Embattled Tech Firm Keeps State Contract

While a mushrooming scandal complete with state and federal investigations prompted two Texas state agencies to cancel contracts with Austin technology outfit 21CT last month, the state of Texas has not completely cut ties with the company.

The Texas secretary of state’s office confirmed Thursday that it is maintaining a contract signed in 2012 with 21CT, also known as 21st Century Technologies Inc., for information technology security services.

“We are confident our procurement process was done correctly,” said spokeswoman Alicia Pierce. “Just like any other vendor, if they’re not serving us well, we will re-evaluate that, but there are no plans to cancel the contract right now.”

The initial contract signed in August 2012 paid 21CT $167,000 for information technology security software and one year of maintenance and support, Pierce said. The agency has twice paid $30,600 for an additional year of maintenance and support, most recently in August, she said.

“Serving our home state of Texas is a great source of pride," said Mike Rosen, 21CT's director of government affairs.

The secretary of state selected 21CT from a pre-approved list of vendors maintained by the Department of Information Resources known as the Cooperative Contracts program, the same route used by the Health and Human Services Commission and Department of Family Services to award 21CT the now-canceled contracts.

The program allows agencies to fulfill IT work without going through an open bidding process. However, Pierce said, the secretary of state’s office performed its own due diligence before selecting 21CT.

“Even though we didn’t have to do a bid process because it wasn’t required, we did seek out comparables to make sure what we were getting a good deal compared to other vendors in the market,” Pierce said.

The secretary of state’s office signed the contract with 21CT approximately four months before HHSC signed its first purchase order with the company, $20 million for Medicaid fraud detection software. An extension of that contract worth $90 million was scheduled to kick in last month before HHSC canceled it following questions about ties between HHSC’s former chief counsel, Jack Stick, and the company. The growing inquiry has led to resignations of Stick and multiple other state employees including Doug Wilson, the commission's inspector general, who stepped down after then-Gov. Rick Perry demanded his resignation.

The Department of Family Services also canceled a $452,000 no-bid contract with 21CT in December for a pilot program to help it better track families investigated for child abuse.

Last week, Gov. Greg Abbott announced the creation of an independent "strike force" to review the commission, specifically how it awards contracts to private vendors. The state auditor is also reviewing the agency, as is the state public integrity unit. The Austin American-Statesman reported, citing anonymous sources and a state legislator, that the FBI is also investigating.

21CT CEO Irene Williams has repeatedly defended her company's work with the state and the way in which it obtained its state contracts.

"We pledge to cooperate with all investigations and reviews of HHSC if called upon, and I have every confidence that audits of our practices and our interaction with the state will validate our company’s good work and lead to changes that taxpayers, and those who do business with the state, deserve," Williams wrote in a column this week for TribTalk.