Key players involved in the process had ties to Affiliated Computer Services, the company that benefited the most from the deal. Mitch Roob — a Daniels appointee who ran the state's Family and Social Services Administration when it awarded the contract — was a former ACS vice president. As the state began the project, Roob occasionally sought advice from former Indianapolis Mayor Stephen Goldsmith, a political ally of Daniels and fellow privatization advocate who also had been an ACS vice president.
The libertarian critique of many regulatory agencies and government in general is that it becomes captured by the interests they’re supposed to regulating; the solution, in their eyes, is typically for the government to withdraw. This might work in a blank slate situation, wherein the government has the choice whether or not to enter some new field; but in a situation like this, the act of withdrawing can often serve the entrenched interests it’s supposed to hurt. This shouldn’t be surprising; entrenched interests always find a way to get the first bite of the apple. But it is something to think about when someone extols the virtues of withdrawing (rather than withdrawn) government.