Officials blame a lack of leadership, last-minute changes from the federal government, and lackluster employee pay and benefits for delays and cost overruns in social services such as the Arkansas Medicaid and food-stamp programs.
The problems, officials said, have cost tens of millions of dollars and led to missed deadlines.
Legislators questioned representatives from the Arkansas Department of Human Services and various contractors -- including IBM Curam, Northrop Grumman, eSystems, RedMane Technology and EngagePoint -- about why the eligibility verification system for Arkansas Medicaid, food stamps and other social services has been delayed more than eight months and doubled in expected cost.
"We do not do procurement as well as we could," said Human Services Department Director John Selig at a Joint Performance Review committee meeting on Wednesday. "At least within DHS, we need more capacity, more training on how to do -- in particular -- [information-technology] contracts."
Selig said the state has spent a little more than $100 million on the project so far and expects to spend about $200 million to complete the system. The federal government has paid 86.5 percent of the cost.
A variety of contractors -- considered experts in specific programs and federal mandates -- have been working on different parts of the system. They testified that decentralized leadership, project specification changes from the federal government and a delayed start date made getting everything working on time "mission impossible."
"The project was a very challenging one from the beginning, as we have heard repeatedly," said Pradeep Goel, chief executive of EngagePoint, one of the contractors involved in the project. "It started in an unusual procurement model with an unusual product structure, so when we got involved in the project, those challenges were well known. Those were the challenges we were expected to overcome."
Selig said problems started when the Human Services Department put out its initial request for proposals in early 2012. Noridan Systems won the contract to integrate the various systems, but Selig said the department was not able finalize the contract after months of negotiations.
State rules precluded moving to the second-scoring vendor, he said.
The months spent negotiating with the Noridan Systems meant the Human Services Department didn't have time to send out another request for proposals, so the department hired subcontractors through a staff augmentation contract.
That meant contractors were paid based on hours worked instead of tasks completed and no organization was solely responsible for the product.
Selig said the department tried to function as the systems integrator, which is in charge of putting the pieces together. In hindsight, he said that was a mistake. Ultimately, he said the department didn't have to expertise to manage that project.
Despite the challenges, Arkansas implemented an basic system that was able to enroll people in federal programs using new standards by October 2013.
But since then, the state has not developed a fully functioning system that integrates data among the different federal programs. Programming that's more than 25 years old has been handling many of these tasks.
Selig said the contractors are making progress. Tuesday night, the department was able to recheck the eligibility of 5,600 Medicaid and private option recipients.
That's a "major milestone" and will begin to chip away at a backlog, Selig said.
During questioning, legislators said better oversight of contractors -- given the complicated task of integrating data from various federal and state agencies -- would have helped keep contractors accountable.
"We have a time frame and we made -- in my estimation -- a poor decision to do the staff augmentation route," said Sen. Missy Irvin, R-Mountain View. "It's tied our hands to actually go after and hold these folks accountable. It's tied our hands to not get the deliverables and get the product -- all of which we're frustrated by."
Some legislators also questioned contract expertise within state government.
"A lot of time we talk as conservative Republicans that we need to run the government like a business," said Sen. David Sanders, R-Little Rock. "In terms of looking at what the private sector does, in terms of contract negotiation, in terms of what they pay, in terms of training, if you want to run government like a business, those are the lessons that we need to learn from."
He said state employees are up against negotiators who are better paid and have greater expertise.
"Do we need to pay more?" he said. "Do we need to invest more in training?"
In response, Camber Thompson, director of the Office of State Procurement, said she has trouble keeping qualified employees.
"I think so, yes," she said. "I have 30 [percent] to 40 percent turnover in my office."
Of the contractors that legislators questioned Wednesday, IBM Curam received the most scrutiny.
At a question-and-answer session for print reporters last week, Gov. Asa Hutchinson said the state is withholding $1.2 million from the company for failing to meet requirements on time.
The Department of Information Systems contracted with the Gartner Group to look at whether the state should continue to use IBM's software.
Rep. Nate Bell, I-Mena, questioned why a different software company hadn't been used. He cited failures of IBM Curam systems in North Carolina, Maryland and other states.
"I don't know anywhere I can find where they've actually been successful," he said.
Maryland copied code from Connecticut -- which used software from Corticon Technologies -- to run the Maryland Health Connection website after its IBM Curam system failed.
In North Carolina, the federal government threatened to withhold money for food-stamp recipients because of significant delays verifying eligibility.
Selig said North Carolina spent about $300 million on its IBM Curam system, called NC Fast.
Officials at Maryland's Department of Health and Mental Hygiene and North Carolina's Department of Health and Human Services didn't respond to requests for comment.
At the end of seven hours of testimony, legislators questioned representatives from CoCENTRIX, the company responsible for providing an electronic tool to evaluate developmental-disability clients.
That company has been paid about $9 million so far, and DHS expects to spend about $16.4 million for a five-year contract to use the company's software.
The software would be used to evaluate about 12,200 people.
The Human Services Department dropped CH Mack in 2014 and shifted work on the project to CoCENTRIX after the company failed to deliver a working product.
CH Mack received $4.8 million and spent about three years on the project but failed to deliver a program that works.
Between CH Mack and CoCENTRIX, the project is set to cost more than $21 million -- about $1,700 per person served.
The CoCENTRIX tool had not worked in locations where wireless Internet is not available and the state is withholding $340,000, but an early version that can function offline was being tested as of Wednesday morning.
"It seems to be all thumbs up at this point," said John Malcolm, vice president of government solutions at CoCENTRIX.
"We're going to have a product that's ready and good to go."
Metro on 06/18/2015