decision, is going to be between me and my boss, not between me and the public. Because I wasn’t elected — I was appointed. The governor was elected, OK?" Williams said.
To secure the deal with CGI, Williams said, the revenue department decided not to take open bids. He said the process was appropriate if he limited negotiations with companies that had an existing relationship with state government. Once negotiations were completed with CGI, the company's competitors were given one week to object to the contracts.
Kelly said the process relied upon by the Colyer and Brownback administrations to hire CGI was contrary to the guidelines for state procurement and produced agreements not in the best interests of the state.
"For many years, I have voiced concern about the frequent use of ‘no-bid’ contracts under the previous administration," Kelly said. "This practice bypasses the official state bidding process designed to ensure that contracts are transparent and in the best interests of Kansans."
A formal letter was sent to CGI terminating the contacts, but the Kelly administration had been reviewing IT operations in the revenue department since taking office in January.
"My administration will continue to review contracts from the previous administration, limit the use of ‘no-bid’ contracts, and increase transparency," Kelly said.