The state suspended consideration of bids to operate a new $15 million statewide student information system after it discovered that a Wisconsin-based company in the running had been offered tax breaks if it won the contract.
The state Department of Administration said it suspended Tuesday's original due date for bids after learning that the Wisconsin Economic Development Corp. had made what it called a "soft offer" of economic development assistance to Skyward contingent upon it winning the bid — an offer that has since been rescinded.
The DOA said in its statement that directly linking a tax credit to the successful award of a state contract violates the spirit of a competitive bid process. The news also raised concerns that the offer may amount to illegal bid rigging.
"Everybody understands that bids cannot be steered to one vendor and there are certain requirements that must be met," said Democratic state Rep. Louis Molepske of Stevens Point. "But the soft offer of tax credits at this time obviously gives the impression that there is some inside dealing or impropriety."
State Sen. Julie Lassa, a Democrat also from Stevens Point who serves on the WEDC board, said this could be a case of wires getting crossed within state agencies and "it's turning into a situation that looks bad for the state."
"I don't know if WEDC actually made them an offer of tax credits," Lassa said. "I think WEDC was just doing what they could to keep the company here in the state."
Gov. Scott Walker, when asked about the situation after a news conference on another topic, said DOA was taking steps to ensure the bid process was "completely objective."
Department of Administration spokeswoman Jocelyn Webster said in an email that no commitment or award was given to Skyward through the "soft offer," which she said is commonly given to companies that ask about what economic assistance is available.
"To be clear, Skyward did not receive any firm commitment, monetary awards, or tax incentives from WEDC," she said in the email.
Skyward, a Stevens Point information technology company that sells management software for schools, serves 220 of Wisconsin's 424 districts. But under last year's state budget, those contracts would end with the installation of a new mandatory statewide system to integrate information on student performance and demographics.
Skyward CEO Cliff King warned in November that the company, which employs about 270 people, would be forced to leave Wisconsin if it didn't win the statewide contract. King did not immediately return a message seeking comment Tuesday.
The company said in September that in addition to the Wisconsin schools it serves, it also has contracts for information services with 1,442 school districts across the United States and in five other countries.
The DOA said in its news release that no one at the agency involved with the bid process was aware of the Skyward tax credit offer made by WEDC, a quasi-governmental agency that handles economic development efforts for the state.
Walker's legal office informed DOA last week of the offer made to Skyward. In response, DOA Secretary Mike Huebsch on Friday suspended the request for proposals, said Webster, the DOA spokeswoman. On Monday, WEDC Secretary Paul Jadin rescinded the tax credit offer to Skyward, the DOA said.
Skyward will still be allowed to submit a bid, as will any qualified vendor, Webster said.
Moving to a statewide system is expected to save local school districts millions of dollars in savings as they no longer have to run their own systems to track everything from student grades to their health records. School districts will be charged a per-pupil fee to use the statewide system.