INDIANAPOLIS (WISH) – Indiana’s Bureau of Motor Vehicles has entered into a $72 million contract with a California-based company to outsource production and distribution of license plates and vehicle registrations through the end of 2019, according to documents obtained Monday by I-Team 8.
The contract with Intellectual Technology Incorporated (ITI) was signed in late December and approved by State Budget Agency Director Brian Bailey on Jan. 8, according to state records. It includes yearly payments from the BMV ranging from a low of $8.4 million in 2015 to a high of $19.2 million near the end of the contact in 2018.
The Carlsbad, California based company also holds contracts with 13 other states according to its website, including California, Nevada, New York and Ohio. Its logistics and operations office is based in Fort Wayne.
In 2013 the company announced plans for a $2.58 million expansion in Fort Wayne that included construction of a new building near Indiana University Purdue University Fort Wayne’s campus. The project was intended to create up to 30 new local jobs, according to the documents seeking tax breaks on the project at the time. The new contract could bring additional jobs to that region, BMV spokesman Josh Gillespie said.
Asked to justify the cost of the new contract to state procurement officers and the Indiana Department of Administration, BMV Commissioner Don Snemis wrote that the decision would help the agency further streamline its services.
“The contractor shall perform duties and services for quality centralized on-demand production and distribution of license plates and registration documents. The BMV is required to provide Hoosiers with these documents and has found that centralizing the production and distribution is the most efficient manner,” the contract states.
ITI was awarded the contract through a competitive bid process that took nearly 18 months, Gillespie noted.
The BMV has been involved with ITI before. The company has provided outsourced vehicle registration services to Hoosier drivers since 2009, Gillespie said. The new contract now adds license plate production to ITI’s deal with the state.
License plate production has also been at least partially outsourced since 1935 under a contract with 3M. 3M provided raw materials like sheet metal, and has subcontracted for labor services since at least 2009 through the quasi-Indiana Department of Corrections company known as PEN products. Plates have been primarily manufactured by inmates at the Michigan City Penitentiary during that time, Gillespie said.
The state’s subcontract with PEN products will continue until May 1, 2015. After that, all license plate production will shift to ITI. That will not derail PEN’s mission, IDOC said Monday.
“The PEN program will continue in earnest,” IDOC spokesman Doug Garrison told I-Team 8. “There was certainly revenue generated from the production of the plates, and we will lose that. But, license plates are a relatively small portion of the total number of products PEN makes. We only have around 25-30 inmates working that detail at a time.”
Gillespie said the decision to move license plate production to ITI will save the BMV nearly $14.4 million over the next five years. It would not be feasible, he said, for the agency to handle such production on its own.
“We haven’t been doing this in house for some time now,” Gillespie said. “This is primarily focused on cost savings and will represent a significant savings for taxpayers. Drivers shouldn’t notice any changes, but we remain hopeful that they will get some products quicker.”
ITI will also develop additional self-serve kiosks to be placed at up to 33 license branches across the state. The first such kiosk was recently installed in Noblesville. Additional kiosks are now open in Muncie and Lawrence, and a fourth kiosk is under construction in Mishawaka.
The new contract with ITI comes after the BMV agreed to pay an independent contractor up to $100,000 to audit its financial structure after several recent cases of fee overcharging and incorrect vehicle classifications.
In September 2014 the BMV admitted it had misclassified some 180,000 vehicles since 2004, causing excise taxes to be improperly calculated. That caused an additional $29 million in overcharges.
Gov. Mike Pence authorized the BMV in September to hire an independent consulting firm to audit the agency’s financial structure. That audit is expected to be complete late this fall.