With the help of many of you on the 'Net, I have assembled some

information on Lockheed-Martin, and about privatizing child support

collections in general. Under federal pressure, all states are

supposed to have a centralized child support collections and

disbursement unit (called 'SDUs'). Federal penalties in CA alone are

well over $100M, and are rising year by year. Many states, including

IL, have failed miserably to create their own units. Many have turned

to outside contractors like L-M to build it and run it for them.



The real issue for fathers is whether or not a private company will

abuse the power and authority that was originally intended for

governmental use. Will those private companies misuse the personal

data they collect in connection with running an SDU?



Once these private companies have secured the beachhead with the

initial state contract, state governments (like Wisconsin) are finding

out their costs are rapidly escalating, but by then it may be more

expensive to toss out the incumbent and start over.



There is also some anecdotal evidence from CA that L-M employees from

all over the country took a sudden interest in local Los Angeles

politics, contributing thousands of dollars to key political

candidates. Considering the returns for running an SDU, a few

thousand dollars is barely seed money to L-M.



If your state is considering outsourcing child support collections and

disbursements, share this note with your legislators and with the

local news media. Then cross your fingers and hope.



Thanks to everyone who took the time to send me the material below.



Dave Nevers

"Dave Nevers" <[email protected]>



_______________________________________



In a 1999 Lockheed press release, the company said, "Lockheed Martin

processes about $5 billion annually in child support payments for 13

states, accounting for 38 percent of all such payments administered by

state and local governments. Recent multiyear contracts with five

major states, Florida, Georgia, Michigan, Pennsylvania and Wisconsin,

are collectively worth more than $500 million."



That same press release went on to say, "The company intends to double

its state and local revenue over the next three years, an annual

growth rate of more than 25 percent."



"IMS has been identified as one of the high growth areas for Lockheed

Martin"



http://www.wtonline.com/vol14_no16/state/921-5.html



From Virginia:



Lockheed was found guilty of improperly interfering with a child

support collections contract awarded to MAXIMUS Corporation. With the

punitive damages multiplier, the total award to MAXIMUS was $10.5M. I

don't know the status of the case or the award, but you can find the

details at:



http://www.maximus.com/lockheed.html and



http://www.lawyersweekly.com/vasup/1990500.htm



On their home page, MAXIMUS also mentions that they have gotten an

$18M contract for child support collection services in TN. They claim

to be operating over 40 child support projects in 20 states at:



http://www.maximus.com/child_support.htm



Congressional testimony:



Last May, Wendell Primus, Director of Income Security at the Center on

Budget and Policy Priorities testified before the House Ways and Means

Committee on the privatization issue. His full testimony is at:



http://www.house.gov/ways_means/humres/106cong/5-18-00/5-18prim.htm



But the key quote I wanted to share was about his concern over

personal financial information winding up in the hands of these

private companies. He said,



"We do, however, have serious reservations about two areas of H.R.

4469. We are strongly opposed to the provisions in Title III that

extend access to enforcement tools and to additional personal

information to private child support entities and public non-IV-D

agencies. Private child support enforcement entities currently have

access to some private information through the Federal Parent Locator

Service, but there are not adequate protections guarding private

entities' use of that information. Courts have ruled that the federal

Fair Debt Collection Practices Act does not extend to private child

support collection companies and there is growing anecdotal evidence

that several of these private entities are taking unfair advantage of

both custodial and noncustodial parents.



Some privacy advocates believe that personal information is too easily

accessible to private child support entities. Granting these entities

access to additional sensitive information could lead to invasion of

privacy and misuse of information and the further fragmenting of the

child support enforcement system. The Center strongly encourages the

subcommittee to bring private child support entities under regulatory

authority and to require HHS to issue a report on the amount of access

private and public non-IV-D entities currently have before considering

the extension of additional data and enforcement tools."



No big surprise, but N.O.W. came out strongly against the 'Fathers

Count' bill in Congress.



http://www.now.org/nnt/winter-2000/fathers-act.html



Wisconsin:



Lockheed has the contract for the WI child support collections and

disbursement unit. That contract is up at the end of this year.

Lockheed has forecast that its reimbursement from the state will have

to be increased from the current $1.07 per transaction. Their

increase estimates range from 18 to 24 cents per transaction. In

other words, if WI wants to continue their relationship with Lockheed,

next year the state's costs will go up by 17-22%, adding almost

another $2.9M to their collection expenses.



