The state reached a settlement with Hewlett-Packard over a failed computer project at the Department of Motor Vehicles on Wednesday, winning an $8.37 million refund from the company for its failure to deliver on a new driver data system.
Under the settlement, the state will return to HP physical and virtual rights to all software and documents created by the company, but will retain some of HP’s other materials, such as a retail sales system, along with other equipment and printers.
The DMV’s VT DRIVES project was started in 2006 and cost the state $18 million in total. Shumlin administration officials said the contract governing the project was flawed, and mutual termination was the best way to resolve ongoing issues.
DMV Commissioner Robert Ide hailed the settlement as a victory.
“A refund of $8.37 million looks like a pretty big number in my world,” Ide said. The refund represents almost all of the $9 million paid to HP. The other $9 million in project costs includes about $5 million for staff time and expenses, and about $4 million for usable products HP provided.
Both Ide and Jeb Spaulding, the secretary of the Agency of Administration, said negotiations went smoothly. Spaulding said Gov. Peter Shumlin’s personal involvement in the talks since the winter of 2011 made a key difference.
“I think it made a difference that he [Shumlin] was personally adamant about getting some refund, and wanted ultimately, all of our money back,” said Spaulding. “I guess it pays to have a governor who is hands-on.”
HP press spokesman Bill Ritz declined to comment on the settlement.
Spaulding said HP deserves credit for giving the state refund.
“They probably took the bigger picture, that they are a good corporate citizen, and that there’s plenty of other business here in Vermont, both public and private,” said Spaulding, of HP. “By doing ‘the right thing’ in the long run, they’d be better off.”
An HP subsidiary has held the contract for the state’s Medicaid billing system since 1992.
Ide said $5 million on staff expenses was not wasted, and the DMV received some value for another $2.7 million in expenditures.
“When you’re knee-deep on a project of this size, to get a refund like that is about as good as you can hope for,” said Ide. “This has been imperfect for a long time.”
Ide said four different firms handled the same contract over the years, as each became acquired by a larger technology company. That, and staff turnover at both the vendor and DMV, compounded a major technical disagreement. HP refused to redesign a system code that the DMV viewed as fatally flawed.
The DMV will revert to its legacy computer system, which has been in service for 35 years. Ide said improvements had been made to that system in the meantime, and that he isn’t overly worried about replacing it immediately.
Ide says he’ll wait to see if another state successfully installs a data driver system first.
“Certainly there are risks in those old legacy systems, but the bigger risk would be to start undertaking a project that you weren’t prepared for, and didn’t have the capacity to execute on,” Spaulding said.
Spaulding couldn’t say whether the administration was involved in helping the state’s Judiciary with similar ongoing negotiations over its suspended $4.3 million IT contract for an online case management system, though he confirmed that Shumlin wasn’t personally involved in those negotiations. It isn’t clear whether a refund will be the best solution in that case, Spaulding said.
The news about the HP settlement was released the day after VTDigger published a 4,400 word analysis of the state’s $90 million in IT spending from 2005 to 2012 on general government projects, including VTDRIVES, the failed case management system for the judiciary, a timesheet accounting system for state employees, an $18 million online gaming system, a tax program, among others.
