CONCORD – A frustrated Executive Council yesterday approved a one-year extension of the state's contract for a $61 million computer system to handle Medicaid claims.

The contract with ACS for design and development of the system was scheduled to close on Jan. 1. The council voted 5-0 to give ACS until Jan. 1, 2009, but only after closely questioning acting Health and Human Services Commissioner Nicholas Toumpas.

Extending the ACS contract meant that two other contracts with consultants had to be stretched out a year further, too.

Executive Councilor Raymond Wieczorek, R-Manchester, one of two remaining council members who voted for the contract, said he is counting on Toumpas's assurances that ACS's delays won't cost the state more than its contract calls for.

Toumpas said ACS has said in the past and recently agreed in writing that it will absorb all costs of the delay, including the costs to the federal government, which is providing 90 percent of funding for the system.

He said the guarantee is "not as black-and-white" with consultants Fox Systems and Deloitte Consulting, which also need to be under contract for an extra year because of the ACS delays. The combined bill for their extra year will be $1.8 million.

Toumpas said some of the costs are associated with extra functions the state asked ACS for after the contract was signed. The exact costs for which ACS will be responsible will become clearer after Jan. 1, when its contract was supposed to start saving the state money over its current contract with EDS.

Wieczorek said that despite ACS assurances, "something is radically wrong with this thing. ... How did we get involved in a mess like this?"

Toumpas said new Medicaid computer systems have run into delays in every state where they have been launched.

"There isn't a Medicaid system in the country ... that has been developed on time," he said. "Unfortunately, this is the norm."

The council narrowly approved by a 3-2 vote an add-on to the Lottery Commission's contract with Griffin, York and Krause to handle its $5.4 million marketing budget. The agency collects a 12.5 percent fee for advertising it places.

Executive Councilor John Shea, D-Nelson, criticized the measure, which adds $335,000 to the contract to cover the costs of upgrades to its existing Web site and a new interactive Web site that will be used to develop new commercials and ad campaigns through user contests.

Lottery commission executive director Rick Wisler said the money was not included in the original contract because it was not expected to be in the state budget.

Shea said he was upset that the original contract, awarded May 19, did not go to the lowest bidder, and now cost is going even higher.

"The first time, at least they had competition. Now there's not," he said. "This looks like it's too close to the awarding of a bid, and now they have a big increase." Councilor Beverly Hollingworth, D-Hampton, also voted against the contract expansion.

The council approved a series of loan guarantees and bond issues by the Business Finance Authority to help economic development projects in Claremont, Keene, Dover and Londonderry, and a request that The Nashua Bank be certified as a BFA lender.

Also approved were requests by the Community Development Finance Authority to participate in projects in North Haverhill, Claremont and Keene.