NewsLocal News

Actions

Scrapped financial system cost Iowa taxpayers $15.7 million

Cash money
Posted at 9:19 PM, Mar 27, 2023
and last updated 2023-03-27 22:19:55-04

The state of Iowa spent roughly $15.7 million on a financial-management system that was ultimately scrapped before its launch, the governor’s office said Monday.

Last week, Gov. Kim Reynolds announced the state had terminated its controversial contract with the software company Workday.

The first component of that contract, which was for personnel-management software, was successfully launched in 2021. But the second component, for a financial-management system, never got off the ground, with state officials saying Workday’s system didn’t meet their needs.

The state eventually hired a different vendor, CGI, to devise a new system for financial management.

Reynolds’ spokesman, Kollin Crompton, said Monday the amount spent on the scrapped financial-management portion of the Workday contract was roughly $15.7 million. 

He noted the state was spared any additional costs related to implementing the system because work on the contract was suspended last summer before the testing phase had begun. Had the state continued to move forward with testing, he said “there would have been an additional cost of $3.5 million for Workday’s services.”

Crompton said that with the switch to the new vendor, CGI, the state is estimating it will save $8.6 million over the next 10 years, even with the $15.7 million Workday expenditure factored into the equation.

Dean Fiihr, communications director for the Iowa House Democrats, said Monday that members hadn’t yet decided whether they’ll attempt to have the issue examined at an Oversight Committee hearing in the GOP-controlled Legislature.

Reynolds, a Republican, had asked the GOP-controlled Legislature to approve the Workday project during its 2020 session. Lawmakers turned her down, saying there wasn’t sufficient gambling revenue in the state’s infrastructure fund due to the pandemic.

At the time, some lawmakers also expressed concern that the state had bypassed the competitive bidding process before contacting with Workday, which hired the governor’s former chief of staff as one of its lobbyists. The Legislature approved $21 million for the contract in 2021, after Reynolds returned the federal money.

Friday’s announcement about the cancellation of the Workday contract came 27 months after Reynolds was forced to return $21 million in federal pandemic aid to the state’s coronavirus relief fund after the federal government said the money had been improperly spent on a contract with Workday for personnel software.

The Treasury Department’s inspector general had raised questions about Reynolds’ decision to use federal CARES Act money to pay for Workday’s five-year, $20 million contract, noting the contract was signed in 2019, before the pandemic began.

Iowa Capital Dispatch is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Iowa Capital Dispatch maintains editorial independence. Contact Editor Kathie Obradovich for questions: info@iowacapitaldispatch.com. Follow Iowa Capital Dispatch on Facebook and Twitter.

Download our apps today for all of our latest coverage.

Get the latest news and weather delivered straight to your inbox.