Contract dispute delays new NC driver's licenses

Virginia-based MorphoTrak signed the $50 million work order in 2010 to deliver licenses that would be harder to counterfeit. But state Division of Motor Vehicles officials said the company began missing deadlines in 2011, forcing the DMV and the state Department of Transportation to order the company to halt work on the project in both June 2011 and September 2012.

The state even reduced the scope and complexity of the project to try to help MorphoTrak meet the deadlines and get the project completed, officials said.

With the project 27 months behind schedule, the state Attorney General's Office ruled in March that MorphoTrak had violated its contract, and state officials issued a third stop-work order.

After receiving assurances from executives of Safran Group, MorphoTrak's parent company, work on the licenses restarted in May. But the DMV and DOT then began talking with MorphoTrak sister company MorphoTrust about taking over the project.

MorphoTrust makes North Carolina's current driver's licenses and produces next-generation licenses for 42 other states, officials said. The company didn't make such advanced licenses when DMV signed its contract with MorphoTrak, they said.

DOT terminated MorphoTrak's contract in September and ordered the company to return all state property.

"The period of performance under this contract has been marked by significant obstacles directly arising from MorphoTrak's failure to meet its contractual obligations," DMV Commissioner Nicholas Tennyson wrote in a Sept. 18 letter to MorphoTrak Chief Executive Daniel Vassy.

"The small portion of the system delivered to NCDMV to date has not been developed according to NCDMV's requirements, the specifications contained within the contract, approved design documents or to the quality standards of the industry," Tennyson wrote.

Safran executives pleaded for more time, and the state has since backed off the termination.

"The North Carolina Division of Motor Vehicles and NCDOT are continuing conversations with MorphoTrak and its parent company to determine the most effective way to complete the required work with the most efficient use of taxpayer money. The department hopes to reach a resolution and announce the path forward before the end of this year," DMV officials said in a statement issued Friday.

The state has invested $2.3 million for personnel in the driver's license project so far, as well as $2.1 million in hardware and $1 million in software development costs, officials said.

MorphoTrak didn't respond to a request Friday for comment.