Second-place company with troubled history gets $41M contract to update Kansas unemployment system

Kansas lawmakers expressed optimism in the company awarded a $41 million contract to modernize the unemployment system, despite troubles with similar work in other states and a stated preference for another vendor.

Tata Consultancy Services will build a cloud-based unemployment insurance system to replace the 1970s-era mainframe technology that has frustrated state employees and was blamed for pandemic inefficiencies.

TCS representatives met publicly for the first time with Unemployment Compensation Modernization and Improvement Council last week

"This should be the last time you ever have to talk about updating the unemployment insurance system or platform, said Tata executive John Griffin. "Because the idea here is that this is a forever modern journey.

"Our objective and our goal is to make sure that you have a platform that will grow with you over time."

Tata effectively became the only company in the running when the first-choice vendor refused a contractual demand, and the other two companies were deemed not qualified.

The $41 million contract covers nearly seven years and excludes the cost of any hardware, software or infrastructure.

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Tata plans to have the platform ready to go live in 26 months — a timeframe that everyone agreed was ambitious. State officials had previously projected three to five years.

"We've been able to drive down the implementation timeline because of the investments we're putting in the product, and our experience and lessons learned," Griffin said.

Troubles elsewhere

While TCS touts its experience doing similar work in other states, the company has had its share of troubles.

TCS started work in 2013 on a project for Maine, Connecticut, Rhode Island and Mississippi, a joint venture to save money that still cost $90 million. When the software went live in 2017, claimants complained they didn't get their benefit checks and couldn't access their accounts.

A Maine Department of Labor memo outlined technical issues with the software, and the state legislature's house speaker alleged that "TCS developed a faulty product."

Jai Saini will oversee Kansas operations in addition to his work in Connecticut, Maine and Mississippi. Jack White is the Kansas project manager after previously running the Maine modernization project.

Saini said TCS's experience in other state will translate into the Kansas project.

"These state have helped us understand how an unemployment insurance journey should be taken, and how we have used that experience over these years to refine our approach," he said.

The Kansas project will start with the latest cloud production system platform in Mississippi and use reporting and employer outreach features from Missouri.

Sen. Caryn Tyson, R-Parker, questioned Griffin about Tata's past work with Nebraska, which ended more than a decade ago. Griffin said the state wanted to take another path and there was no ill will.

Tyson then started questioning Tata's relationship with Orange County, California. The county won a $26 million settlement after accusing Tata of fraud in their work to replace a property tax system.

A bad internet connection for Tyson, who attended the meeting remotely, doomed the public questioning. Tata representatives offered to meet with Tyson privately.

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"This company does what it says, and we and we say what we do," Griffin said. "We make commitments, we make an agreement like we have here, and we stick to those agreements, and we get things done.

"Doesn't mean it's always, you know, there's not bumps in the road. Projects always run into bumps, right? But the difference is we dig down, we invest where needed, we partner to get the work done.

"And you know, as evidence, you can certainly talk to any of our other customers where we've done work either in the private sector or our other employment insurance customers, and they would give you — I'm confident — a similar perspective."

Tata wasn't the preferred choice

The Capital-Journal previously reported that the four finalists competing to modernize the system had all struggled with similar work in other states. The other three firms were Accenture, FAST Enterprises and Sagitec.

Modernization council chair Rep. Sean Tarwater, R-Stilwell, alleged the governor's office directed the request for proposals to be "narrowly written for one company," which he identified as FAST.

"That was the initial choice, of course, because they wrote it for them," he said.

Officials publicly said that only two companies — presumably FAST and Tata — were deemed qualified by the procurement committee.

Rep. Kyle Hoffman, R-Coldwater, expressed frustration that, as a member of the procurement committee, he had no knowledge that the state had switched to negotiating with the second-place of the two qualified companies — let alone finalized a contract with them.

"I found out that we were negotiating with a different company from rumors around the capitol," Hoffman said.

Negotiations with FAST broke down when the company refused a contractual demand from Kansas that would have made the company liable for a data breach, officials said.

State administrators then turned to Tata and the company agreed to a $26 million liability limit for a data breach.

"That won't even begin to scratch the surface," Tarwater said of the limit, pointing to a trust fund approaching $1 billion.

Griffin said the amount roughly equates to the contractual compensation amount for implementation of services.

Lawmakers confident in Tata

Hoffman's frustrations over the process did not appear to extend to Tata's qualifications.

"I'm confident that Tata is going be a good fit for us," he said. "I think that they will put out a good product for us."

Tata could be in line for more work in Kansas if the KDOL modernization project leaves the state satisfied.

Sen. Jeff Pittman, D-Leavenworth, asked, "if this project turns out to be a raging success," whether the platform could be extended via a new contract for use in other agencies.

Griffin said it would depend on technical details, but such a potential would exist and that other customers are making similar considerations.

Asked afterward whether he is confident in Tata's abilities, Tarwater demurred.

"Now that it's over, I'm looking forward to working with them and making the best product we can," he said.

Rep. Stephanie Clayton, D-Overland Park, said she is confident in Tata's ability to produce a quality system for Kansas.

"Yes, I am," she said. "Because, you know, honestly, I'm confident in the ability of KDOL and the people who are working at that level to make the good choices for what a security system looks like.

"We've seen some of the other states that this company has worked in, and I think that those states have been doing well. And I also think that we have provisions in place to make sure that we're holding them to the highest standards."

Jason Tidd is a statehouse reporter for the Topeka Capital-Journal. He can be reached by email at jtidd@gannett.com. Follow him on Twitter @Jason_Tidd.

This article originally appeared on Topeka Capital-Journal: Tata TCS awarded $41M contract to modernize Kansas unemployment system