With the help of many of you on the 'Net, I have assembled some
information on Lockheed-Martin, and about privatizing child support
collections in general. Under federal pressure, all states are
supposed to have a centralized child support collections and
disbursement unit (called 'SDUs'). Federal penalties in CA alone are
well over $100M, and are rising year by year. Many states, including
IL, have failed miserably to create their own units. Many have turned
to outside contractors like L-M to build it and run it for them.
The real issue for fathers is whether or not a private company will
abuse the power and authority that was originally intended for
governmental use. Will those private companies misuse the personal
data they collect in connection with running an SDU?
Once these private companies have secured the beachhead with the
initial state contract, state governments (like Wisconsin) are finding
out their costs are rapidly escalating, but by then it may be more
expensive to toss out the incumbent and start over.
There is also some anecdotal evidence from CA that L-M employees from
all over the country took a sudden interest in local Los Angeles
politics, contributing thousands of dollars to key political
candidates. Considering the returns for running an SDU, a few
thousand dollars is barely seed money to L-M.
If your state is considering outsourcing child support collections and
disbursements, share this note with your legislators and with the
local news media. Then cross your fingers and hope.
Thanks to everyone who took the time to send me the material below.
"Dave Nevers" <email@example.com>
In a 1999 Lockheed press release, the company said, "Lockheed Martin
processes about $5 billion annually in child support payments for 13
states, accounting for 38 percent of all such payments administered by
state and local governments. Recent multiyear contracts with five
major states, Florida, Georgia, Michigan, Pennsylvania and Wisconsin,
are collectively worth more than $500 million."
That same press release went on to say, "The company intends to double
its state and local revenue over the next three years, an annual
growth rate of more than 25 percent."
"IMS has been identified as one of the high growth areas for Lockheed
Lockheed was found guilty of improperly interfering with a child
support collections contract awarded to MAXIMUS Corporation. With the
punitive damages multiplier, the total award to MAXIMUS was $10.5M. I
don't know the status of the case or the award, but you can find the
On their home page, MAXIMUS also mentions that they have gotten an
$18M contract for child support collection services in TN. They claim
to be operating over 40 child support projects in 20 states at:
Last May, Wendell Primus, Director of Income Security at the Center on
Budget and Policy Priorities testified before the House Ways and Means
Committee on the privatization issue. His full testimony is at:
But the key quote I wanted to share was about his concern over
personal financial information winding up in the hands of these
private companies. He said,
"We do, however, have serious reservations about two areas of H.R.
4469. We are strongly opposed to the provisions in Title III that
extend access to enforcement tools and to additional personal
information to private child support entities and public non-IV-D
agencies. Private child support enforcement entities currently have
access to some private information through the Federal Parent Locator
Service, but there are not adequate protections guarding private
entities' use of that information. Courts have ruled that the federal
Fair Debt Collection Practices Act does not extend to private child
support collection companies and there is growing anecdotal evidence
that several of these private entities are taking unfair advantage of
both custodial and noncustodial parents.
Some privacy advocates believe that personal information is too easily
accessible to private child support entities. Granting these entities
access to additional sensitive information could lead to invasion of
privacy and misuse of information and the further fragmenting of the
child support enforcement system. The Center strongly encourages the
subcommittee to bring private child support entities under regulatory
authority and to require HHS to issue a report on the amount of access
private and public non-IV-D entities currently have before considering
the extension of additional data and enforcement tools."
No big surprise, but N.O.W. came out strongly against the 'Fathers
Count' bill in Congress.
Lockheed has the contract for the WI child support collections and
disbursement unit. That contract is up at the end of this year.
Lockheed has forecast that its reimbursement from the state will have
to be increased from the current $1.07 per transaction. Their
increase estimates range from 18 to 24 cents per transaction. In
other words, if WI wants to continue their relationship with Lockheed,
next year the state's costs will go up by 17-22%, adding almost
another $2.9M to their collection expenses.
The WI state report on their situation is at:
In 1998, Michigan approved a five-year, $107M contract for Lockheed to
set up a centralized SDU. It isn't clear exactly how much of that
went to Lockheed, because computer hardware and network costs were in
that budgeted amount.
Shortly after this system began, an attorney and divorced father
successfully sued the state of Michigan in federal court, claiming
that child support awards were being modified by SDU clerks instead of
by a judge issuing a court order.
Also, MAXIMUS has its hooks into the state of Michigan as well. Last
October the state increased a 'previously unreported' contract with
the company from $1.4M to $5M. The government employee union AFSCME
is very concerned about the 'privatization' movement, since it is
their members whose jobs are affected.
In Colorado, MAXIMUS was recommended by district attorney John
Suthers, who later admitted that the company was no better than the
government-run program it replaced, and was producing only half the
A 'glitch' delayed 7,000 child support checks in Polk County, FL after
the startup of the new Lockheed Martin IMS centralized disbursement
Just a month before LA County Prosecutor Gil Garcetti was up for
reelection, he received $15,000 from 21 Lockheed employees, none of
whom lived in LA County. Garcetti then recommended the County Board
of Supervisors approve a contract with Lockheed to operate the County
child support system, and pay a claim L-M filed for work already done.
The story ran in the LA Times, but appears at:
In the collapse of the statewide CA system (SACSS), Lockheed had
enough foresight to put a clause in their contract that capped their
liability at $4M, even though their total revenue from the failed
project was roughly $100M, and the total project cost approached
$345M. The remainder of the loss was borne by CA taxpayers.
The CA State Auditor released a report critical of L-M and the state
government management of the SACSS (Statewide Automated Child Support
System) published at:
You can find CA's current state budget at:
Pages 146 and 147 deal with child support administrative costs.
The distribution of the federal penalty for failure of the statewide
SDU appear in a state Legislative Analyst's report at:
Look under the heading, "Budget Proposes No State Share Of Federal
Penalty on Automation"
Lockheed management admitted in a Time Magazine article that their
Baltimore child support collection program ran 22% under their
forecasted performance. When Maryland state employees took a shot at
a new approach to running a child support office, their collection
rate was much higher than L-M's.
Randall County (Amarillo) Court Clerk Jo Carter estimated that the new
Lockheed Martin child support collections program will slow payments
by 'five to eight days.'
After receiving the contract to privatize child support collections
offices in Hampton and Chesapeake, VA, Hud Croasdale, former CIO for
the Commonwealth of Virginia, accepted a position with Lockheed Martin
IMS as Director of Marketing and Business Development.
According to the Philadelphia Inquirer, checks were delayed, payments
lost, and some parents wrongfully turned over for prosecution for
child support delinquency after Lockheed started up the state's
central disbursement unit.
While OK officials said that L-M's performance was 'satisfactory',
they added that an L-M subcontractor was performing poorly. The
subcontractor in turn subcontracted some of their work, leaving the
state with the problem of finding the right party to resolve problems.