Iowa gets pushback on CARES-funded IT projects

Iowa Gov. Kim Reynolds is coming under fire for using millions in federal coronavirus relief funds to pay for two IT projects that some consider unrelated to the pandemic. Federal and state auditors told the Iowa executive branch it should return the money it had used for projects that had been drafted before the virus’ outbreak.

According to the CARES Act, coronavirus relief funds can only be used to cover necessary expenditures incurred due to the public health emergency that were not already accounted for in state budgets and that were incurred between March 1 and Dec. 30.

In one case, Iowa Auditor Rob Sand noted a $21 million contract with Workday for a human resources and accounting system to replace the state’s legacy mainframe system was already in the 2019 budget. In an Oct. 16 letter to Dave Roederer, director of the state Department of Management, Sand said the Governor’s Office justified its decision to use coronavirus relief funds to pay for program by saying it would allow the state “to act quickly to assist essential government employees, giving them flexibility in a number of ways, such as requesting COVID-related hardship help, easier ways to request Family and Medical Leave Act leave types, and automate processes for donating leave, and borrowing leave.”

The auditor did not think the project met the requirements of the CARES Act and advised the state return the money because otherwise it would have to be repaid to the federal government at the expense of taxpayers. In addition, Sand said his office consulted with U.S. Treasury Department’s Office of Inspector General “to confirm our conclusions.”

Treasury Department Deputy IG Richard Delmar also wrote an Oct. 16 letter to Roederer that echoed Sand’s findings, according to a report in The Gazette:

“While the new and modern Workday system may provide additional functionality, these upgrades are not necessary to address the public health emergency and were already planned before the COVID-19 pandemic outbreak,” Delmar wrote. “As such, funding the Workday contract with Coronavirus Relief Fund proceeds is not a reasonable, allowable use of funds.”

Besides the Workday contract, Sand also disputed the use of $448,449 of relief finds on salaries for the governor’s staff because those workers were not substantially dedicated to COVID response.

The other IT project under scrutiny for misuse of coronavirus relief funds is a master data management system that would aggregate and analyze data from various agencies. The Office of the Chief Information Officer, which was also responsible for the Workday contract, was given $16.9 million for a cloud-based data management platform that would standardize data collection and analysis across agencies to derive insights for better service delivery. So far, it has spent about $40,000 on the five-year project, according to an Oct. 22 AP report.

Although the data management project was not in the state’s budget, it was already under discussion before the outbreak, according to AP, and only superficially related to the pandemic.

“The state's 128-page request for proposals issued to vendors in July mentioned the coronavirus once, saying the contract's ‘first workstream will focus on critical data during emergent situations like the COVID-19 pandemic.’” AP reported.

One state legislator said lawmakers hadn’t been briefed on the data management project, so it wasn’t clear whether it qualify for pandemic funds.

"If they can explain why they need it and how it's going to benefit the pandemic, we'll have no problem with it. But doing an end run around the regular process is problematic," Sen. Claire Celsi, a West Des Moines Democrat, told AP. "The concern is obviously if something is being done wrong we'll have to pay it back."

The governor said she would try to convince federal auditors to allow the state to spend $20 million on the Workday project, saying she believed using coronavirus relief funds to help pay for a new accounting and HR system is “an allowable expense.”

“We’re going to reach out and talk about why we believe it was an appropriate expense and hopefully we’ll get the answer we think we should get,” Reynolds told reporters. “And if not, we’ll readjust and do what we need to do. We’re not going to spend dollars in a manner that is not appropriate.”

Iowa CIO Annette Dunn called both projects "essential to the pandemic response" in an Oct. 23 statement, AP said.

"Just as gaps in broadband coverage throughout Iowa has made life more difficult, so too has outdated technology made the pandemic response more difficult," she said. "Having quality forward-thinking technology, software platforms, and data analytics to execute the government services Iowans rely on should not be optional."