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State won't pursue $5.1M owed after treasurer refuses to pay

| Thursday, Sept. 19, 2013, 12:01 a.m.

HARRISBURG — A company hired by Gov. Tom Corbett's administration to run Pennsylvania's executive branch websites will forgo $5.1 million it believed it was owed after state Treasurer Rob McCord refused to pay it.

A Corbett spokesman, Dan Egan, said on Wednesday that the administration and Kansas-based NIC Inc. agreed that it was in the best interest of their partnership to move on. In a Sept. 6 filing with the Securities and Exchange Commission, NIC said it had decided not to pursue the collection of the money and to write off the amount due.

The administration hired a subsidiary of NIC under a five-year, no-bid contract late last year to manage the state's website infrastructure and technology. The contract initially was billed as a self-funding contract to be financed by new fees slapped on certain high-volume information requests by businesses.

The subsidiary, Pennsylvania Interactive LLC, began work on the websites before any fee took effect and instead billed the state for the $5.1 million, essentially what it would have raised from the fee in the six months between Jan. 1 and June 30, Egan said.

But McCord cited concerns over the contract's legality and propriety, and said the Corbett administration cut corners on contracting practices, inflated the contract value beyond the original approved amount and used a no-bid process without adequately justifying it.

A spokesman, Gary Tuma, said on Wednesday that billing the state flew in the face of the self-funded contract that the administration had advertised.

Instead, the NIC subsidiary will begin to see revenue on the contract in late October when a $2 surcharge is expected to begin applying to requests for driver records by wholesalers that then sell them to insurance companies that monitor the activities of policyholders. The fee, which would rise from $5 to $7 per record, could trickle down to the cost of automobile insurance.

The state has informed wholesalers of the new fee and given them a 45-day period to align with the new system, Egan said.

The first website to be up and running under the contract will be the state's main site, www.pa.gov, in October, he said.

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