Non-Competitive Contracts Don’t Compute

The PA Revenue Department’s main computer system was installed in 1975. The outdated system’s technological language, COBOL, is not even taught in universities anymore, narrowing the number of applicants who can work with the Department’s system. Some operations can’t even be done by the current computers; employees have to manually calculate some tax figures! The Revenue Secretary, C. Daniel Hassel, actually believes the computers could crash at any time.

Certainly, we do not begrudge the Department of Revenue this desperately needed upgrade. The expected cost is reasonably high at $100 million. Additionally, accusations that the current contract was a no-bid one are cause for concern.

The Department issued a request for contract bids in April 2009 and selected Accenture six months later, but rescinded the selection to add a specific software requirement to the contract. Accenture agreed to add this requirement to the upgrade procedure, and the Department of General Services re-contracted the company. Another bidder, Fast Enterprises, is suing for the contract.

From the start, Fast Enterprises submitted an original bid of $53 million, much less than Accenture’s original bid of $65.4 million. Some speculate the companies’ locations influenced Pennsylvania decision-makers. Accenture has offices in Philadelphia and Pittsburgh, while Fast Enterprises is based in Colorado.

No-bid contracts help nobody. In this case, the commonwealth chose to overpay one local company at the expense of all Pennsylvania taxpayers. Competition is foundational to shrewd financial dealings, and Pennsylvania’s fiscal shapeup is far overdue.