State is negotiating with Hewlett-Packard for refund

The Shumlin administration is lobbying hard for a cash refund or other compensation from technology giant Hewlett-Packard, which oversaw a failed $18 million information technology project for the Department of Motor Vehicles, known as VT DRIVES.

Administration Secretary Jeb Spaulding couldn’t say how much money could be refunded. Discussion of details, he said, would jeopardize negotiations. A definitive written agreement could materialize in several weeks.

“The administration, including the governor personally, has been active in trying to get as much of our money back on the project as we can, or get some other kind of accommodation that is similar,” Spaulding said. “We are optimistic that we’ll come to a conclusion that’ll work well for the taxpayers, HP, and the DMV.”

HP press spokesman Bill Ritz confirmed that the company was negotiating, but wouldn’t comment because negotiations are ongoing. In a statement, he said: “The VT DRIVES contract has been a challenge for all sides. At the invitation of Gov. Shumlin, HP has begun discussion with the state regarding outstanding issues.”

Shumlin first became personally involved in ongoing negotiations with HP in the winter of 2011, and at one point flew to HP headquarters in California. Spaulding said the governor told company officials he expected to see results.

Spaulding wouldn’t say whether there was a recent breakthrough in the talks. “HP and the state of Vermont are now both on the same wavelength,” he said. “Now we need to work out the details and make sure the lawyers sign off.”

The VT DRIVES project started in 2006 and has cost the state about $18 million. DMV Commissioner Robert Ide said about $9 million was paid to HP, and the rest went toward equipment, software and DMV staff time.

The project is supposed to overhaul the department’s outdated computer system and provide motor vehicle information in real time, but little has actually materialized from the project, which is now more than three years overdue and millions of dollars over budget.

“I’m very frustrated by the project,” said Ide. “We have worked very, very hard, and as of today, we don’t have anything to show from multiple years of activity from many DMV employees. Forgetting the portion that went to HP, we have received some return for the other half of the money expended,” said Ide. “It’s unfair to say that the $18 million was totally wasted.”

Earlier this year another HP media spokesman, Ericka Floyd, told Seven Days that project delays were “unfortunate,” but “necessary to deliver a high-quality customized system.”

The DMV plans to renew its contract with HP; the contract has been extended at least four times for the project.

Hewlett-Packard also has a longstanding contract with the state of Vermont to manage Medicaid payments.

At one point, Vermont was seen as a potential success story for HP’s DMV technology revamps, Ide said. Now the DMV is monitoring the progress of similar HP infrastructure projects under development in Michigan and New Jersey, and particularly Rhode Island.

DMV contract becomes political football

The state’s IT expenditures on failed or delayed projects have become a campaign issue for Republicans in several statewide races. Randy Brock, the Republican candidate for governor, has made the failed judiciary technology system and the VT DRIVES project a campaign issue. Wendy Wilton, the GOP candidate for treasurer, has pointed out overtime costs associated with the Retirement System Re-Engineering Project, which is three years overdue.

And this week, Vince Illuzzi, the GOP candidate for auditor, has promised to scrutinize all of the state’s IT projects.

Deputy State Auditor Joe Juhasz said his office hadn’t audited the DMV contract, though they posted a review, or situation report, on the agreement in April 2012, prompted by the Seven Days’ article.

One of DMV’s responses to the auditor’s questions sheds light on the deteriorating relationship between HP and the state. “DMV feels that the vendor has not shown good faith in discussing the issues or in negotiating a solution to the problems,” the authors wrote.

Juhasz said a full audit would be unlikely until the project has been formally completed, though he is interested in the preliminary review and questions raised by media reports.

“When this thing gets finally resolved and we understand what happened, then it might be time to look at what we got for our dollars,” said Juhasz. “We can’t do that at this point.”

Any IT project costing over $500,000 must also be independently reviewed by the state’s Department of Innovation and Information. Richard Boes, commissioner of the department, said he has tried to implement stronger oversight of IT projects, but he said the Legislature only gave his department more authority in this arena in the last session.

Now the DII can effectively veto a major IT project proposal, whereas before its role was merely advisory, said Boes.

The failed DMV project became a gubernatorial campaign issue in a recent WPTZ debate. Republican candidate Randy Brock asked Shumlin how the state is going to implement a new health care system “if we can’t do a motor vehicle system?”

Shumlin said the DMV system was set up by the previous governor, and he agreed that “the taxpayers didn’t get the value for the dollars they should have.”

Brock asked Shumlin whether it was appropriate to visit a vendor responsible for major problems and come away with a campaign contribution. (Shumlin received a $2,000 donation from HP this election cycle.)

The governor said he flew to California to meet with HP officials to resolve the issues.

“I’ve taken corporate money just like you have, but I find it insulting that you would suggest that on state business I would ask for money,” Shumlin said. “I don’t do that. When I work for the taxpayers that’s what I do.”

Nat Rudarakanchana

Comments

  1. Kathy Callaghan :

    Good point about the DMV system vs. the health care system. Yikes! State government does not have a very successful record implementing new IT systems on time and on cost. So the thought of the State running a huge all-encompassing health care system, bigger than anything we have done before, is frightening. Many agencies have struggled with this issue, and incurred significant cost and time overruns. Vendor management has been a key problem. Based on my 19 years of vendor management experience for the State, you have to hold vendors’ feet to the fire, sometimes almost daily, to ensure that each deliverable is on time and on cost. Sometimes you have to be relentless, and I do mean relentless. Implementing a new system requires a lot of staff time, and sufficient dedicated staff just for the project. Which means balancing project work against regular staff work. It’s not easy, but it can be done. And in my experience, very close vendor oversight is needed, along with significant financial performance penalties built into the contract for vendors’ failure to meet goals. It may not get the project done faster, but it certainly reduces cost, and the vendor has skin in the game.

  2. rosemarie jackowski :

    This is just one more example of how government committees, commissions, boards, ‘paper churners’ cannot seem to get things done. BUT, that does not mean that we should not have SinglePayer health care. It means that the new health care system should be clear, simple, and efficient. The government should stay out of ALL aspects of health care except the billing/paying process. All medically necessary health needs should be covered, including dental. The money to pay for this would come from the savings – getting insurance companies out of the loop. Also a broad based, progressive tax. The bottom line is – SinglePayer saves money and lives.

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