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About a quarter of the $120 million the state has spent so far on a new Medicaid enrollment system has gone toward features that don't work, a state Department of Human Services technology official estimated Thursday.

Dick Wyatt, chief information officer with the department's office of systems and technology, gave the estimate in response to a legislator's question during a meeting of the Legislature's Joint Performance Review Committee.

"So we've thrown away $30 million?" Sen. Gary Stubblefield, R-Branch, asked.

"Yes, sir," Wyatt said.

Legislators have been pressing Human Services Department officials since the spring to explain how the cost of the project to replace a 25-year-old computer system more than doubled, to an estimated $200 million.

The old system couldn't determine eligibility for Medicaid and food-stamp benefits required by new federal rules that took effect Jan. 1, 2014, department officials have said.

The project has been plagued by missed deadlines that delayed the federally mandated reviews of Medicaid recipients' eligibility and resulted in a backlog of Medicaid applications that left recipients without medical care and cost health providers money.

The project's problems began in early 2013, when contract negotiations fell through with top-ranked bidder Noridian Healthcare Solutions of North Dakota. Noridian had bid $65.4 million.

Instead of turning to the second-ranked bidder, state officials decided to hire workers using an existing contract for technology services available to all state agencies.

Under that contract, the Human Services Department pays companies for workers' time and materials, rather than for meeting specific goals.

In July, Wyatt told the review committee that state procurement rules prevented the department from negotiating with the second-ranked bidder: Virginia-based Northrop Grumman, which had bid $52.8 million.

But at Thursday's hearing, the state's former procurement director said that a short deadline, not procurement rules, prompted the decision to use the existing state contract.

The state faced an Oct. 1, 2013, deadline to begin enrolling Medicaid and food-stamp recipients using the new system.

"At the end of the day, my call was, we do not have time to even negotiate another contract and get this up," said Jane Benton, former director of the state Department of Finance and Administration's office of state procurement.

Wyatt said in July that procurement officials had told him he could not negotiate with Northrop Grumman because the state sent the wrong document notifying Noridian it had been selected as winning bidder.

"I don't believe that I would have ever said that because that's not the law," Benton said Thursday.

A document error wouldn't have prevented the Human Service Department from negotiating with Northrop Grumman, she said.

But she said she didn't remember what she told Wyatt.

Wyatt said he would have liked to explore negotiating a contract with Northrop Grumman. But he agreed that reaching an agreement likely would have been difficult given the short time that remained to complete the project.

"We all agreed we didn't have time," he said.

Enrollment through the new system began on time, but officials have blamed the lack of performance measures in the staffing contract for missed deadlines that caused a seven-month delay in checking incomes of Medicaid recipients enrolled for at least a year.

The Human Services Department also replaced its lead vendor on the project in January and hired a separate company to help manage the work.

In addition, the state Department of Information Systems hired another company to evaluate the project, including whether the Human Services Department should continue using IBM software or scrap it and start over using different software.

If the Human Services Department had been able to award a contract to Northrop Grumman, the state would have been better off because officials would have "one throat to choke," Wyatt told legislators in July.

But such a contract wouldn't have eliminated other difficulties, such as shifting federal requirements and flaws with IBM's Curam software, he said.

Rep. Kim Hammer, R-Benton and a chairman of the committee, said after the meeting that he wasn't satisfied with the explanations for why officials didn't try to negotiate with Northrop Grumman, which already had a contract to provide computer support services to the department.

"It was an option that could have been explored if the leadership at the time had decided to explore it," he said.

"Now we are millions of dollars over budget for a project that could have perhaps been handled for a lot less money."

A Section on 09/11/2015

Print Headline: Losses on tech upgrades at Medicaid put at $30M

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Archived Comments

  • RBear
    September 11, 2015 at 5:43 a.m.

    As I read this "clown car" implementation,it makes me wonder what kind of skills and talent we have building the technology infrastructure for our state. These are fundamental processes to any I/T project and it's apparent good PM and technology skills were lacking at many stages of the process. Time and materials for a deliverable based system estimated to be in the millions?
    ...
    If this is what's building our future state infrastructure, Gov. Hutchinson's first order is to reset the leadership of some of these organizations.

  • DontDrinkDatKoolAid
    September 11, 2015 at 8:18 a.m.

    And the blame game begins. Asa better get YOUR HEAD out of that hole of yours and have direct involvement. I hate to see our tax dollar pissed away as it is.

  • 686
    September 11, 2015 at 9:24 a.m.

    And it will be the same fiasco when the state sets up its own health insurance exchange. Millions wasted,many people thrown off insurance and political cronies making huge profits. Why not continue to use the Federal exchange which is already working? Even the Governor suggested this.This is one of the few times I agree with him.

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