Md. taps firms to reform its books Local software vendor, KPMG to build system to track accounts; State government

Maryland has hired a fledgling Owings Mills software company and one of the nation's leading accounting firms to install a cash managment and accounting system to keep track of the millions of dollars that flow in and out of its accounts each day.

"This is part of my plan to move this department and Maryland to the forefront of reconciliation and accounting among state governments," said state Treasurer Richard N. Dixon, a former stockbroker and assistant vice president at Merrill Lynch.


Bidding for the job to help the state track and reconcile the more than $50 billion that moves on and off its books annually was intense, said state administrators.

Three accounting firms sought the job as financial adviser for the project, and two financial software companies bid on providing software to provide computerized reconciliation of the state's disbursements and receipts.


Chesapeake System Solutions Inc., a 4-year-old company with just 20 employees, and the Baltimore office of KPMG, Peat Marwick LLP, one of the Big Eight accounting firms, were selected by the state treasurer's office for the job.

The contract awarded to privately held Chesapeake System calls for the company to provide a cash management and accounting reconciliation software program, as well as consulting services to train state employees. It will be paid $147,425 under the contract.

The other software package bidder was publicly held Checkfree Corp., which is based in Ohio and has a large operation in Owings Mills.

The other accounting/professional services firms submitting bids were the Baltimore office of Arthur Andersen LLP and T. Curtis & Co. of Greenbelt.

Mark Reger, deputy state treasurer, said officials selected Chesapeake because its software program, sold under the name Total Reconciliation Solution, was determined to be the best fit.

"It is more oriented to government and corporate needs," said Reger.

Added Dixon, "We were basically looking at who could provide the best job at the lowest price."

Peter Vogelberger, president of Chesapeake System Solutions, said the state contract is a boost to his small, growing company. "This certainly should open up opportunities for us, hopefully with other state governments," he said.


Maryland's announcement about the new system has already drawn inquiries from Michigan, Missouri and Virginia, said Dixon.

Up against 'big player'

Vogelberger said Chesapeake also likes to think of the state's decision as "a very clear indication of our credibility. We were up against a pretty big player in the market, and we won."

KPMG, Peat Marwick will be paid $157,500 to provide expertise to review the state's current reconciliation system and provide advice on the best way to interface the new software program with the state's banking institutions. The firm will be assisted on the project by a minority contractor, Bert Smith & Co. based in Columbia.

KPMG had no immediate comment on the contract award.

KPMG and Chesapeake, said Reger, are each obligated under their contracts to prove that the new system put in place works efficiently and accurately for the first year.


Dixon said the state was aided in its decision, which took about six months, by an advisory committee consisting of some of the state's top banking and financial service industry executives, as well as state treasury officials.

Dixon said his office also conducted a survey of other state government's to see if there was a new high-tech computerized system Maryland might emulate.

'Really stunned'

"I was really stunned to find no other state had a system like the one we wanted in place," said Dixon.

Dixon, who was named to the treasurer's post in 1996, said Maryland is long overdue for an overhaul of its cash management and reconciliation system.

When he took office, he found that the state's books had not been reconciled in almost six years and ordered an immediate review that turned up $4.7 million in unrecorded assets.


"When I was a stockbroker I would have on my desk every morning a complete and accurate accounting of how much money was in the accounts of each and every one of my clients," he added. "There is no reason why a state government's reconciliation process should be any different from private industry."

The massive amounts of money the state must keep track of daily range from small credit card payments at the University of Maryland bookstore in College Park to large checks issued to contractors for state road and highway work.

"Just yesterday we had $272 million come in and $266 million go out," said Dixon. "We printed $47 million in checks yesterday alone. It's not only our duty to keep an accurate account of that money each day, but it makes good business sense."

Pub Date: 3/22/97