Outsourcing at Kansas Department of Revenue could mean dozens of layoffs
The Kansas Department of Revenue will lay off nearly 60 employees as it moves its information technology service to CGI Technologies, which was given no-bid contracts worth nearly $60 million despite criticism of its operations in the rollout of the federal health care website in 2013.
The 56 workers losing their jobs will be allowed to apply for CGI jobs in Topeka or could be matched with other jobs in the revenue department or other areas of state government, department spokeswoman Rachel Whitten said Wednesday.
The contracts were signed in 2017 with CGI Technologies, a subsidiary of Canadian-based CGI Group, which has several government contracts. CGI was one of the primary contractors that developed healthcare.gov, which was plagued by technical problems at launch. North Carolina ended an $85 million contract with CGI for tax software in 2014.
Neither Kansas nor CGI has publicized the company’s new role in state government. CGI is contractually prohibited from saying Kansas is a customer.
Legislative leaders didn’t know about the contracts until the layoffs became public knowledge, according to Republican House Majority Leader Don Hineman.
“The Legislature was not informed. As a member of leadership, it’s brand new to me,” Hineman said, noting that he first learned about the contracts Wednesday.
One of the Kansas contracts — worth $53 million — requires the company to operate and support the revenue department’s tax systems. Another contract requires CGI to improve the state’s debt collection, including providing a self-service portal to allow people to pay back taxes and create payment plans. The total cost of the contracts over 10 years is $59 million, The Wichita Eagle reported .
CGI will receive 80 percent of the revenue and Kansas gets 20 percent from the portal until the company has earned $4.2 million. Kansas will keep 100 percent of revenue after that.
Kansas has gained $15 million in new revenue over the past 10 months because of the self-serve portal, Whitten said.
A form explaining why the state didn’t put the contract out for bids indicates the department already uses software from American Management Systems, which later became CGI.
“There is no known alternative to CGI that would not require significant upfront investment by the (department) IT staff to bring up to speed and would also require some form of licensing agreement with CGI to be able to maintain the applications in a similar manner,” the form says.
State Sen. Laura Kelly, a Topeka Democrat who is running for governor, said lawmakers haven’t been able to get much information on the contract from the administration since last year. She pointed to problems with the state’s privatized Medicaid system as proof that the state should carefully consider privatizing its services.
“We’ve seen how trying to use a private company to do state business doesn’t work,” Kelly said. “We’re just giving money away to private companies and either they’re not producing or they’re reaping excessive rewards.”