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Sunday, June 16, 2024 | Back issues
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Auditor Says $1.9 Billion Project May Be DOA

SACRAMENTO (CN) - California's head auditor said in a report issued late Thursday that a $1.9 billion court software project could be technologically doomed. An expert on her staff says the system's useful life "may be very short."

"Our IT expert believes there is significant risk that the technology used for CCMS could be outdated shortly after its full deployment in 2016-2017," says the auditor's review of the Court Case Management System, a massive and controversial software project.

Only days after the judiciary's administration unveiled a positive analysis of the IT project, the state auditor fired back with her own independent review, finding that the accounting firm hired by the Administrative Office of the Courts had based its analysis on "unrealistic assumptions."

Casting the viability of the project in doubt, Auditor Elaine Howle's review said the software could be obsolete by the time it is installed in all of the state's 58 trial courts. Even the premise of complete installation in all the courts is in doubt because of determined resistance to CCMS from some of the state's major trial courts.

First conceived in 2002, the IT project is supposed to connect the courts with each other and with law enforcement agencies. In 2003, administrators granted a multi-million dollar contract to Deloitte Consulting to develop a system that was originally meant to cost a relatively modest $260 million.

The judiciary's administration amended the contract with Deloitte 102 times, and costs soon ballooned out of control. While AOC Deputy Director Ron Overholt told lawmakers that the system could be completed and installed for $1.3 billion, Howle found that amount was actually closer to $1.9 billion.

At a later legislative hearing, the state Auditor said the expense to trial courts of installing the system could add roughly one more billion onto that total, bringing the total cost of the system into the $3 billion range.

"Barring any delays," said Howle, "the useful life of CCMS may be very short after it begins to achieve a positive return on investment in fiscal year 2019-20. The AOC began developing CCMS in 2007 and the CCMS technology will be almost 10 years old when fully deployed in fiscal year 2016-17 based on current AOC estimates under the most optimistic conditions."

Howle added that IT expert Payson Hall of Catalysis Group, who worked with Howle on the review, "believes there is significant risk that the technology used for CCMS could be outdated shortly after its full deployment in fiscal year 2016-17."

Howle also found the supposed $300 million annual return on investment for the software system "may not be achievable because the analysis excludes and understates certain costs, assumes certain benefits of CCMS that are questionable, and uses a deployment model that includes some unrealistic assumptions."

Howle's review said the cost-benefit study commissioned by the Adminstrative Office of the Courts had assumed the new computer system would become profitable quickly and that installation would be seamless.

The study produced by the English accounting firm of Grant Thornton's also assumed the court computer system would save money through reductions in labor, but Howle found the analysis "does not provide details of how the workload reductions were determined."

One of the most critical conclusions in Howle's review was that Grant Thornton had not audited the numbers provided by the Administrative Office of the Courts.

"The analysis relies upon data provided by the AOC, which Grant Thornton acknowledges it did not validate," Howle wrote. "As noted in our audit report, the AOC has a history of understating costs and being overly optimistic about when CCMS will be completed."

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