STATESMAN INVESTIGATES STATE CONTRACTING

AG tech contract costs hit $310M

Abbott-launched overhaul of child-support database goes astray with Accenture at the helm.

ByJ. David McSwane and Andrea Ball dmcswane@statesman.com aball@statesman.com

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When Greg Abbott took office as governor this year, one of his top priorities was getting a handle on technology contracts the state had either bungled or let balloon into outrageous costs to taxpayers.

He could have started with his own contract.

Under Abbott’s command, the attorney general’s office in 2010 began an ambitious project with Accenture, a technology giant with a questionable track record of handling big projects for Texas. The new effort was meant to augment one of Abbott’s most touted successes as attorney general: child support enforcement.

The project, commonly referred to as T2, was to transform a clunky mainframe database into a decentralized data network that was supposed to be more efficient, cheaper to run and more secure. Officials hoped a more efficient data and case management system would supercharge investigations.

It was supposed to cost $202 million. Instead, state records show the price tag has grown

to $310 million, and five years later, after failing to meet deadlines, Accenture has yet to finish the work.

In fact, there is little to show for the more than $200 million spent so far. The American-Statesman reviewed six years of technical documents that tracked the project’s failures and found:

• Accenture has repeatedly failed to deliver on its end of the bargain, with little consequence. In fact, Texas officials have rewarded the company with more money and more autonomy to run the project.

• The project has quietly become a massive offshore outsourcing endeavor. More than 165 workers in India have access to state data and are working on code remotely, despite warnings from software experts who monitored the project.

• Monthly reports showed the project was riddled with complications and disappointing results. Accenture didn’t provide enough staff to work alongside state programmers, those records show, and those the company did provide often lacked the skills necessary to do the job. Often, project monitors noted that Accenture representatives didn’t attend meetings.

• Concerns about the quality of the work by Accenture were raised as early as 2011 and have persisted since.

• When problems mounted and the project fell behind schedule, state officials moved the deadline back. They called it a “rebaseline.” The project has been rebaselined at least five times.

Despite these documented failures, one thing is certain: Taxpayers will pay more.

How much Abbott knew about the problems is unclear. But the attorney general’s former deputy of child support operations, Charles Smith

— who reported directly to Abbott — regularly attended meetings where he was briefed on the project’s status and was among those who oversaw the T2 project.

Answers to the many outstanding questions about T2 might ultimately come from Texas Attorney General Ken Paxton, who inherited the project from his fellow Republican in January when Abbott became governor. In March, Paxton told legislators that he was investigating the project because it had grown so large and was far behind schedule.

The attorney general is currently negotiating with Accenture on how to proceed with the project. Paxton’s office declined to give details about those negotiations or whether the company will continue to do the job.

Accenture has been in the state’s cross hairs before, having lost an $899 million contract in 2007 over accusations that the company mishandled a project running call centers for public benefits.

That hasn’t kept the state from continuing to hire the company. Since fiscal 2008, Texas has paid Accenture more than $6.3 billion for a range of projects, including Medicaid payment services, according to the state comptroller’s office.

Last week, Texas House Speaker Joe Straus tapped fellow Republican state Rep. John Otto, R-Dayton, to launch an inquiry into the child support enforcement contract with Accenture.

“The House remains focused on bringing more transparency and accountability to these arrangements,” Straus said.

Accenture officials declined to comment. Abbott’s office didn’t return a call for comment.

‘Emperor’s new clothes’

The T2 project was born in 2007 when the attorney general’s office decided to upgrade its then decade-old system, which was struggling to handle the quickly growing number of child support enforcement cases. Officials wanted to get rid of paper case files, be able to access the system remotely and revamp the way they handled other tasks.

In July 2011, shortly after Accenture started work on the project, the state auditor’s office checked on the initiative.

T2 had hit some road bumps, the auditor wrote. Budget cuts had pushed the launch date for the first phase back a year, from 2012 to 2013. Officials were spending money on the project before getting permission from the Legislative Budget Board. Meanwhile, the agency had spent more than $40 million for a part of the project that was supposed to cost $1.8 million.

Still, the audit said, the agency had set up ways to “reduce the risk of project delays, budget increases, security weaknesses and functionality problems.”

