California's check-writer-in-chief on Friday axed a $90 million payroll software contract after the program's pilot runs revealed dozens of flaws, from pay miscalculations to errors in court-ordered child support payments.
A spokesman for Controller John Chiang said that officials overseeing the long-delayed and over-budget overhaul project learned of the problems from employee complaints and staff research not from the contractor.
"There's no excuse for these errors, but that makes this doubly bad," said Chiang spokesman Jacob Roper.
Chiang fired Pennsylvania-based SAP three years and $50 million into an $89.7 million software installation contract for the troubled MyCalPays payroll system. The controller plans to recoup that money and, under terms of the agreement, could go after 150 percent of the contract's total value, Roper said.
An SAP spokesman said Friday that company officials are "extremely disappointed" by Chiang's decision, but that the firm has lived up to its contractual obligations and stands by its software, which runs in government agencies worldwide.
"Throughout the course of this project, we have made every reasonable attempt to work with (the Controller's Office) in a professional manner," James Dever said in an email to The Bee on Friday.
And when the company sought mediation, he said, the Controller's Office "responded with a termination notice."
Chiang is suspending the $250 million overhaul, adding to a long list of failed state tech programs. Last year, the state dropped its plan for a computer system linking county courts after dumping $500 million into it.
The payroll program boondoggle came into focus last summer after SAP ran its first test using the controller's 1,300 employees, a tiny fraction of the 214,000 workers it aimed to eventually serve.
More than 100 defects emerged, including:
Child support garnishments for five families went to someone other than the custodial parents.
The state had to give payroll advances to 67 of the controller's employees whose paychecks were shorted.
The system overpaid some staff. The controller is working out repayment plans with those employees.
Health insurers dropped at least a dozen employees and family members after the payroll system failed to pay premiums. Some workers learned from their doctors' offices that they'd been uninsured for months.
It's not clear how many employees took a hit from the system glitches, Roper said, but analysts are combing payroll records "to make sure our employees are whole."
When the state complained in detail to SAP about the software defects and demanded fixes, the company didn't acknowledge the problems, Roper said, and suggested expanding the test to 10,000 employees in six departments.
"They said a certain amount of errors are acceptable," Roper added. "We said, 'No way.' "