Yesterday, the Nevada Board of Examiners approved two contracts for Xerox State & Local Solutions to provide services to the Nevada State Treasurer in relation to the unclaimed property fund. Specifically, these contracts address auditing and stock custodial services for the state. The Nevada State Treasurer's office determined that they do not have the internal staff necessary to complete unclaimed property audits and thus need to seek outside assistance. Further, the Treasurer's office does not employ licensed brokers that can market the abandoned securities, so outsourcing is required.
The Xerox contracts run for four years, expiring in 2018. According to the Board of Examiners, the maximum value of the contract is $7 million, based on a 12% contingency fee from property collected under audit. Meanwhile the maximum value of the securities custodial contract is $800,000. Both contracts are to be funded through the Abandoned Property Fund.
These contracts are an extension of a previous contract for the same services. Xerox's prior services were deemed satisfactory in both cases. Xerox's audit division was once the independent firm known as ACS Unclaimed Property Services and the Unclaimed Property Clearinghouse. Xerox acquired ACS in 2009. Xerox has earned less than $1 million in unclaimed property audit fees from Nevada since 2010. According to state and company officials, unclaimed property audits have brought in $71 million since Xerox/ACS began auditing on behalf of Nevada in 1986.
Xerox has a deep relationship with the State of Nevada. In addition to the unclaimed property contracts, Xerox also had a contract to build the state's healthcare exchange, but the company was eventually pulled from that project. Xerox maintains current contracts for office equipment and software. Since 2004, Xerox has 11 approved contracts with the state totaling $147 million. It appears that the current contracts were approved with great hesitation by the governor, a member of the Board of Examiners, and perhaps under the threat of litigation.
Other Nevada Notes
Nevada has been strictly applying its penalties and interest provisions on late reported property and non-compliant reports and remittances. As such, it is important to strictly adhere to the compliance requirements to avoid such assessments. Nevada offers a Voluntary Disclosure Program to aid holders beginning their compliance programs. The state will waive penalties and interest on late properties reported through the VDA process.