Texas Awards Portal Contract to NIC

Seven-year TexasOnline deal is expected to produce $183 million in revenue for state.

by / August 3, 2009

Texas awarded NIC a seven-year contract to operate the state's multi-billion dollar TexasOnline Web portal on Friday, capping a 17-month procurement process.

The Kansas-based portal company already had operated TexasOnline since May, acquiring management of the site from original contractor BearingPoint, which filed for bankruptcy protection in February. Texas officials said the new contract will generate millions of dollars in new revenue and allow the state to focus on transformational Web initiatives.

"We're very excited about what this does for the state of Texas and the citizens of Texas," said Doug Holt, division director for e-government and IT policy for the Texas Department of Information Resources.

More Revenue

Launched in 2000, TexasOnline is self-funded. The costs of managing the Web site and developing new features are covered by transaction fees attached to electronic services provided by the portal.

The new contract, which begins immediately, is expected to generate more than $183 million in revenue to the state's general fund over its seven-year term, Holt said. By comparison, the old contract is projected to deliver about $61 million by the time it expires on Dec. 31. The contracts will overlap until the old one expires, allowing NIC time to transition from the old to new contract provisions, Holt said.

Besides generating more revenue, the new agreement will shift TexasOnline's focus from revenue-producing transactions to broader services.

Under the old contract, Texas split revenue with BearingPoint on new electronic services, once the cost of development was recouped. Texas also received 20 percent of the total revenue generated by the portal. Therefore, decisions about launching new services often hinged on the amount of revenue they could produce, Holt said.

The new contract gives Texas approximately 40 percent of total revenue generated by the portal. "The new business model lends itself to getting away from focus on revenue-generating projects as individual decisions," Holt said. "It allows more focus on the program as a whole -- the ability to look at both revenue generating and nonrevenue-generating applications that will allow citizens to move from a transactional relationship to a more transformational relationship with government."

The new contract also gives Texas a bigger slice of overall portal revenue. Holt said the old agreement ultimately provided the state between 29 and 31 percent of total portal revenue. "In the end, the new model is simpler and it yields greater benefit to the state of Texas," he said.

Perpetual Rights

Like the old TexasOnline contract, the new deal with NIC gives Texas the right to retain all portal assets after the contract expires. "We will have perpetual right of usage for all the applications and infrastructure that we have now and develop moving forward," said Holt. "So in the event that we want to part with NIC in the future, we get to keep everything we have."

He added that TexasOnline expects to unveil a number of new services, including a "software development kit" that will allow public agencies to build Internet and intranet applications and share them with other public entities. TexasOnline also would host these applications at low or no cost for Texas state and local government agencies and schools.

TexasOnline represents the biggest portal contact for NIC, according to Texas state officials. The company runs government portals for 23 other states. The Texas portal will be operated by Texas NIC USA, an Austin-based subsidiary of NIC Inc.