Hawaii Governor seeks more funding to update financial management system

Gov. Josh Green’s administration has called on lawmakers to replace an outdated financial management system, saying the project would cost $60 million since the state terminated a troubled contract with the vendor last year and the project stalled. We plan to request additional funding from the following.

State Auditor Keith Regan said the failure of the old contract with Labyrinth Solutions cost about $8 million, and the state would essentially have to start over with a new, larger contract for the modernization project. He said there is.

Members of the Senate Ways and Means Committee on Tuesday began publicly rebuking Mr. Regan and state Chief Information Officer Douglas Murdoch for accepting the losses.

“How can we spend $8 million in people’s hard-earned tax dollars?” asked Sen. Donna Kim. “If it was your money, someone would get fired. Someone would get fired. And you’d start from scratch because you wouldn’t get anything.”

The failed project would have replaced the existing state financial system, called FAMIS, with a modern system that would manage data such as accounts payable, budget and finance, travel and expenses, and fixed assets.

FAMIS is a decades-old mainframe computer system, and replacing it was a top priority for the state government.

LSI was awarded a $16.5 million contract to replace the old system in 2021, but Murdoch said last year that the company subsequently attempted to renegotiate the terms of the contract. Regan said federal American Rescue Plan Act funds were used for the project.

Murdoch chose to terminate the contract after the committee overseeing the project “learned that LSI would be unable to meet cost, schedule and performance parameters due to disagreements over requirements” in the bid specifications. said.

Rick Miller, InvenioLSI’s head of global distribution and executive vice president, disputed Murdoch’s explanation. “The state misunderstood the intent of the RFP (request for proposal) and the contract awarded to LSI,” Miller said in a written statement Tuesday.

The original scope of the job was to replace the financial management systems of two departments: the Department of Accounting and General Services and the Office of Budget and Finance, but the state later requested a price estimate to consolidate nearly all state agencies, Miller said. writing.

LSI developed a model to generate these cost estimates, but shortly after the Green administration took office, “the new leadership (Executive Steering Committee) “We determined that coverage was not possible. The common feeling was that because the scope had expanded, the state needed to go back to bidding to level the playing field,” Miller wrote.

Regan and Murdock are both members of that steering committee, along with state budget director Luis Salavaria, and Murdoch gave different versions of events to the Ways and Means Committee. He noted that the state has hired outside consultants to track the project and report progress to the state.

“When a vendor told us they couldn’t meet the cost, schedule, or performance terms of the contract, we tried to negotiate an amicable solution to it, but in the end we ended up canceling the project. “We decided we couldn’t do it successfully,” Murdoch said. Committee.

Murdock said the $8 million was not a complete waste because the state now has plans and other work products received from LSI. “But essentially, we fired vendors who were not able to successfully implement the project,” he said.

Commission Chairman Donovan Delacruz questioned why the decision to terminate the contract had not been made sooner. “Why do we have to wait $8 million for someone to say, ‘I don’t think we’re moving in the right direction,'” Delacruz asked. “When will the bleeding stop?”

Mr Murdoch said there were “regular discussions” early on in the process about potentially canceling the project, but the executive committee had chosen to “try to continue and try to fix what went wrong”. Ta.

The vendor posted a bond to guarantee completion of the project, but Murdoch said the state took advantage of the contract rather than terminate it for cause because “there were some things that didn’t work out on the government side as well.” He said he has chosen to quit.

“I don’t think there were enough government officials with enough knowledge to help the contractors move forward with the contracts,” Murdock said.

This time, Regan said Murdoch has an entire team focused on “organizational change management” to help move the project forward.

He added that the proposed executive budget calls for $1.6 million in contracts that will be used to increase staffing, which will allow staff in the General Accounting Division to focus on computer modernization projects. Ta. Mr Regan said these funds were “vital” to moving the project forward.

Regan said DAGS is asking for $5 million in the governor’s proposed budget to restart the project, but “I can tell you, it’s not going to cost $5 million to do that project, it’s probably going to cost $60 million. It will take some time.”

The administration plans to send a message to the governor during the next legislative session explaining how the money will be used and asking lawmakers to fund the project.

The plan drew a harsh reaction from Kim. “If $8 million goes down the drain, obviously you can’t control it,” she said. “Now you want to entrust us with $60 million, but at what point in the $60 million are you going to tell us that things won’t work out?”