CA: Cost of upgrading state data systems at least $1 billion (over 7 years)

Bakersfield Californian ^ | 10/14/04 | Tom Chorneau - AP

[NormsRevenge]

SACRAMENTO (AP) - Taxpayers face a price tag of at least $1 billion over the next seven years to fix the state's aging computer systems that run payroll, budgeting and purchasing functions, according to the state's technology chief.

Consumers and businesses would also be asked to pay user fees to support new Web-based services such as renewing driver's licenses, obtaining business licenses or filing corporate documents. Meanwhile, the state will aggressively continue to consolidate its many computer processing facilities, call centers and other information systems to save money and improve services.

The ideas are all part of a grand technology plan, urged by Gov. Arnold Schwarzenegger and endorsed by his government reform commission, the California Performance Review.

Although still in draft form and expected in some cases to require approval from the Legislature, the technology plan calls for several new projects that could be up and running within two years. Those projects could generate huge contracts for hardware vendors and consulting firms, some of whom are already lobbying for the business.

Two information technology consulting firms - Accenture and BearingPoint - have lobbied the Schwarzenegger administration especially hard. In other states that have done similar projects, Accenture, in particular, has been active in taking information technology jobs overseas to cheap labor markets.

Aided by Accenture and BearingPoint consultants, the California Performance Review calls for removing barriers to private firms to bid on services now done by public employees, such as information technology functions.

Hampered by antiquated computers and the software that runs them, California needs the upgrade, said Clark Kelso, Schwarzenegger's special adviser on technology and the state's chief information officer.

"We do a miserable job at an executive branch level of having information available to the right people, the policy-makers, in real time," he said. "We just don't have systems that do that."

Key programs running payroll services, providing cash-flow accounting and producing budget projections are written in a 30-year-old computer language so archaic that it's no longer taught at any major university, Kelso said.

There are multiple and often conflicting systems that track revenues and spending, so the administration doesn't really know the state's cash position day to day. He said no one knows how much the state buys every year because of procurement databases held by different departments that are also not integrated.

"We're talking basic, fundamental management information that just isn't available," Kelso said.

But there's no money dedicated to pay for any of the upgrades, Kelso said, adding that his $1 billion estimate for the upgrade is just a "wild guess." California is by far the largest state to try such a project.

"I wanted people to realize that over a seven-year period this is at least $1 billion," he said. "It could be a whole lot more, but I don't want to get caught in a Bay Bridge problem where I say it's going to be $1 billion and it turns out to be $2 billion."

In Texas, one state that Kelso said California is watching, officials turned Web services over to BearingPoint, which developed a network of portals that require citizens to pay for many services, including some that Californians now get for free.

Since 2001, the company claims, the sites have collected nearly $500 million for state and local governments.

A law professor who works for Schwarzenegger part-time, Kelso has a long record of service in politically sensitive positions. He was appointed interim insurance commissioner by former Gov. Gray Davis following a campaign finance scandal that forced the resignation of Chuck Quackenbush in 2000. Kelso was again tapped by Davis in 2002 to take over the Department of Information Technology - since dismantled - after another campaign finance debacle involving a contract with Oracle Corp.

Now, he said, he is the subject of intense interest among computer vendors and consultants already eyeing the state's technology upgrade.

"You can't let yourself get entangled with consultants and vendors; they are around me all the time," Kelso said. "But I know what relationships I have and with whom, and I know there are clear boundaries."

While he said he was certain none of the vendors or industry lobbyists has "crossed any lines" in terms of their contact with the state, he acknowledged that he was unaware of a criminal investigation in Florida aimed at contract irregularities involving BearingPoint and Accenture.

Two weeks ago, Florida officials canceled $173 million worth of contracts with the two companies to run state data centers and perform other technology improvements after auditors found the bid process may have given the two companies an advantage over competitors.

Along with helping shape the Performance Review, both BearingPoint and Accenture sponsored a daylong seminar in Sacramento last week for about 100 state information technology officers - a program that Kelso helped arrange.

Because his state office doesn't have a budget or staff, Kelso said he had to enlist the help of an industry group to conduct the seminar, which brought together both private and public sector experts in computer integration systems to talk about California's pending program.

While Accenture and BearingPoint representatives said they helped the Performance Review without considering any future business in California, Kelso said he is not operating under that illusion.

"They have a strong material interest here," he said. "I don't think there's any doubt about it."

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