Another California state government technology project is in trouble, and this one needs $17.5 million right away or the state could be on the hook for five times that much and have nothing to show for it.
Lawmakers said this week that they want to hold hearings about the future of the BreEZe project over the next few months before they’ll authorize the money. On Friday the Department of Consumer Affairs, which is implementing the system, said the delay would trigger contractual obligations to vendor Accenture PLC totaling up to $86 million.
Those costs, in turn, could raise fees collected by Consumer Affairs, department spokesman Russ Hiemerich said.
“We are still evaluating the potential ramifications,” he said.
Consumer Affairs runs 40 state entities – boards, bureaus and commissions – that do everything from licensing doctors to regulating guide-dog schools. The department annually processes about 350,000 first-time license applications and 1.2 million renewals.
Ten entities launched BreEZe in 2013 to replace their decades-old paper-based systems with a unifying online program that would streamline work and make applications and renewals more convenient for licensees.
It hasn’t worked out that way, however. A state audit this month found that the new system is less efficient, poorly planned and difficult to implement. The department has spent more than $37 million on BreEZe so far. In 2009, the department figured the whole project would cost $28 million.
Sen. Loni Hancock, D-Berkeley, mentioned BreEZe on Friday when she announced a bill that would require state departments to ask outside contract bidders whether they worked on other state projects that busted their budgets. Accenture is a case in point: The New York-based firm installed a glitch-prone computer system for CalPERS that cost double its original $279 million budget and launched two years late.
Consumer Affairs wants to part ways with Accenture at the end of the year and worked out a $17.5 million agreement to pay the company through December. Then the department would take the audit’s advice and reassess the project.
But when the Brown administration asked lawmakers to appropriate the money, Senate Budget Committee Chairman Mark Leno, D-San Francisco, tapped the brakes.
The department, he wrote in a letter to Finance Director Michael Cohen, “has failed to provide adequate information necessary to inform the Legislature’s review and decision-making.”
Several committees have hearing dates scheduled over the next few months that will provide “an opportunity to inform the decision-making process,” Leno said.
The delay, however, would invalidate Consumer Affairs’ agreement to cut ties to Accenture this year and allow the firm to bill roughly $2 million per month for 43 months, even if it no longer works on BreEZe.
“That in turn means the boards and bureaus may have to pay up to $86 million while getting nothing in return,” Heimerich said, calling the figure a “worst-case scenario.”
Leno wrote that he expects “the Administration will make every effort to minimize the costs ... on balance, I believe that it is worth the risk.”
Call Jon Ortiz, Bee Capitol Bureau, (916) 321-1043.