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State cancels short-term plans to outsource payroll system
Cancellation of request for bids due in part to ‘ambiguous or otherwise inadequate specifications,’ according to notice published Thursday
By Mark Sabbatini
Juneau Independent
This is a developing story.
Plans by the Dunleavy administration to outsource payroll operations for state government employees to a private contractor, possibly as soon as November, have been cancelled, according to a notice issued Thursday by the Alaska Department of Administration.
A request for bids from companies interested in taking over payroll operations is being shelved because "the award is not in the best interest of the state," wrote Tom Mayer, the state’s chief procurement officer, in the notice.
He cited two other administrative criteria for the decision: "ambiguous or otherwise inadequate specifications were part of the solicitation," and "the solicitation did not provide for consideration of all factors of significance to the state."
Attempts by the Juneau Independent to contact Mayer for further details about the decision were not immediately successful Thursday afternoon.
The state’s payroll system has been problematic for years, prompting the Dunleavy administration in April to solicit vendors about taking over operations, with bids in a subsequent request for proposals due Oct. 1. The Alaska Beacon reported on Oct. 5 a contract could be awarded as soon as November.
Concerns about the outsourcing plan were raised earlier this month signed by 16 of 20 members of the Alaska State Senate. A letter with similar questions was sent by 13 members of the 21-member Democratic-led House majority caucus.
State Sen. Jesse Kiehl, a Juneau Democrat who was among those helping to draft the letter by members of that chamber, said in an interview Thursday that while problems with the state’s payroll need to be resolved, it should be a more fully considered process after a new governor is sworn in and the session reconvenes in January.
"What I know is at this point we still have a really old, clunky payroll system," he said. "We have got to upgrade, fix, replace, repair it, and there are a bunch of good ways to do that. I'm glad we're not doing it a bad way."
The Department of Administration stated its intent was to replace the state’s $10 million payroll operation with a proposed $4 million third-party contract. The letter from senators questioned, among other things, the criteria being used to implement such an agreement.
"We understand only a single bidder is now participating in the process," the letter states. "If true, this raises serious concerns about both the wisdom of the limited process and whether the state could even receive a competitive price. Would your department proceed with a sole source?"
State union leaders issued a press release Thursday praising the administration’s decision.
"We agree with the State’s determination that outsourcing payroll is not in the best interest of the state” Jeff Kasper, business manager of the Alaska Public Employees Association/AFT, said in a prepared statement. “This is a victory for good government and the State of Alaska as a whole. Beyond contract violations, we had serious concerns about the State’s move to fast track this without the scrutiny a decision of this magnitude deserves.”
• Contact Mark Sabbatini at editor@juneauindependent.com or (907) 957-2306.
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