Raleigh, N.C. — State lawmakers received a postmortem Thursday on a failed effort to build a new tax-processing system – the latest government IT project to run into trouble – and said there has to be a better way to manage such projects.
The state Department of Revenue split with software firm CGI last month after five years of trying to build the TIMS system. Although the system can process some tax returns, it hasn't been able to handle individual income taxes, corporate income taxes or sales taxes, which combine to account for 89 percent of the state's tax revenue.
Total spending on the contract has topped $90 million.
"Let me get this straight," Rep. Dean Arp, R-Union, said during a meeting of the Joint Legislative Oversight Committee on Information Technology, "almost 90 percent of the budget was spent on this project, and we received nothing for it?"
Jeff Epstein, chief operating officer of the Department of Revenue, said the system has brought in some money – state officials have applauded it for finding $320 million in unpaid taxes – but officials finally decided they couldn't keep waiting on CGI to finish it.
"Our decision was how much longer are we going to go on with this, and when it does get done, is it going to do what we really need it to do?" Epstein told lawmakers.
CGI is the same company responsible for the defect-riddled rollout of the federal HealthCare.gov website used to enroll people for health coverage under the Affordable Care Act.
"When it comes down really to it, we've been defrauded in this state by a software company," said Sen. Ralph Hise, R-Madison.
Epstein said the problem is that the contract was written to favor the company, not the state. Rep. Joe Tolson, D-Edgecombe, said that has been a problem for years across state government.
"I don't know when we're going to learn how to go out and get the experts that can come in, tell us what we need to do and plan it," Tolson said.
Committee Chairman Rep. Jason Saine said it's time to rethink big IT projects, breaking them into smaller pieces with more accountability and more safeguards.
"Things are going to go wrong. That's just the nature of software," said Saine, R-Lincoln. "Whether you're Bank of America or Wachovia or any large organization, things happen, but we've got to better at how we react to that."
The committee also heard a report about the network outage that shut down NCTracks, the state's Medicaid billing system, for more than a day this week. Officials said Computer Sciences Corp., the contractor on that system, will be fined for the hours the system was down.