The State Worker

The State Worker: California takes ‘see no evil’ stance on state technology debacle

Jon Ortiz
Jon Ortiz

Here’s a California state technology twist on a timeless truth: Honesty is the best policy – unless it blows up your $150 million lawsuit.

Last year’s failed state payroll system overhaul, dubbed MyCalPays, offered an invaluable opportunity to figure out what went wrong, a new report says, but the Brown administration fears a sudden attack of forthrightness would sabotage litigation against the project’s contractor.

“The administration seems concerned that any inward-looking assessment of the (project’s) failure could endanger the state’s position in the legal proceedings, apparently leading it to prioritize the state’s legal efforts over such an assessment,” according to the report by the nonpartisan Legislative Analyst’s Office that focuses on the piece of Gov. Jerry Brown’s budget proposal that carves out several million dollars for a MyCalPays court fight.

H.D. Palmer, a spokesman for Brown’s Department of Finance, said in an email that the administration agrees “that an assessment should be done, but that it should be done after the pending litigation has run its course.”

State Controller John Chiang, who is running for treasurer, shut down the quarter-billion-dollar state payroll computer project a little over a year ago after test runs fouled up payments to several hundred state workers.

The 2013-14 budget assigned $14 million and two dozen full-time employees to the task of straightening out the books and another $1 million to pay lawyers, but no audit money. Brown’s budget for next year includes nothing for a review of what went wrong, but it does propose $6.5 million “to support ongoing legal activities,” the analyst wrote, of which $2.5 million would pay for outside attorneys.

They would work on the lawsuit Chiang filed last year against the project contractor, SAP, for a host of alleged contract violations, from hiding system flaws to refusing to fix problems when confronted with them. SAP has said it upheld its end of the deal.

If Chiang (or his successor) loses, the state will have to pay SAP up to $50 million for work performed. If Chiang wins, SAP would have to pay up to $150 million – about $60 million more than the value of its contract.

“In our view, however, an immediate and thorough assessment ... is arguably at least an equal if not a higher long-term priority for the state,” the analyst wrote, because lessons gained could benefit more than $4 billion in technology projects in the government pipeline. Waiting compromises the accuracy of a review because people move on and memories fade.

The analyst didn’t mention the cost of that kind of public truthfulness: harsh criticism and maybe even a career deathblow. Transparency isn’t for wimps.

Nor does the report say how much an assessment might save future projects. It’s impossible to guesstimate the dollars-and-cents value of a debacle avoided.

But you can add up the numbers in a lawsuit.

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