But the opposite happened. Three data and technology experts who worked on T2 described myriad problems and said employees were afraid to voice concerns to higher-ups for fear of reprisal. Those people, who until recently all worked at the company, requested anonymity because they said they feared difficulty finding work in Austin’s tech community if they spoke publicly about their experiences.

In separate interviews, all three used the same phrase when they described a culture of denial at the attorney general’s office as the project foundered: “It’s the emperor’s new clothes.”

Over several months, the Statesman worked closely with the sources to review and decipher dense technical documents that detailed recurring issues, including a high turnover of state and Accenture staff, underestimates of how challenging the project was, poor performance by Accenture and conflicts between the state and the company.

Monthly reports tracking specific milestones, as well as in-depth reviews conducted by software experts at the University of Texas, tell the story.

Accenture was awarded a contract to design and develop the child support data project in September 2010 with a goal of completion by 2017. Work began at the start of 2011 and swiftly fell behind schedule, records show.

Monitors used color codes in tracking the project’s schedule, risk, quality and issues. Green meant all was well, yellow meant trouble was on the horizon, and red meant something had gone very wrong and needed to be fixed.

Low-skill workers

A December 2011 report included an observation that would be repeated several times in the following months and years: “The Accenture team does not appear to have the technical skills and the staffing levels required to implement the project successfully.”

Child Support Division officials reported they were “concerned with the low level of quality for work products and deliverables submitted by Accenture,” the records show.

“Accenture’s way of working is to hire green beans out of college or newbies from around the world,” one of the three former T2 employees said. “They didn’t have enough experienced people to get things done.”

By August 2012, all indicators were red. By December 2012, they were still all red.

Then the first phase deadline passed. So managers rolled phase 1 into phase 2 to keep the final deadline on track.

The picture improved in March 2013, when child support managers added a new indicator: “Effort.” It was green.

“This is basically a worthless measurement because it just tracks how hard everyone is working, so it should always show green,” one of the former T2 staffers said.

It didn’t. By October, it was yellow.

Despite moving major deadlines at least five times, the project was still tracking as running late through 2014 and this year.

By this year, programmers began to question whether the project could work at all. At the same time, the Child Support Division staff expressed concern about the quality of Accenture’s custom development. Developers had loaded more than 100 off-the-shelf software bundles.

Developers were no longer building a system designed specifically for Texas. Instead, the project became a tangle of disparate systems and applications built on top of each other. This was a dramatic setback, reports and the sources explain, because all that software had to work together, stay updated and synced.

“It’s a total train wreck,” one of the three former T2 staff members said.

Because the project was about 66 percent financed with federal money, Texas was required to commission semiannual monitoring reports, which were conducted by researchers at UT’s Center for Advanced Research in Software Engineering. Those researchers noted scores of problems “plaguing the initiative.”

In a 135-page review in September 2014, researchers said one big concern was that Accenture had moved more than 165 programming jobs to India, a development that came after the project had fallen behind by more than 81,000 work hours.

Those close to the project said that offshore move introduced a slew of technical challenges, cultural and language barriers as well as the concern that data containing sensitive information — such as a child’s or parent’s Social Security number — could potentially be compromised.

Records indicate researchers also raised concerns about network security and quality of work coming from lower-paid workers in India.

One practical concern was that the Indian programmers were using expensive virtual desktops to remotely plug into state servers at night, when Child Support Division techs weren’t around to assist.

Under scrutiny

Within two months of taking office, Paxton set his sights on the T2 project. In March, Chip Roy — Paxton’s top lawyer — wrote a letter telling legislators that the initiative was under scrutiny.

While the inquiry had just begun, Roy wrote, reviewers had already found a number of initial concerns. T2 was going to be delayed once again. It would be far more expensive than anticipated. And project leaders had underestimated how much it would cost to run the system annually, which would lead to a “significantly higher” yearly price tag, the letter states.

Legislators seemed to heed that warning. In the state budget, they ordered the T2 leaders to report all projected cost overruns and delays to the Legislative Budget Board and to refrain from spending more than already-budgeted money without permission.

In June, Abbott appointed Smith as deputy executive commissioner of the Health and Human Services Commission. Paxton has revamped the executive committee overseeing T2, bringing in more attorney general office lawyers, a staffer with the auditor’s office and people from other agencies.

Contact J. David McSwane at 512-445-3618.

Contact Andrea Ball at 512-912-2506.