PROVIDENCE, R.I. (WPRI) – One month before it was set to go into effect, Democratic Gov. Gina Raimondo has nixed a plan to tack a 1% fee onto all state contracts to pay for a new computer system.
In a letter dated April 9, about 730 state vendors were informed a new “e-procurement” computer system is set to come online this summer, designed to be what the Department of Administration called a “one-stop shop” to file and track bids. To fund the IT system, businesses were told the state was going to charge a 1% “administrative fee” beginning on June 1.
One state contractor – who asked to remain anonymous to protect his relationship with state officials – said the cost of the fee would likely just have been passed on to taxpayers, because businesses would increase the cost of a contract to account for it.
The plan was put forward in a budget amendment proposed by the Raimondo administration and passed by the General Assembly last year. But on Wednesday, Raimondo said she was nixing the fee.
“When I learned about it I gave the directive to the Director of Administration not to impose the fee,” Raimondo said. “The economy is doing better, revenue is up, we don’t need to impose a fee on small businesses.”
Two days before the governor revealed her decision, Republican gubernatorial candidate Allan Fung released a statement blasting the fee plan.
“The last thing we should be doing is putting another fee on companies looking to do business here,” Fung said. “The state really has a spending problem, and we shouldn’t be turning around and forcing local companies to bail us out of those bad habits.”
Brenna McCabe, a spokesperson for the Department of Administration, said the fees were expected to generate about $540,000 annually. She said the e-procurement system has a one-time $400,000 “implementation cost” and will cost taxpayers $1.3 million over eight years.
The e-procurement system is slated to roll out in phases, according to McCabe, with the first phase set to launch this summer and the second in 2019.