The WI state report on their situation is at:



http://www.dwd.state.wi.us/asd/budget/di5601.htm



Michigan:



In 1998, Michigan approved a five-year, $107M contract for Lockheed to

set up a centralized SDU. It isn't clear exactly how much of that

went to Lockheed, because computer hardware and network costs were in

that budgeted amount.



http://www.michiganlegislature.org/pdf/Senate.analysis.legis/1999-2000/S9H4816F.pdf



Shortly after this system began, an attorney and divorced father

successfully sued the state of Michigan in federal court, claiming

that child support awards were being modified by SDU clerks instead of

by a judge issuing a court order.



http://www.office.com/global/0,2724,58-16124,FF.html and



http://www.law.about.com/newsissues/law/library/docs/nmicscom.htm



Also, MAXIMUS has its hooks into the state of Michigan as well. Last

October the state increased a 'previously unreported' contract with

the company from $1.4M to $5M. The government employee union AFSCME

is very concerned about the 'privatization' movement, since it is

their members whose jobs are affected.



http://www.afscme.org/private/update/pw001023.htm



Colorado:



In Colorado, MAXIMUS was recommended by district attorney John

Suthers, who later admitted that the company was no better than the

government-run program it replaced, and was producing only half the

expected results.





Florida:



A 'glitch' delayed 7,000 child support checks in Polk County, FL after

the startup of the new Lockheed Martin IMS centralized disbursement

unit.



http://www.polkonline.com/stories/102499/loc_glitch.shtml



California:



Just a month before LA County Prosecutor Gil Garcetti was up for

reelection, he received $15,000 from 21 Lockheed employees, none of

whom lived in LA County. Garcetti then recommended the County Board

of Supervisors approve a contract with Lockheed to operate the County

child support system, and pay a claim L-M filed for work already done.

The story ran in the LA Times, but appears at:



http://personal.clt.bellsouth.net/clt/w/o/woodb01/CS/Articles/Lockheed%20Martin.htm



In the collapse of the statewide CA system (SACSS), Lockheed had

enough foresight to put a clause in their contract that capped their

liability at $4M, even though their total revenue from the failed

project was roughly $100M, and the total project cost approached

$345M. The remainder of the loss was borne by CA taxpayers.



The CA State Auditor released a report critical of L-M and the state

government management of the SACSS (Statewide Automated Child Support

System) published at:



http://www.bsa.ca.gov/bsa-htmls/summaries/97116sum.html



You can find CA's current state budget at:



http://www.osp.dgs.ca.gov/Publications/GovernorsBudget02/pdf/hhs.pdf



Pages 146 and 147 deal with child support administrative costs.



The distribution of the federal penalty for failure of the statewide

SDU appear in a state Legislative Analyst's report at:



http://www.lao.ca.gov/analysis_1999/health_ss/health_ss_depts3_anl99.html



Look under the heading, "Budget Proposes No State Share Of Federal

Penalty on Automation"





Maryland:



Lockheed management admitted in a Time Magazine article that their

Baltimore child support collection program ran 22% under their

forecasted performance. When Maryland state employees took a shot at

a new approach to running a child support office, their collection

rate was much higher than L-M's.



http://www.cnn.com/ALLPOLITICS/1998/03/16/time/welfare.html



Texas:



Randall County (Amarillo) Court Clerk Jo Carter estimated that the new

Lockheed Martin child support collections program will slow payments

by 'five to eight days.'



http://www.amarillonet.com/stories/102900/new_payment.shtml



Virginia:



After receiving the contract to privatize child support collections

offices in Hampton and Chesapeake, VA, Hud Croasdale, former CIO for

the Commonwealth of Virginia, accepted a position with Lockheed Martin

IMS as Director of Marketing and Business Development.



http://www.nasire.org/publications/Newsletters/exc97v8n4.cfm



Pennsylvania:



According to the Philadelphia Inquirer, checks were delayed, payments

lost, and some parents wrongfully turned over for prosecution for

child support delinquency after Lockheed started up the state's

central disbursement unit.



http://interactive.philly.com/inquirer/2000/Jun/29/city/SAUDIT29.htm



Oklahoma:



While OK officials said that L-M's performance was 'satisfactory',

they added that an L-M subcontractor was performing poorly. The

subcontractor in turn subcontracted some of their work, leaving the

state with the problem of finding the right party to resolve problems.



http://www.okdhs.org/ipublicinfo/news/dircom/dircomm0697.html



