State delays firm’s contract amid jobless computer ills

Michael Gerstein
The Detroit News

Lansing — A $75 million contract to overhaul the Secretary of State’s old computer system has been delayed because of concerns over the bidding company’s role in a Michigan unemployment benefits system beset with problems.

The State Administrative Board scrapped a Feb. 7 meeting agenda item to consider Colorado-based Fast Enterprises for the Secretary of State Department’s computer system overhaul. The decision was delayed because “further discussion was needed due to recent concerns” with the Unemployment Insurance Agency’s computer system, said Caleb Buhs, a spokesman for the Department of Technology, Management and Budget.

Fast Enterprises developed the system that led to false fraud accusations against more than 20,000 Michigan residents and that many times led to wages being wrongfully seized. It resulted in two lawsuits against the state, one of which was recently settled with accompanying broad policy reforms for the agency.

Fast Enterprises also developed the latest software update to the unemployment system that led to the potential exposure to unauthorized viewers of nearly 1.9 million Michigan workers’ Social Security numbers and names. The security breach is under investigation by the State Police to determine how many individuals were affected.

Buhs said Fast Enterprises’ contract with the Secretary of State’s Office has not been canceled. But the State Administrative Board’s consideration was delayed because of the prior problems after a committee in the Secretary Of State’s Office recommended Fast Enterprises.

The Department of Technology, Management and Budget made the decision with the Secretary of State’s Department to pull the item from the agenda.

But Buhs and Secretary of State spokesman Fred Woodhams both said the administrative board could still approve a contract with the company. Board members include Gov. Rick Snyder, Lt. Gov. Brian Calley, Secretary of State Ruth Johnson and Attorney General Bill Schuette.

On Friday, Snyder did not give a firm answer about whether the state will consider switching to another company for future state computer system contracts.

“Well again, we had issues,” Snyder said after a State Trooper graduation ceremony in Dimondale. “...The recent IT (information technology) issues are something we’re still investigating, but we always need to be careful about that with any kind of IT projects in this environment.”

He said officials will “be making a review of all those issues.”

Democrats have criticized the Snyder administration for sticking with Fast Enterprises and for not doing enough for wrongfully accused individuals whose money was seized by the state.

House Minority Leader Sam Singh, D-East Lansing, said after the latest glitch that Snyder should choose a different company to supply technology for the Unemployment Insurance Agency.

“People had access to very sensitive information — that’s the No. 1 thing vendors are supposed to protect,” Singh said. “It makes absolutely no sense to me why this governor allows this vendor to receive any state dollars from us.”

Spokesman James Harrison said said Fast Enterprises — which has clients across the country — is one of the few “that can do what we do.”

“I’m not saying we would be shocked if they decided to move forward for us,” Harrison said. “As far as we know ... we’re still under consideration.”

Twitter: @MikeGerstein