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November 26, 2014

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Sandoval leery of new Xerox contract with treasurer

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ASSOCIATED PRESS

Nevada Gov. Brian Sandoval delivers the State of the State address at the Legislature in Carson City, Nev., on Wednesday, Jan. 16, 2013.

After being blamed for problems with the state’s troubled health insurance exchange and losing the associated $75 million contract, Xerox is back in negotiations with Nevada.

The tech company is looking to renew two contracts worth up to $7.8 million with the state treasurer’s unclaimed property division.

But the deal is facing skepticism from Gov. Brian Sandoval.

The contract talks come three months after the state fired Xerox for building software that crippled the state’s online health insurance marketplace, Nevada Health Link.

The state was set to award the new contracts in July, but Sandoval, an outspoken critic of Xerox’s work on the health care exchange, halted the deal.

Sandoval is a member of the state’s Board of Examiners along with Attorney General Catherine Cortez Masto and Secretary of State Ross Miller. The board approves contracts between the state and private companies. The two contracts were up for approval at the board’s July 8 meeting, but the governor asked to table the contracts until August.

“And I’ll be frank with why I asked these to be let out, is they’re with Xerox, and I just had some questions with regard to the nature of those contracts,” Sandoval said during the board meeting.

The state hired Xerox in 2012 to build Nevada Health Link as a way for Nevada to comply with the Affordable Care Act. Nevada joined 13 other states in building its own exchange. It was the only state with a Republican governor to build a state-run exchange rather than opting to use the federal system, HealthCare.gov. Nevada paid Xerox $12.3 million for its work.

Xerox did not reply to an interview request for this story.

The problems with Xerox haven’t disappeared since the state fired the company from the exchange in May. Glitches are still affecting the software it built for Nevada Health Link.

The state and Xerox are also defendants in a class action lawsuit in which plaintiffs allege problems in the Xerox-built system caused consumers to pay for health insurance without receiving it.

With that fresh in his mind, the governor tabled the newly proposed contracts so he could learn more about the relationship between Xerox and the treasurer’s office, said Tyler Klimas, Sandoval’s spokesman.

“Given the situation, after all the state has been through, of course the governor is going to have questions on contracts for approval with Xerox,” Klimas said.

The deal with the treasurer’s office highlights a longstanding relationship between the state and Xerox that goes beyond the health care exchange.

Xerox has earned $954,000 for work with the treasurer’s office since 2010, said Steve George, chief of staff in the treasurer’s office. The company’s role is to find financial assets abandoned by their owners and turn them over to the treasurer’s office. Xerox earns 12 percent of the money it uncovers. It doesn’t receive taxpayer dollars for the work, George said.

Best known for its copy machines and printers, Xerox’s role as an auditor and software developer in Nevada sheds light on its wide-ranging position in the business world. It acquired the auditing firm ACS in 2009 and inherited the contract that company had with the state.

“We’ve been happy with the service that we received with the company that Xerox bought,” George said.

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