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Planners seek $27M or say it’s trouble for state IT project

April 13th, 2018

— A massive effort to replace the state government’s backbone accounting system needs another $27 million promised by June 30, or the entire project will be at risk, the State Controller’s Office told lawmakers this week.

Without that money in the budget lawmakers will tweak when they gather for the General Assembly’s short session next month, “I don’t believe any vendor would sign up” to take on a project expected to cost almost $100 million in total, Deputy State Controller Jim Dolan told members of a legislative oversight committee.

“It’s a big project, so you don’t want to get halfway there,” Dolan said after the meeting. “In order for people to bid for this, you have to have the money put aside.”

Adding $27 million to the budget would give the project about what it asked for last year and what Gov. Roy Cooper included in his initial budget ask: $40 million.

Lawmakers approved $13 million last year, though Dolan said only $500,000 has been spent so far. That went to a consultant who worked with state agencies to determine their needs and to build the request for proposals that IT companies interested in the project will use as a road map as they pitch the state on solutions.

Oversight committee members grumbled some about the cost during their Tuesday meeting, but there seemed to be agreement that the project was necessary. The current accounting system for more than 50 state entities is based on COBOL, an older program language that the Controller’s Office described as “a dying skill set.”

Nationwide, the language is mostly practiced by retired programmers, the Controller’s Office said, and the system’s support team in Raleigh will all be eligible for retirement by 2022. The system “was adequate for the 1990s,” officials told lawmakers, adding that concerns over security – “increasing vulnerability every day” is how they put it – are mounting.

“DELAYING COULD BE CATASTROPHIC TO THE STATE AND ITS CITIZENS,” the committee presentation states. “New system takes a minimum of 3 years to deploy.”

House Appropriations Chairman Nelson Dollar, who is not on that committee but is key budget writer in the General Assembly, said the $27 million request will be considered along with other requests sure to come before the legislature this May. Appropriators will look to whether “the project is truly ready to move forward and it’s moving forward in the appropriate way,” he said.

“Everyone agrees the system needs to be replaced,” Dollar, R-Wake, said.

State Auditor Beth Wood told legislators she’s hiring two consultants “as we speak” to monitor this project, looking at what’s already been done and watching the project going forward. The state has struggled to bring major IT projects to fruition, and massive budget overruns have been common.

A 2013 audit of the 84 state technology projects found they took an average of 65 percent longer to complete than promised and cost more than twice original agency estimates. That’s an additional $356.3 million, the audit showed.

In 2014, the state stopped development of a tax collection system, deciding to start over after spending at least $85 million. Something similar happened in the early 2000s when the state canceled a contract to replace the state’s Medicaid information system. It cost some $16 million between what had been spent and a lawsuit over its cancellation. The project that replaced it cost the state more than $480 million.

The state’s new food stamp system doubled in cost a few years ago, ending up around $48 million.

Some of these problems arise, officials have said, because agencies that use these systems change what they want from them in the middle of development. Other issues arise, Wood has said, from poorly written initial contracts. There are also concerns that vendors, which pay better, have the expertise to take advantage of the state.

Dolan said he couldn’t identify vendors interested in the financial backbone project, or say how many there are, because the project is in “a blackout period” in the state’s contracting process. He said the Controller’s Office is well aware of the problems with past projects and is working to avoid them here.

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