It’s an unbearably familiar story: Hawaii’s out $8 million after halting a failed contract.
The money was supposed to support an update of the state’s faltering and obsolete financial management system, which handles highly critical state data. Instead, the system, operated by the Department of Accounting and General Services (DAGS), was sent back to square one last year, after a new administration came in and learned that little useful progress had been made.
State officials who were attached to the program now disavow responsibility. The state’s chief information officer, Douglas Murdock, who served as project manager for the aborted work, told members of a state Senate committee that he was not at fault, and that some of the prior work could be useful for planning a new project.
But when Sen. Donovan Dela Cruz questioned whether the state would need to start over, or would build on previous work, current DAGS director Keith Regan responded that the state expected to launch a new project.
Getting DAGS’ financial management system into working order is now estimated to cost more than $60 million. This is on top of $1 million-plus to hire consultants who will pick up some necessary slack within DAGS so that officials with adequate expertise can oversee the technology upgrade.
Despite the disappointing sense of deja vu, then, we’ll say it again: Responsible, benchmark-driven oversight of contracts and exacting stewardship of public funds must be non-negotiable expectations. Given the state’s repeated failures to meet these expectations, a thorough review must also be conducted here, with a better explanation and assignment of responsibility for failures of oversight that occurred.
The saga begins back in 2020, when DAGS’ then-director in the Gov. David Ige administration, Curt Otaguro, launched a search for a vendor to upgrade the financial management system. The company invenioLSI (LSI) was chosen for the $17 million contract, paid for with federal American Rescue Plan money.
When Regan, newly appointed, began reviewing monthly project reports in December 2022, he found “numerous deficiencies … including the quality and pace of work,” the Star-Advertiser reported in January. “Key initial (project) deliverables have either not been delivered by LSI or have been delivered and not been approved by the State on time,” one report stated.
Pause a beat here to recognize that the state itself was not responsive to work done, and its late action and failure to provide quality checks along the way contributed to the delays and continuation of what would be wasted effort.
In March, Regan, Murdock and state Budget and Finance Director Luis Salaveria pulled the plug on the contract.
This is simply unacceptable. The $8 million spent might have otherwise gone to pressing needs. It could have been used to detect and eradicate invasive species, to build a homeless kauhale — or to shore up state computer networks against cyber attack, if spent on information technology (IT) needs.
The state’s IT systems facilitate aspects of nearly every service provided by the state. When they falter, the state’s residents pay the price. Here, Hawaii’s taxpayers are paying twice.
Hawaii’s public servants, entrusted with stewarding taxpayer dollars to return the most benefit to the state, keep saying agencies will learn from their mistakes. But despite plenty of mistakes, there hasn’t been enough learning.
A 2015 editorial ran the issue down as “a familiar, dispiriting tale of a porous government contract written by a state employee who may or may not have expertise in procurement. … Thousands, if not millions, of dollars are earmarked and spent with little, if any, oversight. There is no storybook ending, only the state left with an obsolete or faulty product.”
Nearly a decade later, that lament can again be applied to the state’s dealings with contractors retained to do complex work of all kinds. Despite repeated calls for clear policies and procedures for managing contracts, and promises to clear up the issue, here we are.