After a string of failed or canceled computer projects that cost millions of taxpayer dollars, Gov. David Ige’s administration unveiled a new plan Thursday to step up centralized oversight of state computer projects and withhold payment from private contractors that fail to perform.
The state Office of Information Management and Technology is also seeking 43 new full-time positions for workers who would tighten computer security and automate more state business operations. That budget request would also provide additional technical staff that would help implement the new plan, according to state Chief Information Officer Todd Nacapuy.
The new mandatory computer contract oversight process is part of a larger restructuring of how the state handles information technology projects, Ige told reporters.
“On the policy side, we’ve made decisions that we will cancel procurements that we can’t afford, and we will cancel contracts and go after recovery of funds when a contractor fails to perform,” he said.
State departments have launched some projects to replace or upgrade their computer systems without much central oversight by the Office of Information Management and Technology, and lawmakers at times have been dismayed at the result.
The state attorney general’s office in September filed a lawsuit alleging the information technology consulting company Ciber Inc. defrauded the Transportation Department in a failed effort to set up a new financial management computer system for the state Highways Division.
The state paid Ciber and other consultants working on what was known as the Financial Accounting System Transportation a total of $13.88 million, but the new system didn’t work. The state claimed the new system was unable to perform even simple tasks, and federal highway officials refused to certify it. Ige scrapped the entire project earlier this year.
The state’s lawsuit over the project was later tossed out of Circuit Court for procedural reasons, but the state has vowed to pursue the case. Ciber has also filed its own lawsuit accusing the state of improper termination and breach of contract.
Another expensive computer controversy involved the Hawaii Health Connector, which spent $87 million in federal funds on its own computers and related consulting costs to build a system to process health insurance applications under the national Affordable Care Act, or Obamacare.
The Health Connector was not a state agency, but it had a significant impact on an information technology system operated by the state. The Health Connector computer system called HHIX had problems interacting with the Department of Human Services’ KOLEA computer system that processes Medicaid applications, but the two systems had to exchange information related to Medicaid.
The state auditor in January reported that file transfers between KOLEA and HHIX did not work and “would be difficult to fix.” The state is now shifting Obamacare enrollment to the federal site Healthcare.gov, and HHIX is being shut down and abandoned, according to Health Connector officials.
As part of the continuing fallout from the Health Connector shutdown, the state has agreed to pay up to
$26 million more to contractor KPMG LLP to add new functions to the state’s KOLEA system that are needed to comply with the Affordable Care Act.
Yet another well-publicized computer contract controversy involved the state Department of Taxation’s agreement with CGI Group Inc., which was paid $87.5 million to install what state officials now describe as an outdated computerized tax collection system.
In a new effort to modernize and improve tax collections, this year the state signed a second, entirely new $59 million contact with another company to modernize the tax system. Ige said that newest tax modernization contract was used as a pilot project to test out the new system of increased oversight for IT projects.
Citing some of those past controversies, Ige said the state “really hasn’t done a great job of managing these projects,” adding, “We have made substantive changes about how we do IT on a going-forward basis.”
He said the state has relied too heavily on contractors in the past, in part because staffing for information technology projects was too thin to do the work they were assigned.
“It was not unusual for the state to hire a contractor to develop requirements,. They would hire a contractor to help evaluate the proposals, and then they would hire a contractor to help manage the project’s implementation,” Ige said. “I think what we’re trying to do is build core capability within state government to keep contractors honest.”
From now on, said Nacapuy, the chief information officer, new projects worth more than $1 million will undergo reviews by workings groups at four different stages of each project, and will need to be cleared before they can proceed. Among other requirements, each project will need to meet measurable performance goals before contract payments will be made, he said.
The new oversight system will be supervised by newly hired IT Governance Officer Todd Omura.
State Sen. Sam Slom (R, Diamond Head-Kahala-Hawaii Kai) has been among the critics of some of the failed computer contracts, and said a formal oversight system makes sense. He said it will be up to the state Legislature to oversee the new review system, but “there’s nothing wrong with the idea.”
“We all recognize the problems that have occurred, the problems that can occur and the overall cost if you don’t have someone or some people competently looking and reviewing those contracts before they’re negotiated,” he said. “Not afterwards. The time to do it is before.”
