Child Support Technology – Procurement Landscape 2019

Background

Child support enforcement is the legal process through which a parent supports their child monetarily following the end of a marriage or relationship. Specifically, the non-custodial parent makes ongoing, periodic payments to the custodial parent for the financial benefit of the child. The majority of child support payments, which are court-ordered, are collected through direct wage withholding. Employers are responsible for reporting newly hired and terminated employees, withholding child support payments as ordered, and remitting payments to the state. Child support represents an intersection between the judicial system, employment authorities, and human services programs.

Information Technology

Several information technology systems are required to support a state’s child support program:

• A Child Support Enforcement System automates management of the program, specifically providing caseload management, document management, and information sharing. Each state is required to have this system.
• A State Disbursement Unit (SDU) is a payment processing center for child support payments. It processes checks received from employers and non-custodial parents before disbursing the funds to recipients.
• A New Hire Reporting System is a central location for employers to report newly hired employees to the state shortly after hiring. This system helps child support agencies issue income withholding orders.

Procurement Landscape

There is significant variation between states in terms of which of the above technologies they procure externally versus developing in-house. Most states contract out to a vendor for one or two systems, while there are nine confirmed states that have vendors for all three. These states include Delaware, District of Columbia, Louisiana, Michigan, Mississippi, New Jersey, Ohio, Pennsylvania, and Texas. Overall, there are nearly 90 confirmed contracts throughout the country related to the three main child support technologies, including 24 child support enforcement systems, 38 SDU’s, and 25 new hire reporting systems. Four states currently have no confirmed contracts for anything – Hawaii, Montana, North Dakota, and Utah. Furthermore, 18 states are actively procuring one or more of these systems, meaning formal solicitations have been released or are being reviewed. The following states are currently accepting proposals:

• Kentucky recently released a request for proposals (RFP) for Child Support New Hire Employer Data Collection and Transmission. Proposals are due on October 15, 2019.
• Tennessee is also accepting proposals for New Hire Reporting and Employer Maintenance services until September 30, 2019.
• Michigan is soliciting a State Disbursement Unit for its Child Support Payment Processing project. Proposals are due on October 18, 2019.

In terms of contract values, there is approximately $1.5 billion in the collective market for child support technologies. Breaking this number down by technology, the average value of child support enforcement systems is about $36 million. California holds the most expensive contract for this technology at almost $125 million with Deloitte. For SDU’s, the average contract value is about $32 million. Ohio’s contract with Systems and Methods is the most expensive at approximately $165 million. Compared with these technologies, new hire reporting is generally less lucrative of a service. The average contract value is only $1.2 million, with Texas holding the most expensive contract at nearly $8 million with Maximus.

Indeed, Systems and Methods and Maximus, along with Conduent and Stellarware, are top vendors in the market for child support technologies. Systems and Methods and Maximus each have 15 confirmed contracts, while Conduent has 12, and Stellarware has 9. Other notable vendors include Protech Solutions, Informatix, Deloitte, and Accenture. Additionally, over half of all child support IT contracts have terms that range between five and ten years, including with renewal options.