Iowa will pay Amazon Web Services and Cognizant Government Solutions roughly $420 million over the next decade as it transfers management of state government data and websites to the private companies, recently released records show.
The move is part of a state IT transition plan Gov. Kim Reynolds has touted as a continuation of her administration’s initiative to consolidate and centralize the state’s IT services, which she argues will be more cost-effective.
Documents the Des Moines Register obtained through a records request provide insight into the terms of the contracts between the state and the companies, the scope of the planned IT system and projected cost savings from the switch, as the transition has prompted questions about job outsourcing and transparency of state hiring practices.
The change, announced June 9, will save the state more than $525 million over 10 years, according to Reynold’s office. However, around 200 state IT workers have had their positions terminated as part of the transition and are facing confusion over their prospective employment.
Shortly after last week’s layoff notice, affected workers received notice that they could release employment information by June 12 to receive a competitive offer from Cognizant for a guaranteed one-year position “equal to or better than their current compensation,” according to the governor’s office.
Employees are set to receive offer letters from the company between June 15 and 25.
While Reynolds said guaranteeing the laid-off state employees positions with Cognizant was part of the negotiation process, there is no mention of an employment guarantee in the contract between the company and the state, the Register found.
Here’s what to know about the contracts.
How much will Iowa pay each company?
Under its contract with Cognizant, Iowa will pay the company $339.2 million across 10 years to take over daily IT operations for Iowa’s executive branch, including managing servers, networks and systems that support IT operations and providing technical support to state agencies and employees.
Roughly $202.5 million will be paid to the company through 2031. Cognizant is contracted to work with the state until 2031. The last five years of the contract will be based on annual renewals.
Iowa will pay AWS roughly $80.4 million over the next decade to shift the state’s data from dozens of data centers and thousands of physical servers to a cloud-based system.
Based on its cost analysis, the state will save about $530 million through switching to a managed service provider (MSP) model with the two companies.
Under the current system, state IT operations would cost $1.98 billion compared with the estimated $1.45 billion price tag of the new system. The state attributed part of the projected savings to lower IT hardware costs under the contracts than if the state continued replacing it on its own.
In its services to the state, Cognizant will be required to utilize its AI-enabled IT infrastructure. The contract requires the company to obtain prior written approval from the Department of Management before deploying AI technologies in the state’s systems.
It also bars the company from using state data to train AI models without written approval.
Contracts awarded through bidding process
The state awarded contracts to AWS and Cognizant through competitively bid federal General Services Administration supply contracts, according to the contracts.
Reynolds’ office says state code allows the Iowa Department of Management to enter into agreements for the “purchase of information technology through federal supply contracts issued by the GSA.”
Contracts between the state and private vendors are typically awarded through a competitive bidding process at the state level.
GSA announced a contract with AWS in 2025 in which the company provided the federal government with $1 billion in credits that federal agencies can draw down for the company’s cloud services through 2028.
Iowa’s government data still subject to records requests
Iowa’s open records act, which gives members of the public the right to examine government documents, will still apply to state data and websites that AWS and Cognizant manage, according to the governor’s office.
“The open records law applies to state data regardless of how it is stored,” Reynolds’ office confirmed in a statement to the Register.
Iowa’s contract with Cognizant establishes a data privacy framework for the company to deal with customer data and confidential information. Under the agreement, the company must keep state data “secure, and not disclose or use it for any purpose other than providing Services under the Agreement,” the contract states.
The company may only retain state data to perform IT services for Iowa or with prior written approval of the state.
Rapid Response Politics Reporter Maya Marchel Hoff can be reached at mmarchelHoff@usatodayco.com. You can find her on X (formerly Twitter) at @mmarchelhoff.
This article originally appeared on Des Moines Register: Iowa to pay $420 million to Amazon, Cognizant for state IT transition
Reporting by Maya Marchel Hoff, Des Moines Register / Des Moines Register
USA TODAY Network via Reuters Connect
By Maya Marchel Hoff, Des Moines Register | USA TODAY Network
