The $283,000 fine will be issued to the Seattle-based tech giant because the county paid for Microsoft Office Standard, but staff accidentally activated the more expensive Microsoft Office Professional.
(TNS) -- Winnebago County must pay a $283,000 settlement to Microsoft Corp. for downloading licensed software without paying for it.
Microsoft recently conducted a routine compliance check to review how the county has used its software. Company officials discovered that Winnebago County had activated software it didn't have authority to use under its licensing agreement with the firm. The settlement amount reflects a cost the county should have paid all along, county officials said.
“I wasn’t aware this was happening,” said August Gentner, a contract employee who serves as the county's chief information officer. “It was pure human error. For example, we paid for Microsoft Office Standard and human error meant my staff accidentally (activated the more expensive) Microsoft Office Professional.”
Microsoft Office Professional costs about $100 more than the standard Microsoft Office software package and the costlier software has been installed on hundreds of county computers, Gentner told the County Board Finance Committee last week. The committee has recommended approval of a budget amendment to pay the settlement, and the County Board will meet Thursday to consider it.
Most of the software installations took place before Gentner’s tenure or from departments not under his supervision, County Board Chairman Scott Christiansen said. About $113,000 of the settlement amount has been recovered so far through savings in other areas of the IT budget, Christiansen said.
The county has since put new procedures in place to make sure this doesn't happen again with other software vendors. A second county employee was added to the software installation procedure to double check all computer setups for proper compliance.
The county doesn’t use Microsoft's compliance assurance plan — an insurance policy of sorts that would cost the county more than $250,000 a year and would cover the cost of such an error. More concerning to board members, however, is that Gentner’s contract stipulates that he is not liable for any damages or mistakes caused by his work. The County Board most recently approved a contract renewal with Gentner in April 2013. The one-year agreement contains four consecutive one-year renewal options.
The county guarantees Gentner at least 100 hours of work a month — not to exceed 120 hours a month without approval of county management — at an hourly rate of $107.50 as of Jan. 1, 2015, according to the agreement approved in 2013. His pay rate will increase to $115 an hour beginning Jan. 1. The county also provides Gentner a $120 monthly allowance for communications expenses such as a cell phone or broadband service. The county paid Gentner $139,400 in fiscal 2015.
- Gentner supervises roughly a dozen technicians who work in the county Information Technology Department, though Gentner himself is not a county employee and, as such, receives no health insurance or retirement benefits from the county for his contract work. Gentner's contract stipulates that he reports to Christiansen.
Christiansen said that Gentner is extremely well qualified for the job and pointed out that some of the errors occurred before Gentner began working with the county as the chief information officer in 2006.
"The issue is that Mr. Gentner didn't set up the software," he said. "Were there some people under his position as chief that did? Yes. But not intentionally. ...Mr. Gentner has been a tremendous partner here."
Under Gentner's supervision, Christiansen said, the county has made money by providing IT services to numerous other small local governments that wouldn't otherwise be able to afford or find it feasible to establish their own IT department. The county brings in more than $200,000 per year providing IT support for Loves Park, Rockton, Chicago Rockford International Airport, South Beloit, Boone County courts and the village of Winnebago, among others.
Several years ago, Gentner supervised a $6.7 million software upgrade of the county's court case management system, which was done on time and on budget, Christiansen said.
Liability wasn’t a big topic of conversation among County Board members in 2013 when they considered renewing Gentner's contract, recalls board member Steve Schultz, R-3. Moreover, the board didn't explicitly approve Gentner's contract. Rather, the board approved a resolution, by a voice vote, that authorized the contract renewal. The resolution made no mention of the "hold harmless" clause in Gentner's contract that frees him of liability for "special, incidental or consequential damages" that might arise as it relates to his services.
“Mr. Christiansen as the chair and whoever else he discussed it with directly would have been aware of that information,” Schultz said. “I’m frequently not comfortable with voting because I know there is a lot of information that I don’t have and historically that has been the case.”
Board member John Guevara, R-19, said that he was concerned about the liability issue. He ultimately supported the resolution, he said, because it simply authorized renewal of Gentner's contract, which hadn't been a problem before.
“At the time, we had to work really hard to build a solid relationship with the chairman,” he said. “I know some other entities that utilize services spoke to different board members saying everything was on the up and up. The feeling of the board was that this has existed, a number of folks use the service and this is something we should trust.”
- Some County Board members are not yet ready to approve the Microsoft payment. The consensus among those who attended a County Board Republican caucus meeting on Monday was to postpone a final vote on the budget amendment. More time is needed, some board members say, to review Gentner's contract and examine other outstanding contracts that may expose the county to liability.
“This gives us a chance to make more sweeping changes,” Guevara said. “There was a disconnect somewhere and it's proof that we need a systemic change to be able to avoid this kind of thing in the future. “
Restructuring the county IT Department is one idea that's been floated. It might make more sense to hire an information technology supervisor rather than hiring an outside firm, said Eli Nicolosi, R-8. Nicolosi wasn’t on the board in 2013.
“I’m not exactly going against Mr. Gentner,” Nicolosi said. “But he makes (about) $130,000 a year for not full-time work. I’m trying to understand both sides of the situation. ...It just seems very odd to me.
“I feel like moving forward we have to look at everyone's contract," he said. "Who else doesn’t have insurance? It’s too sweet of a deal.”
The County Board meets at 6 p.m. Thursday on the eighth floor of the Winnebago County Courthouse, 400 W. State St., in downtown Rockford. On the agenda: approval of a budget amendment to satisfy the $283,000 Microsoft payment. However, the board could decide to postpone a decision on the amendment.
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