STAND. COM. REP. NO. 3097

Honolulu, Hawaii

RE:    S.C.R. No. 78

       S.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fifth State Legislature

Regular Session of 2010

State of Hawaii

Madam:

     Your Committee on Ways and Means, to which was referred S.C.R. No. 78 entitled:

"SENATE CONCURRENT RESOLUTION REQUESTING A MANAGEMENT AND FINANCIAL AUDIT OF DEPARTMENT OF TAXATION CONTRACTS,"

begs leave to report as follows:

     The purpose of this measure is to request the Auditor to conduct a management and financial audit of all contracts between the Department of Taxation and CGI Technologies and Solutions, Inc., and its predecessor American Management Systems, Inc.

     A concerned individual submitted testimony in support of this concurrent resolution.  The Department of Taxation submitted comments on this concurrent resolution.  Written testimony presented to the Committee may be reviewed on the Legislature's website.

     Your Committee finds that, in 1999, the Department of Taxation entered into a benefits funded contract with American Management Systems, Inc., which later became CGI Technologies and Solutions, Inc., to create the Integrated Tax Information Management System project.  Your Committee also finds that, from 2005 to 2008, the Department of Taxation contracted with CGI Technologies and Solutions, Inc., through a sole source procurement exemption for over $60,000,000 related to the Integrated Tax Information Management System.  Your Committee further finds that, in 2008, the Department of Taxation entered into another contract with CGI Technologies and Solutions, Inc. for the collection of delinquent taxes.

     Your Committee finds that concerns have been raised regarding the possibility that potential witnesses have been discouraged from coming forward to testify regarding the Department of Taxation's contracts with CGI Technologies and Solutions, Inc.  Your Committee further finds that concerns have been raised regarding who will perform the functions currently performed by employees of CGI Technologies and Solutions, Inc., after the current delinquent tax collection contract ends.

     Accordingly, your Committee has amended this concurrent resolution by:

     (1)  Urging the Auditor to use all powers granted to the Auditor by the Hawaii Constitution and the Hawaii Revised Statutes, including the power to issue subpoenas to compel the appearance of witnesses and the production of documents, to the fullest extent necessary in the investigation of contracts between the Department of Taxation and CGI Technologies and Solutions, Inc.;

     (2)  Requesting the Department of Taxation to establish and implement a transition plan wherein department personnel shall assume all functions performed by employees of CGI Technologies and Solutions, Inc., under the current delinquent tax collection contract;

     (3)  Requesting the Department of Taxation to report to the Legislature on the development and implementation of the transition plan no later than August 31, 2010; and

     (4)  Making technical, nonsubstantive amendments for the purposes of clarity, consistency, and style.

     As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee concurs with the intent and purpose of S.C.R. No. 78, as amended herein, and recommends its adoption in the form attached hereto as S.C.R. No. 78, S.D. 1.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

____________________________

DONNA MERCADO KIM, Chair