Sunday, February 09, 2014

The Horribe Tech Services of Deloitte

I wrote about auditing scandals involving Deloitte Touche Tohmatsu Limited. I questioned why the Federal Reserve of New York renew the contract with Deloitte after auditing scandal with Adelphia Communications Corp. and companies based in China.

Apparently, government agencies updating their technical services have trusted Deloitte that has proved to be a grave error.

In 2003, the California court system hired Deloitte to connect the computer systems.

Officials hired Deloitte and another firm in 2003 to create a statewide case management system, connecting 58 county courts, as well as appellate courts. By 2010, Deloitte was running the entire job, and the contract had been amended 102 times, ballooning in cost to $310 million from $33 million, according to a state audit.

Worse, the cost to install the software had been wildly underestimated. The total price tag soared to a projected $1.9 billion, so expensive that the courts could not afford to put the system into operation.

The integrated computer system was to be called the California Court Case Management System. The California's Judicial Council ended the contract with Deloitte. The financial loss to California taxpayers is estimated to be $2 billion. Even if the system was installed it would soon be outdated. The worst part was reimbursed for $16 million when the contract was ended.

Deloitte once again had problems with in California in 2013. The state's unemployment website Employment Development Department was backlogged with 300,000 claims.

Now lawmakers want answers. The Assembly is setting up a hearing to determine what went wrong with a system that cost taxpayers $110 million, almost double the original estimate.

Some blame the EDD's slow response to the problem that created the massive backlog of claims. Others are pointing fingers at a familiar name around the halls of Sacramento: Deloitte Consulting.

State employees warned government officials that the system set up by Deloitte would not be ready. Their warnings were ignored. EDD was forced to admit to the Assembly Insurance Committee. CBS Sacramento reported as many as 600 people didn't receive payment on their unemployment claims.

Deloitte set up the unemployment claim system for Florida's Department of Economic Opportunity. Many people were not able to log into the system.

The main contractor of the project, Deloitte Consulting, won the bid to modernize Florida’s unemployment compensation system by beating out nine other firms. In early 2011, the company negotiated with Florida that it could do all the work for $39.8 million and finish by December 2012, a deadline it blew — badly.

As contracts go, this wasn’t a big one for Deloitte Consulting, a U.S. company that’s part of an international British conglomerate better known as Deloitte & Touche. Since 2007, Deloitte Consulting has won $283.4 million in contracts with Florida agencies. Gov Rick Scott has been rather unresponsive to complaints about the glitches in the unemployment website. One reason maybe it is because the lobbyist for Deloitte is Brian Ballard. Mr. Ballard served as Co-Chair of Governor-Elect Rick Scott's Inaugural Committee. Scott was a guest at Ballard's Super Bowl party. Don't expect Scott to say to end Deloitte's contract any time soon.

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