State, computer company agree to speak no evil

Posted January 27, 2014

N.C. Revenue Building

— When North Carolina's Department of Revenue fired software maker CGI, state officials agreed not to criticize the company's efforts to build a new revenue collection system, despite the fact it could not carry out one of its principal functions. 

The state terminated CGI's contract for the TIMS tax-processing system earlier this month, paradoxically both praising its purported successes in finding unpaid tax revenue while abruptly ending a years-long effort to build the system. The state hired CGI in 2008. 

A separation agreement between the state and the company obtained through an open records request shows that revenue officials are legally bound not to talk smack about the company. 

"Both CGI and DOR agree not to disparage the other and agree to make only positive or neutral references regarding the other, the contract, the TIMS Project, and the reasons for the mutual termination of the contract," reads a provision in the separation agreement. 

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.

Both the Revenue Department and CGI took pains to tell reporters that CGI had helped spot $320 million in under-collected taxes during its run. But total spending on the system will top $95 million, and spotting gaps in tax payments is only one of its jobs.

The contract's termination leaves the state paying to operate two different large computer systems. TIMS is carrying out some functions, while a computer system known as ITAS, which is more than 20 years old, handles the bulk of the department's workload.

Several documents obtained through open records requests detail the system's problems. 

One of the TIMS system's main tasks was processing various sorts of tax returns, including individual income taxes. 

"The full implementation of TIMS will enable the Department to more quickly respond to legislative changes, mandates, and requests for information, expand e-Services offerings to taxpayers, take advantage of new data sources, and stay current with technology through version updates," reads a presentation by Revenue Secretary Lyons Gray from March 2013. 

However, while the system could process some types of returns, CGI never delivered a final update that would have allowed it to process individual income taxes, corporate income taxes or sales taxes, which combine to account for 89 percent of the state's tax revenue. 

"TIMS is the latest example of why the state can't afford to keep doing business as usual," reads a talking point developed by officials in the Office of Information Technology Services, North Carolina's central agency for overseeing IT projects. Officials at ITS deferred to Revenue Department officials when speaking about the contract's termination earlier this month.

"We aren't going to throw good money after bad once it's clear that a vendor can't deliver as promised. The decision to terminate a contract isn't an easy one, but it's the right thing to do when even more tax dollars – and the quality of the services the state provides to its citizens – are at stake," reads another line in the ITS talking points. 

Memos regarding the TIMS system released by ITS show that the contract had been amended 13 times. The final contract amendment specified that a major update to the system was due on Oct. 31, 2013. That update – known as "Release 5" – was supposed to integrate the ability to process individual returns.

"To date, Release 5 remains incomplete and has not been implemented according to the requirements and specifications of the contract," reads the Revenue Department's letter to the company terminating the contract. "As of the date of this letter, CGI has failed to deliver TIMS as required by the Contract."


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  • JustOneGodLessThanU Feb 3, 2014

    Thanks, Gingerlynn, for pointing out that Private Companies need to take “personal” responsibility and not rely on gov't to tell them how to do business.

    But, I’m not sure why you’re angry. Is it because, in your opinion, that gov't has not done enough...has not created enough laws...to restrict the hiring of private businesses?

  • ALECarolina Jan 29, 2014

    Right......who wants to bet the ALEC administration's new tax revenue computer don't make people who owe the state money wait as long to pay as it's taking the DHHS computer to process Medicaid and food stamp claims?

    Dirty deeds done in the dark will come to light........

  • Larc Jan 29, 2014

    I'm not so willing to put all the blame on the vendor. When governments order things such as custom computer programs, what they specify often tends to be a moving target. They add to, subtract from and otherwise make changes nearly constantly. There are usually lots of people in a position to input ideas and demands, and they do it. If all the blame was on one side, I doubt there would have been any agreement not to point fingers.

  • Gork Jan 28, 2014

    Ugly truth: this project is not unusual nationwide.
    Source : McKinsey & Company in conjunction with the University of Oxford
    Type of survey : Study on large scale IT Projects
    Date : 2012
    a.) 17 percent of large IT projects go so badly that they can threaten the very existence of the company
    b.) On average, large IT projects run 45 percent over budget and 7 percent over time, while delivering 56 percent less value than predicted.
    Or, from FT.COM -- projects in private industry fail just as often as in the public sector, but the private sector is better at hiding the failures (http://www.ft.com/cms/s/2/794bbb56-1f8e-11e3-8861-00144feab7de.html#axzz2rkJWBC2G)

  • Vote for Pedro Jan 28, 2014

    View quoted thread

    It ain't,just CGI, the state is behind this too....makes you wonder what they don't want to come out.

  • gman007 Jan 28, 2014

    At least now I know why my tax guy can't e-file my returns at this time. Maybe by Friday they say.

  • HeadsUp Jan 28, 2014

    Public agencies have no right to promise not to tell the truth about a vendor. For shame.

    We taxpayers pay the bills. We're the boss. We get to know what happens with our money -- the good, the bad, and the ugly. Period.

    If CGI wants to keep its failures secret, then it should stay entirely in the private sector and stop seeking government contracts paid for by us, the people.

  • Rebelyell55 Jan 28, 2014

    My past experience , not all IT personnel are capable of doing the job. Very rare is the one that actually knows something. Many time it's a trial and error thing. They lack basic problem solving skills and have poor communication skills. I've seen too many who have jumped on the computer and start doing things, without doing a proper flow chart. This generally always leads to waste. I'm not saying they don't know computers, just that I've ran into too many who have a hard time grasping what it is the customer wishes the program to do. Of course in their defends, I've seen too many Managers who didn't know what they need the program to do and were not going to be the one using it.

  • JustOneGodLessThanU Jan 28, 2014

    The failings of a Private Company are causing these problems for our government.

    It's the same as if Lockheed Martin made bad jets for the military.

    Sorry, Conservatives, but the gov't is not always, completely to blame...and this is just another example of that.

  • sinenomine Jan 28, 2014

    The contractual term prevents the state from speaking ill of the computer company but it also prevents the computer company from speaking ill of the state.

    While I expect that the contract terminology is boilerplate I've got to wonder - what would the computer company say about its counterparts at the state were it permitted to speak? And why can't the taxpayers who funded the effort hear it say its piece?

    Where public funds are concerned a provision of this sort strikes me as possibly being a sort of gag order to prevent possible embarrassment to state agencies, employees, and possibly even elected officials.