SACRAMENTO, Calif. (CN) – The California State Auditor on Thursday slammed the state over a software project intended to streamline the state’s outdated accounting and procurement methods, citing implementation delays and a $237 million cost overrun.
The blistering report says the state agencies responsible for overseeing the development and implementation of the accounting system overhaul have continually ignored the auditor’s recommendations, and that the project’s estimated cost has ballooned by more than $237 million since July 2015.
“If these delays continue and start to compound, the project team may find it necessary to extend the schedule yet another year, which the sixth special-project report estimates could increase the project’s costs by roughly $100 million,” state auditor Elaine Howle warned in the report.
Developers began working on the Financial Information System for California, dubbed FI$Cal, in 2007, and the massive IT project has been hampered by delays and shifting costs. FI$Cal will eventually be used by most state departments to track government spending.
According to the audit, California spent more than $479 million on the project as of June 2016, and the estimated completion date is now July 2019. The Golden State plans to release FI$Cal in five staggered waves to its horde of agencies.
California has contracted technology-services giant Accenture to help develop and eventually implement FI$Cal across its departments. Accenture’s project costs have also spiked $61 million since a July 2015 project progress report, bringing its contract total to $298 million.
Accenture won the lucrative bid over Celadon Group and IBM.
Howle says Accenture has struggled with transferring knowledge of FI$Cal to state employees and that the state may have to hire contractors to help troubleshoot problems once the program is finally launched.
“If the project does not take more initiative to transfer knowledge from Accenture to state staff, we believe the state will have to continue to rely on external contractors for support after the project is complete. This would likely end up costing the state much more than if state staff were adequately involved in knowledge transfer activities,” the report states.
Combined with scheduling and cost issues, state regulators have failed to act on complaints and concerns regarding FI$Cal. The audit found 11 “significant” outstanding concerns and recommendations, some of which have gone unaddressed for up to 46 months.
Despite the bloated project costs and launch delays, Howle says the project managers have no plans for submitting a new progress report to state officials.
“Given the number of issues that the project is currently facing and its failure to address the approval conditions for its sixth special progress report, we believe the technology department should consider requiring the project to submit a new [report],” the audit advises.
Thursday’s audit was the 13th FI$Cal audit dating back to 2007, and the sixth since the project began its design-and-development phase in 2012. Howle recommended the Legislature require the project staff to submit cost totals annually in 2012, but to her knowledge lawmakers have not addressed her concerns.
The program’s cost is being split between general and special funds, but the state says once implemented FI$Cal could save up to $415 million annually.
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