Government and Technology and Media & Marketing

Haverstick lands DWD's controversial IT contract: Original award to India-based Tata was election issue

August 8, 2005

Last year, it was the contract that helped turn the gubernatorial election. Now, it's a nice piece of business for Carmel-based Haverstick Government Solutions.

When Indiana awarded a multimilliondollar project to an India-based information-technology developer, Gov. Joe Kernan, a Democrat, endured intense criticism. By November, Kernan had canceled the agreement with Bombay-based Tata Consultancy Services Ltd. He also introduced "Opportunity Indiana," an initiative for government-procurement reform.

But the political damage had already been done. Republican Mitch Daniels triumphed at the polls. After taking office, he kept many of the measures Kernan began and added a few of his own to foster an "Indiana bias" when all other contracting factors are equal.

For the second go-around, the state considered five potential vendors to modernize the Department of Workforce Development's antiquated mainframe computers. DWD Commissioner Ronald Stiver said Haverstick was the only one based in the state, although all the vendors had some Indiana ties.

In each category including price, Stiver said, Haverstick scored equal to or higher than every other vendor. Because the contract hasn't been finalized, DWD wouldn't reveal its terms. The General Assembly originally appropriated $39.2 million for the contract, though some of that was already spent on the Tata deal.

DWD announced Haverstick's selection on July 27. Observers had long expected the contract to go to an Indiana firm, and the choice received scant media attention. But if the contract had again gone out of state, it might have made headlines Daniels wouldn't like.

"The administration certainly has to be pleased that it worked out this way," said Indiana Legislative Insight Publisher Ed Feigenbaum.

Tata did not return IBJ's call requesting comment, and it was not clear whether the firm sought the contract this time around. Haverstick Government Solutions CEO Howard Bates declined IBJ's request for an interview, instead issuing a written statement.

"We look forward to collaborating with the Department of Workforce Development to create a customer-focused system that will significantly benefit Indiana employers and the individuals who rely upon it," Bates wrote. "When the new system is completed, Indiana will have one of the fastest, most flexible and costeffective systems in the United States."

Developed in the late 1980s, DWD's current system is a patchwork of aging technologies that are increasingly difficult to maintain. Fewer IT professionals each year are willing or able to support it.

The new system is supposed to be fully operational by 2008. Besides increased efficiency, it will allow DWD to mine for a wealth of work-force information. Stiver said it will be a key tool in his effort to make better decisions via better data.

The government contracting process is considered a Byzantine maze by many business leaders. Their inability to penetrate that maze was partially at the root of Tata's original award. But thanks to the reforms Kernan began and Daniels completed, Indiana companies will likely have an easier time earning state contracts in the days to come.

Steve McNear, CEO of locally based Quest Information Systems Inc., said the state's efforts are already paying off.

Improved communication has leveled the playing field, he said. It's now easy for small IT companies to receive e-mail notification when state contracts become available.

In addition, bid bonds, which favor large companies with excess cash, are no longer a barrier. And the state is now willing to consider teams composed of relatively small Indiana firms. A global anchor from out of state is no longer a necessity.

Quest competed for the DWD mainframe contract as part of a team with Blue Bell, Pa.-based Unisys, McNear said. Even though his application fell short, he said he's happy to see an Indiana-based company win.

"[The state is] making it very clear to everyone how it all works. To me, it's a matter of leveling the playing field," he said. "I think they're giving local, small Indiana companies a lot more credibility than we've seen in the past."
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