Lawmakers approve $21M for Workday contract. How did we get here?

Gov. Kim Reynolds discusses Iowa's COVID-19 response at a news conference Feb. 17, 2021, at Iowa PBS. (Screen shot from Iowa PBS livestream)

When Gov. Kim Reynolds first requested $21 million to install a new state accounting and human resources system, the Iowa Legislature turned her down. 

Now, about one year later, lawmakers in both chambers have approved the $21 million funding proposal, sending it to Reynolds’s desk for a signature. 

What changed?

A brief history of the Workday contract

Reynolds, a Republican, signed a contract with software company Workday in October of 2019, the Cedar Rapids Gazette reported. The state entered an additional contract with the company in February 2020. Those two deals, set to go into effect in the summers of 2021 and 2022, would total $50 million.

Rather than go through a traditional bidding process, the state used a third-party group called the National Cooperative Purchasing Alliance to decide on Workday for the new system. 

Democrats argued this week that the method was “atypical” for such a large contract. In addition, Reynolds’ former chief of staff, Jake Ketzner, was a lobbyist for Workday, but Reynolds spokesperson Pat Garrett said Ketzner was not involved in the contract.

As the COVID-19 pandemic reached Iowa’s borders in the spring of 2020, lawmakers shelved the proposal and did not approve state funding. The first installment of $21 million dollars would have come from the state’s gambling revenues, but with casinos suddenly shuttered, the House Appropriations Committee did not advance the request.

So Reynolds looked to the CARES Act, a federal program to help states pay for COVID-19 expenses. The CARES Act allocated $1.25 billion to Iowa. Reynolds planned to use $21 million of that money for the first half of the Workday contract. Rep. John Wills, R-Spirit Lake, said during a House floor debate this was another consideration when the Legislature did not fulfill Reynolds’ 2020 request for state funds.

“The governor’s office did not feel that we needed to do an appropriation because it could be paid for with CARES Act money,” he said Thursday.

However, State Auditor Rob Sand and the federal Treasury Department’s inspector general agreed in October that Reynolds should not have used the CARES Act for the Workday contract. She promised to return the money, but argued that the efficiency of state systems was a pandemic expense.

“The COVID-19 pandemic only further highlighted the critical need for integrated IT systems that will improve operational efficiency and effectiveness for the State of Iowa,” Reynolds said in a December news release. “Following multiple conversations with the Treasury Department last spring, we believed we had assurances that the upgrade to Workday qualified as an allowable expense. We would not have moved forward without those assurances.”

Lawmakers considered the funding proposal again in the 2021 legislative session. Both chambers passed a bill that sets aside $21 million of the state’s general fund to pay for Workday in the current fiscal year. Reynolds is expected to sign the bill into law.

Democrats still concerned about bidding system, funding approval

Lawmakers in both parties agreed that the state’s current human resources system needed updating. Wills said the program was “outdated, inefficient and expensive.”

But Democrats demanded answers about why the contract was awarded to Workday without a traditional bidding or budgeting process.

“Here we are, one year later, approving funding for a contract of questionable origin that was executed before the funding was ever approved,” said Rep. Chris Hall, D-Sioux City. 

“To be perfectly frank, this is fishy,” said House Minority Leader Todd Prichard, D-Charles City.

“There are too many unanswered questions as to why this process was handled the way that it was,” Prichard said. “We deserve answers before we are asked to approve something that has too many unknowns and procedures not followed.”

Wills responded that the third-party bidding system was appropriate and that the new system would ultimately improve government functioning.

“We’ll have a better system for less money,” he said. “To me, that is perfect government.”